Fundamentals of Management, 8th ed

134

Part 2: Planning

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SUSTAINABILITY MATTERS

A New Model for Going Green

Darin Budwig, a registered nurse in Glendale, Cali-

fornia, wanted to do the green thing by going solar.

Price, however, was a problem: “I wanted to do

the right thing for the environment,” says Budwig,

“but I really had to ask whether it was worth tak-

ing on $30,000 in debt.” According to Lyndon Rive,

CEO of SolarCity, a provider of solar-energy

systems located in Foster City, California, the

average cost is actually closer to $20,000, but he

understands Budwig’s reservations. “Even those

who really want to make an environmental change,”

admits Rive, “can’t part with $20,000…. The solution

is just too costly for them.”

That’s why Rive revamped his business model in

order to make solar panels affordable for a much

broader range of environmentally conscious consu-

mers. He realized that he could put solar panels on

people’s roofs in much the same way that automakers

put more expensive vehicles in their garages: by leas-

ing them rather than selling them outright. So instead

of borrowing $20,000, Darin Budwig only had to put

$1,000 down and agree to lease a SolarCity system

for 15 years. At a cost of $73 a month, Budwig figured

to save about $95 a month and recoup his $1,000 in

less than a year. Too good to be true? “We hear that a

lot,” says Rive. “But we do save you money, and it

doesn’t cost you a cent to go solar.” With leasing, he

adds, “we can essentially make it so that everybody

can now afford clean power.”

At the same time, however, Rive understands

that price isn’t the only consideration for potential

customers like Darin Budwig. “Widespread adop-

tion,” he admits, “will come if you can take away

the complexity and hassle of installing solar.”

SolarCity thus made things easier for Budwig by

lining up building permits, financing, and tax

breaks. The company also streamlined costs by

using innovative computer automation to custom-

design Budwig’s installation, which was based on

satellite images of his rooftop. SolarCity even com-

piled utility-rate data to estimate Budwig’s return

on his solar investment.

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Surging energy prices, increased consumer awareness, and the availability of

new technologies have combined to lead many people to explore alternative

energy sources, including solar power. Unfortunately, many of these individuals

are often discouraged when they learn how much solar power equipment actually

costs. SolarCity, though, has built a lucrative business by leasing solar panels to

homeowners. This installer, for example, is putting leased solar panels on the roof

of a home in California.

(continued)