I recently had the opportunity to talk solar with Justin Krum, President and CEO of 1st Light Energy, our partner for solar installations. With 1st Light Energy, Extra Space Storage has completed nearly 100 solar installations at our storage properties in six states. With these solar panels,1st Light Energy has helped us not only save energy, but also lower our operating costs. And we’re adding even more solar panels as you read this!
Justin wants to help others realize that solar energy puts more choices in the hands of homeowners and business owners. Consumers really don’t have to completely rely on utility companies for power! In fact, consumers can even help utility companies when they choose solar. Justin also helps eradicate those false assumptions that serve as barriers to many people who think that solar can’t work for them. So, please pour a cup of joe, pull up a chair and listen in!
Brent Hardy:
You’ve been in the renewable energy business for about 10 years, and you launched the original 1st Light Energy location in New Jersey in 2004. Why did you choose this field, and what drives you to continue?
Justin Krum:
I’ve never been a great salesman, so to speak, unless I truly believe in the product, and it’s something that’s a win-win for everyone. And that’s what solar is. It’s something that I can sell that I know will absolutely benefit the customer like when they get their next power bill and see how much they save and know it’s coming from a renewable energy resource.
I’m not a guy who has my hands wrapped around a tree hugging it to death, but I believe that if there’s a way of doing something that is more clean and efficient, then I’m all for that.
Brent Hardy:
1st Light Energy specializes in both residential and commercial solar energy systems. How would you say that the experience for residential customers is different from the experience of businesses such as Extra Space Storage?
Justin Krum:
The overall scope of work is significantly different. On a home, we’re putting on an average of about 20 to 24 solar panels, whereas a business, some of the Extra Space buildings particularly, we install close to 1,500 solar panels on one roof. With homes, we put a solar system on the roof and there are no out-of-pocket expenses whatsoever. Homeowners just pay for the energy solar panels produce as they use it, and they do it at a rate that’s normally about 20 to 30 percent cheaper than the electric company. Those rates are typically locked in for 20 years.
Paying for solar energy only without the costs of installation and maintenance is an option that’s also available on the commercial side. It’s called a power purchase agreement (PPA), but the majority of companies don’t use this option since they’re looking at solar as an opportunity for large tax credits. A for-profit entity can own the system and get the tax credits, but PPAs are more attractive to nonprofits and schools because they typically can’t take advantage of tax incentives since they have no tax liability.
Brent Hardy:
You’re based in New Jersey and California, but you were able to help Extra Space Storage install solar panels in Hawaii. How did you accomplish this?
Justin Krum:
We have engineers who are licensed in all of the states, and we use only our trained installers to actually install the solar panels where ever the location. We’re able to coordinate it so that regardless of where the install is, we have full control over exactly how it will be done from a quality perspective. Hawaii wasn’t hard for us to find people willing to complete the work. It’s more Massachusetts in December that is harder, you know, to find folks willing to do an install! We do partner with local contractors to help with the permit process – this helps us to move forward with each installation efficiently.
Brent Hardy:
For potential customers who are unfamiliar with how solar power works, what is your easy-to-digest explanation?
Justin Krum:
Solar energy is just another form of an electric company. So, instead of using an electric energy provider you don’t always have a choice about, you get to become your own electric provider and put the power station on your roof.
The difference is that the electrical wires don’t come from poles, but from the solar panels themselves. The energy factory is on your roof, and the energy comes down through the wires to the breakers, and powers your whole home or business.
Brent Hardy:
What about solar power during rainy or overcast days?
Justin Krum:
We don’t disconnect you from your electric company. You’ll always use the solar energy first. If you produce more energy than you can use during the day, the excess energy goes back out to the utility company and your meter will spin backwards and the utility company will send that energy straight into your neighbor’s house. So, a solar system on one roof is actually benefitting, during the day, a couple of homes down the street because of all the excess energy. Blackouts occur when power companies have trouble getting the energy to where it needs to go, but solar puts the energy source right where it needs to go.
At night or when it’s snowy or rainy, you’ll use energy from the utility company, but you’ll be working off a credit from the energy you sent them during the overproduction during the day. The utility company is happy to give you energy at night when you give them energy during the day because you’re lightening the load.
Brent Hardy:
Are solar panels protected from storms or other natural events?
Justin Krum:
Everything we install is designed for record winds, record cold temperatures, and record hot temperatures. The solar panels have a 25-year warranty, but PPAs are becoming more beneficial because someone else has to maintain the system and carry all the risk.
Brent Hardy:
One of the benefits of having solar power is protection from utility rate increases. How long can a business or residential customer expect to have this protection once solar panels are installed?
Justin Krum:
There’s a 25-year production guarantee on the solar panels. They’re all warrantied in year 25 to produce between 80 and 85 percent of the energy produced on day one. The life expectancy of the solar panels is actually 40 years. And the great thing is that there are no moving parts to break. It’s just science doing what it does best.
Brent Hardy:
How often do you have to turn away a prospective customer because their home or building isn’t suitable for solar power?
Justin Krum:
The majority of our customers can have solar power, but some may have a beautiful old oak tree that surrounds their home and blocks light, or they live in Manhattan and a skyscraper blocks the sun. So, we do have to turn away some customers, but it’s not the norm. The average customer can benefit from solar power. Most customers think that they have to have the perfect roof that gets sun on it all the time, but that’s not the case. They just need a roof that gets sun most of the time.
Brent Hardy:
How do you know before you install whether it’s going to work?
Justin Krum:
We take a picture of the roof against the horizon and we know exactly how much sunlight is going to hit that roof everywhere we take the picture. So, we typically go to a roof and we’ll take a picture of the four extremes or corners of the roof, and know exactly how much sunlight is going to hit the roof at those points. We’ll average those four points. So, we know that if x amount of sunlight hits x number of solar panels, then y number of watts of energy will be produced from that.
Brent Hardy:
So you actually use your algebra that we all thought we wouldn’t use in high school?
Justin Krum:
Yes, Mrs. Wadsworth would be very proud of me!
Brent Hardy:
From a real estate perspective, what does installing solar panels do for a home or business? Are some potential homebuyers intimidated to buy a house or building with solar installed?
Justin Krum:
There is sometimes some concern among potential homebuyers about what will happen during resale of their home, but that concern or opinion seems to be contrary to fact. There’s actually data that tells us that in California the homes that have solar sell better than the homes that don’t have solar on them. The average home with solar sold for $17,000 more in the analysis of home sales between 1999 and 2009. (Source: Lawrence Berkeley National Laboratory, April 2011 study. Read more at Bloomberg.)
So, solar does become a huge positive. It really comes down to when someone’s looking, and there’s a choice between two similarly priced homes, but one has a zero electric bill compared to a $300 bill for the other, then one of those homes becomes much more valuable to the person buying.
As far as the look of solar panels, you know, most people, when I’m sitting in their home and ask them the color of their roof, they have no idea. I use that to make the point that if you have solar panels on your roof, you just don’t tend to realize it or look at them the same way you do something like your front door.
Brent Hardy:
What has been your biggest surprise in working in the solar industry?
Justin Krum:
One of the things that surprised me the most is that typically there were certain political parties that were supposedly more for renewable energy, but customers who were actually purchasing solar were often from a complete opposite political party than the ones who were calling for it! Yet, solar power isn’t as political as people think it is. Sometimes people think that if you like solar, you’re a tree hugger or environmentalist and act a certain way, but that’s not the case at all.
Another big surprise is how many homeowners think that solar is too expensive and will never work for them. We have to get over that barrier to help people realize that assumption is completely false. So, the biggest barrier is simply a misunderstanding.
On the commercial side, the lack of education can be worse. With businesses, we can’t get to the executives to help them understand the benefits the way we can with homeowners going door to door. I can’t think of more than 10 companies that have solar on more than one or two sites, so for Extra Space Storage to have so many sites with solar, it shows your willingness to listen.
Brent Hardy:
Are there any other benefits of having solar power that we haven’t discussed?
Justin Krum:
Just to recap, you do save off the electric bill right away, it can help deflate energy costs, and there’s the environmental benefit in that solar is clean and no emissions are created from the production of renewable energy. Also, solar power helps the utility companies to lighten their load.
Brent Hardy:
The number of solar panel installations reached an all-time high in 2011. What do you see in the future for solar power?
Justin Krum:
The solar industry has seen year over year growth that’s really second to no other industry in the past five years, and thousands of jobs have been created. When I got into this in 2002, people told me I was crazy to leave my career in construction, but now we know that solar energy is not a bubble. It’s here to stay, and I think that in five to 10 years even people in areas without much solar energy currently will begin to think of it as a common thing just like a water heater.
The biggest growth perhaps is going to be on the financial side, how people are able to come into solar – whether it’s adding it to property tax bills or financing through local banks. In general, there will be more creative financing. Also, as more people start embracing solar, there will be more R&D funds that promote more growth at a faster level.
As the cost for solar continues to go down, we’ll be able to lower to the price of solar. In fact, manufacturers today are already charging about half the price for solar panels compared to two years ago. The goal for solar, and what the industry is fighting for, is to get to grid parity, where the cost to buy solar power is the same or cheaper than the cost for the local grid (what a utility company charges). In some states, we’re almost at grid parity.
The tax incentives for solar that we have now are in place until 2016, so I think that by the time we get there, we’ll have reached grid parity and the cost of solar will continue to come down so rapidly that even without government-subsided incentives, solar will work, be more widely accepted, and there will be more competition.
Brent Hardy:
Sounds great! Thanks for the informative chat on solar.
Justin Krum:
Thank you for allowing me to talk about it!
Brent Hardy
Q&A with a Justin Krum A Solar Power Brainiac.
