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Energy startup The Citizenrē Corporation's haikulike Google ad says it all. "Solar for free," it headlines. "No initial investment needed. Just monthly payments for power."
Instead of making you spring for $25,000 or more in gear, Citizenrē says it will loan you a complete rooftop solar power system, install it for free and sell you back the power it generates at a fixed rate below what your utility charges. The company hopes to make back its investment with those monthly payments, augmented by federal tax credits and rebates.
Founded by a solar power veteran and a former tech company executive just 18 months ago, and still officially in a pre-launch phase, Citizenrē says it has $650 million in bank funding behind it. Enviro-actorvist Ed Begley Jr. has cut an eight-minute video for the company website, and more than 7,000 people from Maine to San Diego have already signed up for systems. And why wouldn't they? With no upfront costs -- aside from a modest security deposit -- consumers can save on their electric bill and help roll back global warming at the same time.
If you own a home and saw An Inconvenient Truth, you're already sold. You're also wondering if the deal is a little too good to be true. Indeed, Citizenrē's offer is generating a furor in renewable energy circles, fueled by the company's own secrecy and an unusual business plan that combines serious technological expertise with an exuberant multilevel marketing campaign in the style of Amway, Mary Kay and Tupperware.
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 Citizenrē as a pipe dream bordering on a scam.
"Citizenrē is not going to be able to stand up to their promises," Wolfe asserts on Renewable Energy Access. "This company is building a 'house of cards' and attracting a lot of customers who want a deal that's too good to be true."
It's not that the company lacks expertise. Co-founder Robert Wills holds a doctorate in electrical engineering, and is credited for advances in solar power inverters; his work with scientific organizations, including Sandia National Laboratories, is widely recognized. His partner, David Gregg, is a 25-year veteran of the IT industry, most recently working on web-based database programs.
Nor is the model entirely unproven. Corporate facilities have long benefited from the type of lease-financing scheme Citizenrē offers. Ryan Wiser, a scientist with the Lawrence Berkeley National Laboratory, says bringing that financing to the residential market is completely viable, provided the investor money is there. He calls Citizenrē "a breakthrough."
"There's an increasing number of companies that are doing this kind of financing" for commercial customers, says Wiser. "There's certainly a market on the residential side; the difference is how do you make a profit. They will have to bear huge transaction costs to get started."
Today, a new solar installation runs between $20,000 and $50,000 to power a typical 2,000-square-foot home for a family of four. While the systems last at least 20 years, it can take two-thirds of that time to reach the break-even point. Most of those costs are in the hardware: the solar panels themselves, and a device called an "inverter" that converts the power to outlet-friendly AC.
Citizenrē plans to lower those expenses by building its own manufacturing plant. "It will be the largest solar manufacturing plant in the world, 600,000 square feet and 1,600 workers," says Rob Styler, the company's executive vice president of marketing. "By manufacturing our own panels and systems, we cut our costs to the bone."
Once it's ready to start installing systems -- sometime after September, the company says -- homeowners will pony up a refundable security deposit of $500 for up to a 5-kilowatt system, and $100 more per additional kilowatt. Customers lock in a fixed price for the power based on current market rates, with a contract for either five or 25 years. They pay for all the power generated, even unused power, but the company tailors each system to fit the household's power consumption. At the end of the contract, the homeowner can optionally purchase the hardware outright
It sounds great. But the naysayers are finding lots to say nay to. Much of the criticism is clinging to the company's multilevel marketing scheme. So far, more than 700 people have enlisted as independent Citizenrē sales agents -- what the company calls "ecopenuers" -- or about one sales representative for every 10 customers, with significant overlap. Heading that sales army is 42-year-old Styler, a veteran of multilevel marketing and a colorful figure in his own right.
In 1997, Styler bailed out of Equinox, a notorious Southern California pyramid scheme, three years before the Federal Trade Commission shut it down. (He wrote a book about the experience). More recently, he's been involved in another multilevel marketing operation that sells skin patches promising the wearer improved health and vigor through the magic of nanotechnology.
Styler says Citizenrē is nothing like Equinox (he stands by the skin patches), and isn't a pyramid scheme. For one thing, neither sales agents nor customers have been asked to spend a dime. "What's missing from the multilevel marketing scam is that we're not asking for money," says Styler. "The reality is that there are lots of scummy companies out there; we're not one of them."
He points to the cell phone, satellite TV and home alarm system industries as ones that were completely changed by the influx of mass marketing and monthly payment schemes.
But the multilevel marketing model has caused problems for the fledgling company. Since its pilot program began in September, some unsupervised sales reps have been caught making inflated promises that would-be recruits would become millionaires if they joined up. Others have hinted falsely at deals with the Sierra Club and Greenpeace, or gotten into spats with local utility companies. Some agents have proven unable to answer basic questions about the power contract that homeowners are expected to sign. One agent is under federal indictment for tax fraud over his alleged role in an earlier multilevel marketing scheme.
"They have been incredibly reckless about letting independent sales agents say things that can cause legal and regulatory problems," says former sales agent Richard George, who resigned earlier this month over his concerns.
Citizenrē co-founder Wills concedes that the company's marketing effort has been flawed. "We have to be careful of our sales reps embellishing the truth and exceeding the bounds of what we want to achieve and what we can achieve," says Wills. "Our next round of sales representatives will be far better trained and better able to serve customers."
But, he says, Citizenrē has also attracted many reputable independent sales agents -- often people who came for their own home system, then stayed to offer them to neighbors.
Those agents haven't been paid yet. The checks won't start flowing until the company has built a plant -- it won't say where or when the groundbreaking will be -- and started collecting security deposits and installing systems. Then agents will earn 5 percent of their customers' monthly solar bill, as well as bonuses based on the performance of downstream sales representatives.
Citizenrē says it's set aside $5 million for commissions. But not everyone is convinced the money exists. Before he resigned, George crafted a detailed, 63-page slide show calling for changes in the company's marketing structure and business plan. Among his criticisms, he slammed Citizenrē for not revealing where it's $650 million in funding comes from. He suspects the company is using its multilevel sales network to perform free market research, a charge Citizenrē strenuously denies.
"It's a highly unethical fishing expedition to prove there's a market for this kind of deal," George says. "It looks beautiful on paper, the website is nice and the idea is great, but they are being very secretive because they probably don't have the skill and money to get it done."
Citizenrē says it has no obligation to reveal who its investors are. "It's a privately held company and we're not required to reveal our investors' identities," Styler says. "It's about strategic competitive advantage. We want as big a head start against competitors as we can get and our backers want to enjoy the photo op and the glory of the initial launch."
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.
"The vision is a beautiful thing," says John Coequyt, director of climate issues for Greenpeace. "But there's no way they can deliver on the promise at this point. Whether they can in the future is clearly uncertain.
"There's a lot of concern in the industry that this is going to give the solar industry a black eye because a lot of people are going to sign up for something that will never be installed on their houses," Coequyt says.
Marc Plante of Milton, Massachusetts, is a believer. He was so impressed with Citizenrē's plan that he first signed up as a customer, and then graduated to sales agent.
"It's just such a good idea," Plante says. "I'm not a sales kind of person. My wife and I looked at this for our house and the idea is so sound it sells itself. Your electricity costs are locked for as long as your contract, and who ever heard of a power bill going down? And you're saving the planet and getting off the grid.
"Everyone I talk to wants one," he adds.
