Executives at the office supply giant decided, however, that any method they chose, improve efficiency, change operations, or buy low-carbon energy, the effort also had to make financial sense. At that time, nobody could argue that the purchase of solar panels were a good investment, since capital recovery periods were much higher than today.
But a startup called SunEdison contacted the company and made them an offer they could not refuse, using a financial model that could give solar energy the edge you need to get to provide a significant part of the world’s energy.
Under the plan of SunEdison, Staples would get solar panels on the roofs of their stores with no upfront cost and no monthly fee for the equipment. Instead, Staples agreed to pay to SunEdison a rate preset by power-generating solar panels for a period of more than 20 years. “The conclusion is that we have the option to purchase the solar energy that comes from our rooftops for a price lower than the electricity from the network,” said Mark Buckley, vice president of environmental affairs for Staples.
Currently, Staples has installed about 10 megawatts of solar capacity by more than three dozen sites, the equivalent of approximately 2,000 solar systems in a typical residence. The SunEdison plan benefits go beyond the monthly savings in the cost of electricity from the grid, and also eliminates the typical risks of ownership. Staples does not have to worry that the panels may not work well enough or they are not damaged. “If our solar system is not working properly, then you pay nothing,” said Jigar Shah, founder of SunEdison.
SunEdison is who plays it. “All the risk goes down on a third party, and received the only attribute that probably really want that clean energy is ideally results in a reduction in electricity bill,” said Nathaniel Bullard, a solar energy analyst Bloomberg New Energy Finance. However, as the amount of sunlight in a particular place during a period of 20 years is very predictable, the risk is not as great as it might seem.
This plan also helps Staples to limit its exposure to increases in electricity tariffs and charges of distribution utilities. SunEdison customers pay a rate increase but does so in a predictable and more slowly than it has historically electricity network. Network prices rise along with inflation, according to the Energy Information Administration of the U.S.. However, the pattern may change and may move to raise rates independently, especially if at some point in imposing a regulation on CO2 emissions. “We are thinking about solar energy as a way to provide a defense in the long term price certainty,” says Buckley of Staples.
The model has been running well in the market. SunEdison has installed more than 125 megawatts of solar energy companies such as Anheuser-Busch and Kohl’s and government agencies like the Department of Energy U.S. Thanks to this promising growth, Jigar Shah in 2009 sold for 315 million U.S. dollars SunEdison to MEMC, a manufacturer of semiconductors and solar panels based in Missouri. Shah has moved on and now runs an organization called Carbon War Room, founded by the chairman of Virgin Group, Richard Branson.
SunEdison’s success that has already come out rivals. Solar City, a company headed by the famous entrepreneur Elon Musk, has taken the model one step further by aggressively applying for homeowners and small businesses. The concept may be even more attractive for small businesses than for large, since they are more difficult to attract cheap loans and have less staff to handle the large amount of paperwork required to collect government subsidies. “We have eliminated most barriers to the adoption of solar energy,” says Solar City CEO Lyndon Rive. Thousand employees The company has installed solar panels on more than 10,000 locations, with about 25 major installations in progress at Wal-Mart.
It is clear that solar energy is still far from able to compete with conventional electricity in most markets, especially in places where there is sun and cheap power is available from dams and power stations. However, this financial model has made it easier to attract funding for solar energy. “Right now, there is more money chasing solar energy projects solar energy projects seeking funding,” says Shah. In turn, this could lead to better loan terms and cheaper solar energy that no longer require government incentives.