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CitizenRE: Panacea or “clean-energy vaporware”

April 18th, 2007 · No Comments

Interested in solar electricity?  Have I ever got the deal for you …

That, in part, is CitizenRE’s claim that has been viral through the web — advertisements at website/blog after website/blog.

The promise:

  • Citizenr? will put solar electricity on your rooftop and sell the electricity to you at a fixed price (based on your current rates) for decades to come;
  • Citizenr?’s revolutionizing the entire process of solar electricity such that they can deliver these systems for a fraction of the price than the market currently sees.

Oh, the ads are appealing … and those of us terrified for the future are hopeful for solutions, for paths that promise a better tomorrow.  

Oh, the promises are lovely … I, for one, was within seconds of signing and faxing in a contract.

But, is something too good to be true, true?  My doubts are rocketing through the web …

WARNING: This is a long discussion — and, yet, it only gives a shadow of what is out there on Citizenr?.

In their own words,

The Citizenr? Corporation is a pure-play renewable energy provider. We are positioned to deliver renewable energy to the marketplace on a cost competitive basis. This makes us highly unique amidst the RE landscape; it places us perfectly - to truly minimize our dependence upon foreign and fossil fuels, to install more environmentally friendly electricity generating assets, to deliver a higher degree of energy surety, and to realize a 21st century quality of life.

As of when I checked the page for the citizenr? REnU the evening of 18 April, “12,885 already have … Join[ed] the Solution”.  12,885 people have signed their contracts. If you live in a state with net metering, you can put solar electric on your roof, eliminating your concerns about how your big-screen TV is polluting the earth and protecting yourself for decades to come against the potential for increased utility costs.  All of this with:

  • No system purchase
  • No installation cost
  • No maintenance fees
  • No permit hassles
  • No performance worries
  • No rate increases

I don’t know about you, but this sounds pretty damn good to me.  

For context, consider the following:

  • When I costed out installing solar PV in Northern Virginia, on a “DIY” basis (which probably is not what most of us / US would want to do), the $20,000 investment (excluding that free labor) would have generated about $27 per month in electricity (at current prices).
  • The $20k would have be worth about $320 per year or a 1.6% return on investment.
  • In other words, assuming zero discount on future dollars (perhaps due to rising utility costs), it would take over 60 years to get my money back. And, the system was warranted for 25 years.

Taking away all the hassles of permitting, labor, and service through life-cycle, and putting it on my rooftop for free, Citizenr? is offering me a path toward a carbon-free home at steadily declining prices (since the price is fixed and, well, inflation happens, you know) for decades to come. Sort of like the HGTV show, I WANT THAT!!!!

And, back in December, I contacted them, almost breathless in anticipation.

I got the materials.

I was excited.  

I told some people about this wonderful new product and that I would have solar pv on my roof come September … with no money down.

And, I was just about to sign the contract.

And, that voice on the shoulder whispered, “Don’t you remember Mom saying, “If it sounds too good to be true …” ”  

I paused and didn’t sign the contract, as much as I wanted to … I want to believe.  I really do.

I want to believe that there is a now path toward putting solar electricity on 100% of American homes in a truly financially beneficial manner, without any government support, even without a carbon tax helping to show the true costs of energy choices, and all of it with “NO MONEY DOWN”.  

But, the whipering voice questioned again, “Too good to be true?”

Well, the controversy is stirring up and my general discomfort is getting reflected in heated discussion and debate on the web. A couple months ago, Wired News published the story Selling Homeowners a Solar Dream:

Arguments between naysayers, independent sales agents and company officials have been burning up alternative energy sites. Much of the criticism comes from the traditional sell-and-install solar photovoltaic community. Some traditional installers, like groSolar CEO Jeffrey Wolfe, dismiss Citizenr? as a pipe dream bordering on a scam.

Reflecting that, here are some of the serious critiques of CitizenRE that I’ve seen:

“In its current incarnation, it is my opinion that Citizenre represents a significant threat to the solar industry. Exaggerated claims, inability to deliver product, sales to areas where they do not intend to install soon. These issues can taint the entire solar industry. Worse, misled customers will delay or not buy products from reputable dealers, putting these sound businesses at risk.”

  • Carl Lenox, over at GreenVolts, has done an excellent job analyzing technical barriers to CitizenRE achieving its claimed cost breakthroughs — both in technical terms (will their material perform) and business terms (is the solar industry as fat as CitizenRe claims (or, at least, implies)).
  • Niels Wolter at Renewable Energy Now laid out his calculations as to why he could not see how CitizenRE could make a profit (succeed as a business) within its promises.
  • Watthead CitizenRE - Solar Snakeoil Salesmen? “Well, you know what they say about things that seem too good to be true, and Citizenre’s hyped-up promises surely fit the bill.”
  • Dana Blankenhorn in his blog “The War Against Oil” started his discussion “The first big scandal in The War Against Oil is warming up, and its name is CitizenRe. There are all the earmarks of a crash here …”
  • Brad’s CitizenRe, real or imagined — a challenge lays out his concerns and appeals to the company:”If you are real, show it sooner rather than later. You don’t have to show everything but you should also give credible reasons why you must hide things. Consider halting sales or the taking of deposits until you get back on track — I doubt you will lose any business over that, it might even make you more desired. Much of the world would love your promise of cheap, grid-competitive solar to be real. Don’t disappoint them.”
  • Solarkismet did an extremely good three-part series examining CitizenRE from all of the angles, from business model to technical issues.  Part 1’s conclusion “Unfortunately, Citizenre has put their marketing cart before their solar panel horse. They have built up a salesforce of thousands and pre-sold thousands of solar systems, but they have nothing to install for at least a year. Not one solar panel.”

    Part 2’s conclusion: “I am amazed at how far the hypothetical has taken this company … CitizenRE has promised it all to everyone. There is basically nothing they haven’t decided they can do bigger and better than the existing solar industry … But ideas are cheap and CitizenRE needs to hit grand slam after grand slam in order to come close to their vision.  The shifting time frames and requests for patience have already started, and it is only a matter of time before various parts of the plan fall apart.  The best kinds of businesses do one of two things - “promise and deliver” or “underpromise and overdeliver.” It’s kind of ironic that the industry is now abuzz about CitizenRE, a brand new company that hasn’t delivered anything … only promised.”
    Part 3:  Focuses on the damage that CitizenRE could be (or is) doing to the solar industry.

In addition, Stephen Lacey at Renewable Energy Access has written The Heated Debate Over Citizenre. In addition, there is a podcast by Stephen Lacey. These raise some serious questions about CitizenRE.  In addition to Lacey’s report, there are interesting comments there.  For example,

There is no factory, no installers, and yet they are putting out six page contracts as if they were a going concern. Their address is basically a mail drop in Delaware, not headquarters for a corporation with 650 million dollars in investor funds.

They are collecting names, and in some cases Social Security numbers, and it seems there is a religious fervor involved that requires blind faith. Blind faith and good business do not go together.

And, another comment

I recently became an Ecopreneur/Associate in Citizenre at the same time I signed an FRA as a customer. I’ve been researching Citizenre trying to come to a decision as to how I should proceed.

This is, then, someone who is associated within the CitizenRE business structure who continues.

As a registered mechanical engineer, I’ve spent my career developing an approach to problem-solving based on facts and science. A belief in Citizenre requires almost a suspension of this tried-an-true method of dealing with technological challenges. There are instances and anticdotes that make it sound almost like a religious cult at times.

Because of the near lack of financial risk I have decided to wait out the storm clouds and give Citizenre a chance to prove that it is working toward the betterment of the solar industry. I hope my wait will not be in vein.

And, well, again …

I want my Free lunch!!!
I don’t know how to make,deliver or design sandwiches,but Gimme my free lunch!!!!
This whole model does a disservice to those who have actually studied,worked and invested in the growth of a healthy sustainable energies industry.
It encourages false expectations of unrealistic returns,at the expense of dissillusioned people who were hoping to “do some good”.I would love to offer a “cheap energy solution” to people,but I would have to offer a realistic option,and right now that means a capital investment in your property-plain and simple.

But, you need to read through the comments to see the other side, the passion and defense of those committed to CitizenRE …

they told NOAH that he was cazy!!!! they said you could’nt fly to the moon!!! they also told Sam Walton his business model would’nt work!!!
HAHAHAHAHA That’s what the old walmart beleivers are saying now how do you think google started?Or “napster” David Gregg is a visionary and if you are too blind to see then go sit and watch your beta max tapes and be quiet. Because this does not cost any major $$$$ and these solar guys should be offering Mr.Gregg their so called expertise in this field!!!! I am a PROUD ecoprenuer and if these so called solar experts were so damn smart then why have’nt done this yet? I know the $40,000 of which more than half is there profit!!!! they don’t want everbody to have SOLAR but David Gregg sayes it’s possible and I beleive him over blowhards!!!!

This is somewhat unfair as a quotation, as there are more eloquent discussions of CitizenRE (for example, check out D Miller, an Ecoprenaur, who had a February discussion ”Proof by negation”) and more knowledgeable and more experienced people out there working with CitizenRE. It is, in fact, that degree of expertise and experience of many of the signed up EcoPrenours that helps give CitizenRE it’s power.  (I was impressed at the resumes of the CitizenRE people who contacted me …)

Rob Styler, CitizenRE’s CEO, has even taken the time to respond to some of the blog discussions (search for Styler):

I am not going to breakdown our business model on this blog, but you can rest assured that major banks do not hand over $650 million in financing if the plan is not solid.

I understand there are skeptics. Our business model is revolutionary.

watch the short movie with Ed Begley, Jr. that explains our offering.

Thanks for taking the time to check us out. Our mission is to lead the solar industry into producing 25% of all electricity by the year 2025.

Now, Styler, himself, is part of the critique.  As he documented in his book, Spellbound: My Journey Through a Tangled Web of Success, he was a key actor in one of the larger pyramid schemes in recent history. As one Amazon commentator reviewed it,

A cautionary tale of greed gone oh so wrong, Spellbound made me thankful that my experiences with direct marketing have all been with a company that actually wants its sales force to make money. For those of us who believe in capitalism and have done direct sales with a well-run and fair company … this book comes as a sad surprise.
What particularly left me with respect for the author is that Styler makes no victim of himself, instead admitting his own culpability in everything that occurred

There are critiques that CitizenRE is nothing more than pyramid scheme. Looking at CitizenRE’s compensation plan (and its cascading path toward compensation) and listening to (podcast by Stephen Lacey) explanations of it sort of gives substance to those concerns.

What are some of the other concerns, well documented and discussed in the links?

  • CitizenRE promises to start installations in September, yet does not yet have a manufacturing plant — in fact, has yet to announced where the plant will be.
  • Plants take at least a 12-18 months to get up and running. CitizenRE is claiming to use a new process and new materials. Certification and quality assurance on such new materials would make this a longer process.
  • While CitizenRE claims $650 million in financing, there is no indication of that financing other than their claims.
  • That claimed efficiencies for mounting solar systems are not believable.
  • That there is a global shortage of key materials that CitizenRE is stating doesn’t affect them.
  • That CitizenRE is signing up customers and marketeers, without establishing an installation and maintenance infrastructure.
  • That … well … so on …

For me, the analyses above more or less dampened the lingering interest in CitizenRE. As much as I’d like to believe otherwise, it really does look to be too good to be true.

Lou Ginzo, the writer of the highly recommended Cost of Energy, chimed in with The enigma that is Citizenre

have no idea what Citizenre’s story is. They could be anything from scam artists to legitimate business people who over promised to geniuses who will fool the world and actually make their grand plans work. I don’t know, and I don’t think anyone outside of Citizenre really knows. Hell, Citizenre might not know how this will play out, even if they have the best of intentions.

…  basic business model, which I have complete faith in and still fully expect to be the pivot point that makes solar power go mainstream. There are already companies like Honeywell installing solar panels on large buildings such as schools and wineries, and I see no reason why this trend won’t continue and spread to government buildings, businesses of all sizes, religious institutions, universities and public schools, and even individual homes. It would take some very low probability event to derail this business model–solar tax incentives go away in the US, we discover a way to make cold fusion work in a pickle jar, etc.

the business model will survive and evolve and grow, simply because it makes too much economic and environmental sense not to, even as individual companies come and go. From a US or even international perspective, whether Citizenre succeeds wildly or crashes and burns or simply muddles along as a minor player in the field is irrelevant; plenty of other companies will jump into this market and find ways to make the business model work. There’s simply too much potential profit and too great a need for anything else to happen.

I think that Gonzo is right — that the basic concept, that eventually a company will be able to profitably ‘rent your roof from you’, makes sense. The question before us all is whether that company is CitizenRe and whether that sometime is now.

And, in regards to CitizenRE, the question is what is the importance? What is the problem if 12,885 dreamers have signed up for a dream?  

  • Some solar dealers are already commented that customers are backing out of deals, saying that they are going with CitizenRE.  If it does not deliver, will CitizenRE have taken business out of the solar market for months or years?
  • If it is overpromising (and, well, you take an honest look — I think that is a fair description, myself) and fails to deliver on these promises, will CitizenRE’s failure to deliver give a bad name to solar energy and hurt the developing market?  (On key solar PV business conditions, see my recent discussion Solar Power:  Making the right choice, the easy choice …)
  • Could CitizenRE and impressions of it hurt efforts to provide tax and other incentives for solar electric installations? After all, if CitizenRE can do it so cost-effectively in competition with simple utility prices, why should the taxpayer put a penny into this?

In other words, the issue with CitizenRE is not just between it and 7727 impassioned dreamers, but it is the potential implications for all of us if its promises are simply that.

As Wired wrote:

Many in the renewable energy community are just watching and waiting; skeptical on the surface and perhaps, deeper down, yearning for it to all be true.

Oh … do I ever want this to work … a chicken in every pot … that is boiling in the water heated by the electricity from solar panels on every roof.  

This is a future, I could live with … even though, sadly, I do not think CitizenRe is helping us (US) get there … sigh …

PS: If you are considering CitizenRE, you might want to check out the Hummingbird first …

CRITICAL NOTE:  

  • Solar electricity already makes financial sense for businesses and individuals in specific situations and environments.  There are a number of obstacles inhibiting a more extensive deployment (and, well, we can discuss how extensive and how quick that deployment can be) of solar electricity (PV or otherwise).  
  • There was excellent work done on this by Topline Strategy Group, which does “Strategy Consulting for Emerging Technology Businesses, that I discussed recently in Solar Power:  Making the right choice, the easy choice ….  

Tags: Solar Energy · solar

0 responses so far ↓

  • 1 Jimmy // Apr 19, 2007 at 4:31 am

    GreenOptions.com also took this one on a little while back here:

    http://www.greenoptions.com/search/node/citizenre

  • 2 A Siegel // Apr 19, 2007 at 10:21 am

    Jimmy,

    Thanks for the note. The SolarKismet work that I cite actually is the material that was cross-posted to GreenOptions (guest blogged?). Excellent three-part look.

    This is an updated version of an examination that I had done two months ago re CitizenRE. SolarKismet’s (excellent) posts were posted after my initial look.

    Bill Hobbs multiple comments re CitizenRE suggested that it was worth the effort to relook at CitizenRE — couldn’t find anything to change the basic conclusions.

  • 3 Bill Hobbs // Apr 19, 2007 at 10:37 am

    I should be clear: I think the basic concept of CitizenRe is a brilliant way to finance rapid consumer adoption of solar. I do have qualms about their multi-level marketing sales channel, and of course they have to actually be able to manufacture and install solar panels not just market them, but the basic concept of selling them to people for the cost of their average monthly electric bill seems smart to me.

    One problem with any solar product now, though, is that the 15-25 year timespan to break even is bad news given the fast-improving technology will render almost anything you put on your roof now obsolete in a few years. But you’ll be stuck paying for them.

    CitizenRe, or whoever succeeds with a similar biz model, needs to include in their contracts an upgrade promise.

  • 4 Darren Duvall // Apr 19, 2007 at 11:18 am

    Did someone repeal TANSTAAFL? I didn’t get the IM on that.

    Banks have made horrible loans in the past, the fact that they’ve made “$650 million” in financing available doesn’t tell you what the terms of the financing are. How many people does Citizenre have to sign up to get the second tranche, or the third? The absence of a factory or installation/service network is particularly disturbing.

    At this point solar is something you do because you want to, because it’s a personal conviction, unless you live in the Southwest. All the posts before this about how marginal the payback is on solar are not repealed, solar is a material sciences problem before it’s a financing problem. Double the efficiency of photovoltaic converstion and we’ll talk, until then it’s dead money.

    I can see banks buying into a MLM capitalizing on the goodwill of people who want to go solar and be green. People have been fleeced for less noble causes.

    I can’t see them buying into the most expensive form of consumer electricity, based on current technology, with the intent of turning a buck on beating coal on a per kWh basis.

    Without doing any research this violates the Too Good To Be True smell test.

  • 5 Ormond Otvos // May 10, 2007 at 1:58 am

    I’ve been carefully monitoring innovations in PV for the last two years, and am a certified Ecopreneur with CitizenRe, and I think they are going to get eaten by the new materials research from porphyrine dyes to nano tubule arrays.

    I cannot find, still, anything about who finances the, where the factory will be built, or what is so special about their manufacturing process or technology.

    Not to mention installation economies, unless they are using illegal immigrants to drill holes in expensive roofs. I’ve been on those roofs, installing Pv AND thermal water systems, and it is no place for amateurs.

  • 6 Eric Sheldon // May 24, 2007 at 11:55 pm

    Hello,
    It’s amazing to read some of the comments. Most if not all mention scam/solar sankeoil/pyramid scheme/etc.
    Yes, I am an Independent Ecoprenuer and what’s funny and what you forget is:
    According to Wikipedia:
    A pyramid scheme (also known as “Pyramid Scam” [1]) is a non-sustainable business model that involves the exchange of money primarily for enrolling other people into the scheme, usually without any product or service being delivered.

    Well let me educate you on something…
    1) I didn’t pay a penny to sign up (no one has),
    2) money has not and will not be collected from potential customers until a certified engineer surveys the house for suitability,
    3) and that can only happen (the survey) when the plant is on-line and the panels are available for install

    So where is the scam??!!

    Rethink Solar Cheer!

    ric

  • 7 A Siegel // May 25, 2007 at 4:42 am

    Eric,

    The problem is that solar installers around the country have had people back out of contracts since people are going to get their panels from CitizenRE.

    Where are those panels? Were not installations to have begun in September 2006? Where is the CitizenRE plant? How many PV/solar panels are coming off? How many installers have been trained?

    Is CitizenRE delivering on any of its promises? Is there any indication that they/you can?

    And, by the way, are there $500 deposits being required yet?

  • 8 Eric Sheldon // May 25, 2007 at 8:58 am

    A Siegel,
    I see your plight and it is a valid concern. Yes, there have been delays and it is causing a lot of doubt…but you have to ask yourself and please let me know if you have the answer, what does Citizenre have to gain by keeping people from signing contracts with other installers, especially since they are not collecting money at this time? Yes, there is a $500 (REFUNDABLE SECURITY DEPOSIT…WITH INTEREST) but again, it is to be collected after an engineer has visited the customer’s house and designed a system for them and the customer signs off agreeing with the design…at this time is when the deposit would be required. None of this is happening yet and won’t until the plant is producing panels.
    Something we are taught is, if someone is financially able to purchase solar panels, we are to encourage they do so. But it is ultimately up to the customer to decide that…and it IS their choice. Haven’t you ever wanted to buy a product/service but waited because you heard something better was coming?

    Thank you for your feedback.

    Eric

  • 9 Steve // May 29, 2007 at 10:15 am

    I signed up with this company but after doing so and asking one of the Reps. more questions she got very rude and defensive with each and every email she sent me. And the only question I asked her really was why is the company taking the fuel charge that the utility is currently charging and adding it to the current electtic charge.

  • 10 Eric Sheldon // May 29, 2007 at 1:44 pm

    Although I cannot apologize for her or anyone else associated…I am sorry that you happened to get involved and soon after experience someone who obviously does not know the first thing about a start-up company or how to interact with people on a business or personal level, she must have been frustrated about something. One thing we are taught (as you may know from the training modules) is either have faith and press on with switching people to solar power and teaching people to switch people to solar power or wait. Once the company takes off and things are going well, that is when I am sure a lot of people are going to want to get involved. I hope she did not discourage you and that you make your decision for you and not from what I say or anyone else. Educate yourself by reading as much about the company as you can as well as solar power, read up in the forums, and hold on for the ride and jump in when you want and how much you want. Cheers!
    SN

  • 11 A Siegel // May 29, 2007 at 9:10 pm

    Eric,

    I must say that I truly hope that you and every single person currently involved with CitizenRE is quickly extremely rich putting solar panels on rooftop-after-rooftop across the globe, truly breaking reliance on fossil fuels for electricity.

    However, at this time, there is nothing in CitizenRE that provides any confidence to a dispassionate observer. Where is the there there? Can you tell us where the panels are being manufactured? When will installations start? How many installers (and where) have been trained?

    There are too many questions receiving inadequate answers.

    The damage is not the $500 but the number of people who are holding off on solar panels due to CitizenRE’s promises. The members of Congress and other government staff across all levels of government who wonder whether their should be government support for solar if CitizenRE can provide it at rates competitive to grid power. CitizenRE’s so far unfulfilled promises are undercutting every other effort to move solar power generation forward.

  • 12 Mike Litt // Apr 1, 2008 at 9:24 pm

    Despite my doubts about their business model, I signed up with CitizenRe. There is no way I could afford a solar PV roof otherwise, so I’ve got nothing to lose. And I’m not taking business away from any other company,

    And by the way, anybody who is interested is Solar energy should read the January 2008 Scientific American article “A Solar Grand Plan.” It’s available free on line:
    http://www.sciam.com/article.cfm?id=a-solar-grand-plan

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