You've Been Warmed

The Evolution of Residential Solar w/ Mike Kirby, President of Lumina Solar

Episode Summary

Mike Kirby (co-founder of Lumina Solar) joins the pod to discuss the evolution of residential solar throughout the past 12 years. We discuss where we are in the adoption curve of solar technology for homes, how batteries have evolved over time & what regulations have specifically contributed to the proliferation of the technology.

Episode Notes

This episode features Mike Kirby - President & Co-Founder of Lumina Solar - a solar energy provider based in Baltimore, Maryland. Lumina Solar facilitates the installment of solar panels for residential buildings and have been in operation for nearly 2 years.

With a long career in the solar industry spanning 11 years, Mike was the perfect guest to get into the nitty gritty details of installing solar panels in homes. I was super curious and had a ton of questions such as - how easy is it to install these solutions? How much do they cost? What kind of financing options are there? What cost efficiencies and savings do customers get when going solar?

I asked all of these and more. Throughout the episode, Mike had some great insights as to what policies which started in California specifically jumpstarted the adoption of residential solar, how the industry has matured and evolved over the past 11-12 years, how batteries come into play and where they are on the adoption curve.

All in all it's a fascinating conversation, one that is more micro in structure than what I've accustomed you with so far. However, if you ever wanted to know how solar panels for homes operate and what it takes for you to get them (especially in the US), then this is going to be an interesting one!


Lumina Solar Website -

Mike's LinkedIn -


2:54- his background and how he got into solar
11:09 - how the solar market has shifted in the past 10 years
15:14 - Policies that were implemented around Solar
18:48 - How they communicate differently depending on political views / customer interests
23:48 - How the process of installing solar works
31:14 - What happens if you overproduce electricity
35:15 - The role that batteries play
40:18 - Solar energy systems increasing the costs of homes

44:25 - Science vs Business vs Politics vs Society



Episode Transcription

Mike Kirby: (00:00)
So it's a really clean, really easy value proposition and it was the biggest driver and having the solar market explode in the early 2010 was because now you didn't need 30 grand. You just needed a good credit score and you could go solar, you could save a bunch of [inaudible].

YBW Intro: (00:18)
Ladies and gentlemen, you've been more. It's time to figure out the climate crisis with the top scientists, activists and entrepreneurs helping us get out of this mess. Now let's welcome your host. Did I? Gosh, in three two one

Dragos: (00:42)
Today's episode of youth been warmed features. Mike Kirby presenting co, founder of Lumina solar is solar energy provider based in Baltimore, Maryland. Lumina solar facilitates the installment of solar panels for residential buildings and they've been in operation for nearly two years with a long career in the solar industry spanning 11 years. Mike was the perfect guest to get into the nitty gritty details of installing solar panels in homes. I for one was super curious and had a ton of questions such as how easy is it to install the solutions, how much they cost, what kind of financing options are there? What cost efficiencies and savings to customers get when going solar. I asked all of these add more throughout the episode. Mike had some great insights as to what policies which started in California originally, specifically jumped, started the adoption of residential solar, how the industry has matured and evolved over the past 1112 years or how batteries come into play and where they are on the adoption curve. All in all, it's a fascinating conversation. One that is I would admit much more micro Instructure than whatever custom you with so far. However, if you ever wanted to know how solar panels for homes operate and what it takes for you to get them, especially if you're based in the U S then this is going to be an interesting one. All right, so let's welcome Mike on the podcast. Hey Mike, how are you doing today?

Mike Kirby: (02:09)
I'm doing well. Appreciate you. Appreciate you having me on.

Dragos: (02:13)
Yeah, thanks for taking the time. I was really curious to find out firsthand from someone who's basically worked in, in the solar industry for almost your entire career. I think I just kind of wanted to get all the details of, of how, you know, with home solar, how people come aware and become aware of it, how they install it, how, how things have shifted over the past 11 years and what you think the trends are moving forward. That's what I'm really curious about.

Mike Kirby: (02:43)
Yeah, no, I'm, I said that's where I've spent the majority of my career and they said, looking forward to really diving into the details with you today. So,

Dragos: (02:54)
Awesome. So how, yeah, just tell us like, how did, for who doesn't know about you, how did you get into renewables and solar in particular? Like was it a conscious decision or was it just the first place where we started working in? How did you stay? I think you mentioned it was, it's been on for 11 years, so just kind of tell us about our journey so far.

Mike Kirby: (03:16)
Yeah. So I I went to university of Delaware and, and graduated in 2009 and kind of my whole time in college I always expected to go to law school, you know, did relatively well in school always. That was kind of the track that I planned to plan to be on tour, took my El sets, did relatively well. But this is also kind of the time, 2007, 2008, 2009 when the recession hit. And I got starting to get a little bit of cold feet about taking on another hundred, $250,000 in debt to go to law school when I didn't necessarily want to be a lawyer. That just seemed like a reasonable path to get a law degree and then to kind of take it from there. So kind of the recession you know, had me start to look at other things and I was trying to look at growing industries and I'd studied or am I majored in political science, so kind of study a lot of the middle East and, and oil and energy G and so started to kind of get attracted to domestic energy production and solar was something that was just kind of starting to take off at that point.

Mike Kirby: (04:35)
And so I sort of look at looking at looking at it and kind of did definitely made the conscious decision that Hey, this is something that I at least want to get into now. You know, 10 years later is probably a different story as far as my thought process. So I started applying to a bunch of solar companies senior year of college. Got one job offer for an $8 an hour internship and accepted that offer moved to to Southern Delaware and stayed there for, for three years. You know, learned a ton. But that, that's really how I got into it. It was a an alternative to law school. Wow.

Dragos: (05:20)
And then how did you, so you transitioned from just working for a company to I think, what, like five years ago you found, you found that the Lumina solar was it?

Mike Kirby: (05:29)
No. So Illumina, luminous solar we founded that 20 months ago. So April 18 so kind of the brief overview of kind of my, my time in the industry my first three years I spent four spent with a relatively small company in Southern Delaware. Just starting out. The only way that people could go solar was paying cash. So you need to kind of a wealthier customer base, you, the costs were a lot higher. And then one of the advantages though of, of getting in at that time was you learned everything or you learn as much as you could about all these different facets of the industry, much more of kind of a startup environment. So you've got to touch everything. You know, and, and just, yeah, learned a ton those, those first three years. But then in 2012 made the transition, wanted to move back to the Baltimore area where my family's from.

Mike Kirby: (06:30)
And so I moved back and started working for a much larger kind of startup type company. Astrum solar in, in October, 2012. And they were kind of you know, they had outside capital, they had several offices up and down the East coast and it was at the time a a top 10 installer nationally. And it was, it was headquartered in Baltimore, which was really attractive cause I got to meet a ton of different people work, work in there. But spent five and a half years there did really well and outside sales my first couple, and then transitioned to a regional manager a couple of years later. And then kind of one of the other things that, that was helpful about that experience is Astra was actually acquired by a company direct energy in the middle of 2014. The right energy is a huge energy supplier in the States.

Mike Kirby: (07:33)
They're owned by Centrica which is basically Britain's the UK is natural gas company. So it's just this enormous, enormous energy company that wanted to get into residential solar in the States. So that kind of experience of going through an acquisition, seeing what it's like to merge billion dollar plus company with a company that has a couple of hundred employees. It was really interesting and learned a lot of positive and some of the challenges with that. But you know, kind of that happened in 2014, stayed on through the middle of 2017 and in the middle of 2017 solar. So a lot of challenges and a lot of these larger companies had kind of built their, their business models on what kind of growth at all costs and they forgot to make money along the way. And, and there was kind of a downturn in the solar market that was relatively, you know, lasts about a year.

Mike Kirby: (08:37)
So you saw different companies kind of getting out of the market or are shrinking for a short period of time. Direct energy at that point decided they wanted to get out of the residential solar business. They still do commercial. But they got out of the residential business. So a couple of hundred people got laid off myself included. And at that point it was kind of looking at [inaudible] where am I going to invest? My thirties yeah, I've been, been in this space for about eight years. I love the people that I worked with. I loved [inaudible] just solar and renewable energy in general and being part of that process of transitioning to a renewable economy. But it also wasn't really fun going through a way off like that. So spent, you know, some time after that you know, company took care of its employees, which was, you know, not a guarantee when something like that happens.

Mike Kirby: (09:37)
So had had a little bit of time to figure out a transition. Went and worked somewhere else for, you know, relatively brief period of time and then got together with some longterm colleagues people that had been working with since 2011, 2000, 12, 2000, 14, 15. So that was one thing, developed this really strong network of people that have been in solar for a long time and kind of things really came together in the spring of 2018 to make it really attractive for us to start our own company. Things lined up really, really, really well. And ultimately the biggest question, you know, we started asking me and my co founders at Lumina was is this something that we wanted to do? Like do we, do we actually want to start our own company? Cause it's you know, everything we'd read, it's a ton of work and that has proved true and we have to be prepared to do that.

Mike Kirby: (10:34)
And then the second piece was, you know, do we think we can do this successfully and do we think we can build a company that's going to last 10, 15, 20 years and yeah, make it work. And ultimately I came to the decision that yes, to both of those things. And you may made the decision to quit our jobs and four days later we had 'em incorporated and we're off to the races. Mmm. So that's kind of the brief story of kind of how, how I got into it and then you know, how we, how we started Illumina, you know, about 20 months ago.

Dragos: (11:09)
Awesome. So like what, what particular changes do you think happened in the market that kind of allowed you to focus on residential solar and start up your own company? Like how have the, I guess the cost of the technology, I mean, I know the cost of technology went down significantly. I guess solar panels are probably like smaller, easier to install. It's more affordable for people. Can you talk a bit about the benefits and kind of what changed in the industry? Yeah,

Mike Kirby: (11:38)
I mean, there's a, a variety of, of different things. First the, the market is just a lot more mature today than it was five or 10 years ago. No. Previously, and depending on the marketing, it can be a little bit different, but the only way somebody go solar is, you know, they pay cash, so they need $30,000, you know, that's the average system price. They, you know, pay cash for it. They get some incentives back that give it a nice payback period. But historically you've had to pay cash to do it, which is yeah. Mmm. It can be challenging or problematic for, for, you know, a lot of people. So the first thing that really alleviated that was in the early 2000 tens and probably 2008, 2009 in California, the solar lease or power purchase agreement got introduced. And so with this option, people can install solar system.

Mike Kirby: (12:34)
It costs them $0 million out of pocket. Maryland today you're going to save anywhere from 20 to 30% on your energy bill. You don't have to worry about the maintenance. Anything like that for 25 years, you just know that you're, you're buying the power or you're leasing the equipment depending on the exact structure. But those savings at the system is going to generate, is going to be, yeah, 20, 30% less than what you would pay if you just stuck with the standard quo. Plus you're getting clean power. So it's a really clean, really easy value proposition and it was the biggest driver. And having the solar market explode in the early 2010 it was because now you didn't need 30 grand. You just needed a good credit score and you could go solar, you could save a bunch of money today.

Mike Kirby: (13:28)
It's really interesting and appealing because there's, there's even more options available. So we still have people still pay cash. People still do that power purchase agreement or lease that I just described. And then kind of a hybrid that's really popular now is, is people will finance the system. So there's a lot of solar specific lenders out there where people can get some of the benefits of ownership without the upfront capital expense. And so I kind of describe it as an example. If your electric bill was $100 with a lease, you know, now your electric bill might be $80 and it's clean power. So your solar, your solar payments, $80, so you're saving about 20% clean, easy with alone. Your electric goal was a hundred after the system's installed. Maybe your electric bill is 95 or your liter loan payment is 95, so you're saving a little bit of money, but that loan payment might only be a 12 year long.

Mike Kirby: (14:32)
So where's the leases a longer term? So you're going to save less money in the short term with the loan, but you're going to save a little bit more of the life of the system with the PPA or the lease, you're going to save more upfront, but you'll save a little bit less in the long run. So again, there's a variety of different flavors that people can, can look at it. Our company, we're agnostic as far as which option the customer chooses. You know, we're pretty fortunate. We have a healthy product mix. We are, we're about a third, a third, a third. But it doesn't matter to us. The idea is like every option we have is better than buying dirty power from the utility. And it's just a matter of finding the right fit.

Dragos: (15:14)
Super interesting because I've been, I've been reading a lot cause I always ask myself the question is something that I always ask my guests as to how much, you know, the cost of not technology goes down and that leads to adoption or there are policies that are put in place to actually help it. And I've read journal articles, journal articles done which we're seeing that California and Germany for example, are two areas that through policy and encouraging the adoption of solar, they actually managed to push the technology much faster than it would have normally. And this sounds like something that you're describing with a specific policy that made a lot of people installed solar and I think California recently introduced something, or not recently, but in 2020, every new home that is being built in California needs to have solar panels.

Mike Kirby: (16:07)
That is exactly right. So yeah, and that's a very interesting development over the next 10 years. It's, it's one of the potential kind of home run opportunities to really be able to deploy a lot of solar over the next decade independent of kind of public policy related to incentives. But yeah, California Pesa law, we're starting in 2020. All new home builds have to Como solar. There's some challenges around that as far as like who pays for it and things like that. And so those details have been worked out the last few years. So most of those systems are actually gonna be PPA or lease systems. And that way the solar contract gets signed right when the mortgage is signed. The home builder is not worried about, you know, throwing margin on top of a $30,000 purchase. There's nothing like that. So it's just a pure savings vehicle for the customer.

Mike Kirby: (17:05)
It doesn't impact the transition for the home transaction for the home builder. So that's how that's going to get executed in a really kind of sustainable way. But so that, that passed a couple of years ago. Massachusetts is currently debating very similar legislation. So that's obviously a positive development and there one of the leaders leading States at least in kind of enacting policies that are pro renewables. And then actually recently, and this is something that we're particularly excited about. Montgomery County in Maryland just outside of DC. The County itself is debating a similar piece of legislation at the County level. So again, a lot of things have to happen over the next few years for this type of legislation to kind of have widespread impact. But the California law is a tremendous there's going to have a tremendous impact. Just be by the sheer, you know, size of the state. And you know, we're kind of hoping you start to see that trickle down. Just to again, really reduced the soft costs for, for installers and, and as a way to, again, just deploy more solar installations on a faster timeline.

Dragos: (18:28)
Yeah. So that's the biggest barrier, right? The cost, the initial upfront costs that if a regular person wanted to, to install the solar panels and they didn't have access to this kind of financing or they didn't have the policies in place, it would be a really big hurdle. And everyone would just ask like, why the hell would I do it, basically.

Mike Kirby: (18:46)
Yeah, exactly.

Dragos: (18:48)
Gotcha. Okay. So how do, how does it usually work with, when people approach you guys to, to install solar? What kind of people do you get? Do you get people, are we, are we in? I'm in a part of the product life cycle where we don't have the early adopters anymore and there's more people that are coming in. It's kind of becoming mainstream. Like what are the kinds of customers that you get?

Mike Kirby: (19:12)
Yeah, so we, yeah. Customers all over the map. So we have, you know, [inaudible] people that are like really conservative customers and they love solar because they love energy independence and they want to get away from the utility. People that are more kind of liberal liberal minded or progressive, they love solar because the environmental benefits and all these other things. So there's so many different positives. So it, it kind of is really attractive to people across the political spectrum in that regard. And then now, you know, when we say we, you know what, people that go solar that are 25 years old and just bought their first first home and are really excited because they want to save money and they're really doing it for the environmental aspect as well. We have people that are, you know, yeah, in the retirement age and they're looking for, you know, they're on a fixed income and they're looking for ways to shave expenses off their bill.

Mike Kirby: (20:15)
And so is a great option for that. We have people that are kind of mid career and just moved into the home that they're going to be in for the next 15 years, have a couple of kids and they're just, they're looking for ways to save money. You know, people that are farmers, people that are, you know, commute to the city. It's just, yeah, anyone that owns a home is a candidate. Obviously, you know, making sure that, that, that the site works, you know, from a shade perspective and things like that. But there's not a demographic certainly in the mid Atlantic and I would say most of the U S where it's like, Hey, this person has this demographic, they're probably not a good fit. Like theirs. Just so many ways that solar can be attractive to different people. And at the end of the day, the financials have to make sense and the financials of solar are better than renting electricity from the utility for the next 25 years, which is essentially what people do. It's just a rent payment to the utility and it's also dirty power.

Dragos: (21:21)
Do you communicate to these people differently? Cause I know you mentioned conservatives and liberals and liberals or progressives are more, I guess if you speak to them about the fact that it's clean energy, it's much more appealing to them and to conservatives. I guess if you emphasize the, the lack of dependence on the grid and also the cost savings, I guess that's really important to them. Yeah. So

Mike Kirby: (21:45)
From a company and a branding standpoint, I mean we have a pretty you know, we, we go to market, you know, trying to yup. Be attractive to a variety of different people. However, you know, once somebody initiates interest you know, they'll, they'll get qualified to make sure that, you know, they're homeless suitable. They'll ask me a couple of questions with, with our inside sales team and then they'll, they'll meet with a soar consultant. Typically that consultant would drive out to the person's home. The first thing that that the consultant is going to do is have a discovery period with the prospect. Yeah. Ask a variety of questions, figure out, you know, what, why they're interested in solar in general. And just dive into that as much as possible. And typically that's when you're able to find out, Hey, what are the points that we're going to emphasize during this conversation?

Mike Kirby: (22:47)
And again, the end result is going to be the same. The outline of the conversation is going to be the same, but you know, each conversation is going to be customized. You know, if somebody is really focused on energy independence and ROI, you're not going to talk about Mmm. The environmental attributes as much. You might mention it and discuss it lightly, but it's not going to be, you know, you're not going to be banging bang on that point. I'll pitch somebody who's very environmentally conscious, probably lightly touched in the ROI and it's all about, you know, the other things that are more important about the project was that person. So that's definitely something that it takes a higher skilled sales rep or consultant to do, to be able to kind of peel away those layers at the beginning. But it ultimately makes for a better customer experience. And we think it ultimately leads to us being able to install more solar by kind of being able to again, tailor each conversation to the individual.

Dragos: (23:48)
Makes sense. So, okay, the representative goes there, they have the discovery phase. What follows after? So you guys, I guess you evaluate the house because you can't just solve, stop solar anywhere. Right? And what falls after?

Mike Kirby: (24:05)
Yeah, no. So I mean the general outline of the conversation when somebody reviewing it and then if you want, are you looking for like the process when somebody kind of makes a decision to move forward?

Dragos: (24:15)
Yeah, yeah. I'm, I'm genuinely curious to see like how each step goes when you want to install solar in your house.

Mike Kirby: (24:22)
So the way that our process works for, for somebody to review. So again, they'll have kind of that question and answer, feared fit answer period. Figure out like what product cash loan, PPA the consultant is going to present. But it's typically, you know, relatively easy conversation. You know, they have that upfront discovery period. They'll do an electric bill review. So the sales rep will take a look at the person's consumption, what their utility rate is, explain to the homeowner how that works so they have an understanding of it. Because ultimately that's our biggest competitor is utility and the customer, you know, not everyone knows exactly how an electric bill works. So that's kind of the first step. Then we run through the system design. We use Aurora solar. It's the best designed tool out there on the market and and they have these really nice 3d designs.

Mike Kirby: (25:22)
Customer can see it, we can play around with the system in a variety of ways, live and in the home. But so that's kind of the, the next step is running through the system design and how it works. The next kind of part of the process is reviewing the different options. So you'll go through the economics of a cash deal and a loan deal or you might just do kind of what a PPA works if that's the type of customer that or prospect that, that we're meeting with. And then after that you kind of run through the process, all the warranties. What does this actually, you know, what's going to happen from the time the process gets started through the system being turned on and how does that work? And then at that point, you know, typically, you know, a lot of people make a decision the same day.

Mike Kirby: (26:09)
Other people you know, they'll don't make the decision over over a week or two weeks. So it can kind of vary. But that's kind of at least the overview, kind of the information that people are reviewing during that decision making process. As far as what happens once somebody decides to go solar. This can vary slightly from state to state, but the general process is, is the same. So if somebody moves forward with us today there's some paperwork they have to take care of with the consultant. If it's a cash deal, you know, they might need to make a deposit if it's a loan or PPA or they'll have to get approved for it, for credit. But all that, you know, it's about a 10, 15 minute process, you know, take care of the paperwork at that point. So we're consultant, we'll get everything processed internally.

Mike Kirby: (27:03)
And that project will get handed off to our operations team and the first step is to schedule a site survey. So we'll have a technician come out at some point over the next week get up on the roof to verify the remote design that we've done and make sure that there wasn't missing from from the online maps that we're viewing to do the design. There are also gathering the electrical data for engineering and they're gathering the structural data for structural engineering to make sure that, that the roof can support the weight. They bring. That information back. Project gets handed off to engineering for the final design and review. Once that engineering is completed the sales rep and the customer approve it just to again, make sure that nothing had to change. That was outside of the expectations of the customer.

Mike Kirby: (27:59)
And then once that's approved, which is again, typically about three weeks after the contract is signed we submit the permit application to the County and we submit the interconnection application to utility so we can get approval to install the system. And if there's an HOA or a homeowners association we're doing that application at that time as well. The timelines for permits, interconnection and HOA can all vary. We have, you know, some utilities, they'll take a week to approve the interconnection. Some counties will take, you know, one day to approve the permit. Other counties take a month or 40 days. Some utilities, you know, they'll take 30 days to prove the interconnection. So we know all that information upfront with the County that we're dealing with. So we'll set the expectation appropriately with the customer. And again, if it's kind of one of those quicker counties, you know, we might get the installation completed 60 days after the, the contract is signed.

Mike Kirby: (29:04)
If it's one of the counties that takes a little bit longer, you know, might be 75 or 90 days from contract to install. But most of that work is being done by us. The customer is just kind of sitting back, you know, we'll update them once a week with the process. But there is a waiting period while we're waiting on approvals. And that's one thing that hopefully will change over the next decade is a standardization of kind of this part of the process. And if you actually in California, the average a system is installed in three and the reason for that is some areas in California have a really uniform process and so they get the engineering done and it's basically one day to get all the approvals. Maryland, a lot of the Northeast, they haven't kind of standardized it. So each County is different and that's why you can have these varying times.

Mike Kirby: (30:01)
Once we get to install Bay, depending on the system size it could be a one day install, could be a two day install. If it's a really large system, it might be a three day install, you know, but it's not a and a really challenging process for the homeowner. We're not out there for two weeks. You know, again, it's, most are typically one or two days. Once the system's installed we contact the County, they come out to inspect the system, make sure that we did all our work properly and give us a passing inspection. After that we submit that our final paperwork to the utility to get system turn on in Maryland. Utilities have 20 business days from that submission to come out, switch the meter to a net meter which allows electricity to flow both ways as opposed to just coming into the home. And so again, within 20 business days it'll come out and switch out that meter approve the site for system turn on and at that point the, the homework and flipped a switch and we're generating clean power. So

Dragos: (31:14)
My question would be in something that maybe I'm not, I'm not a hundred percent clear on. So let's say I install the solar panels, right, and I'm generating clean energy at that point. Like do, do these homes usually do they generate enough solar electricity to power the entire home and all their necessity if they provide, if they get extra during the day. I saw you install batteries as well. So I presume those batteries are capable enough to store enough energy for them to power the house at night or, and it's an end or can they then send, cause you mentioned the thing about the energy flowing both ways can then they send any excess energy back to the grid and make a profit off that or at least save some of their money.

Mike Kirby: (32:00)
Great question. Most of the States have relatively similar policies around this. There are some differences, but I'll kind of go over the most common way that it's done and pretty much how it's done in, in the Northeast the West coast as well. So you bring up a good point as to one of the things that had to happen, you know, 12 years ago for solar to be viable is if the system overproduced, you couldn't just lose that, that energy. By having it go out to the grid, there had to be some sort of compensation for it. Otherwise you really impact the economics in a negative way, certainly without batteries. And so the, the way that that works is, and the way that these laws are structured, these net metering laws is basically every day when it's sunny out, when it's cloudy, you know, source systems going to generate electricity, that electricity is going to flow into the home and that homeowner is going to be using that solar power in real time.

Mike Kirby: (33:03)
Okay. If at any moment the system is over-producing what is being used, the excess gets sent out onto the grid, the meter spins backwards and that homeowner receives the full retail value for those kilowatt hours. If at any point the system's under producing, which would be at night, it could be some point, sometimes during the day it would just draw the difference from the utility. And so it's just a seamless back and forth flow. Homeowner doesn't notice any impact on television, computers, lighting, refrigerator, it's all seamless. But where the impact will be felt is at the end of the month on the electric bill. And again, it doesn't matter when solar power was used, it doesn't matter when it was sent off. But the way that the bill is calculated now is let's say the homeowner used a hundred kilowatt hours this month and let's say the solar system generated 80 kilowatt hours now instead of the homeowner being built for a hundred, they're going to be built for 20 kilowatt hours.

Mike Kirby: (34:09)
The difference and again, it doesn't matter when they used it, when they produced it. At the same time, if you use a hundred kilowatt hours and the system generates 130 kilowatt hours, you have a zero utility bill that month and 30 kilowatt hours will carry forward at the retail rate. The audit analogy we used to use like eight years ago, it was, it's like roll over minutes and you can just carry that excess production forward month after month after month. No one has rollover minutes anymore. But that's the concept and that's, you know, essentially what you're doing is you're, you're treating the grid like 100% efficient battery from an economic perspective. So it just again, flows back and forth. There's no concern about am I gonna have power at night. What if the system doesn't cover all my needs? None of that really has a significant impact because of the systems grid tied. And so it's working together. And that's what helps the ability.

Dragos: (35:15)
Yeah, that includes the battery, right? So like if it overlaps,

Mike Kirby: (35:20)
That does not include a battery. No.

Dragos: (35:22)
So how, when does the battery, if the battery comes into play, then any excess energy can be stored in the battery.

Mike Kirby: (35:30)
So there's two. So the battery value proposition is very much market dependent today. So again, the, the situation I just described is no battery. You don't need a battery. And that has been really helpful because batteries are expensive. And so you're you know, the last tech decade, you're, you're shaving a major expense from kind of allowing industry to scale. Today batteries have finally gotten down to a cost point where they make a lot a lot more sense. And ultimately we're going to need storage to scale tremendously for the kind of the transition over noble economy to, to take, take it to the next step. That's where my question was coming from exactly that. So I'm in Maryland and a variety of other States. The functionality of a battery is backup power. So today if the grid goes down and you have a source system in Maryland, your source system will automatically shut off.

Mike Kirby: (36:42)
And the reason for that is if there's workers on the power lines down the street we don't want to be sending live feed out onto the grid. It's a very dangerous situation. So all these grid type systems are designed to automatically shut off if the grid goes down. It's a code issue. It's a safety issue. So that's kind of the front end of the question. But now again, people still want to have power when, when the grid is down. And so that's where batteries step in is, is they provide backup power. So now if somebody installs a power wall or a similar battery, the grid goes down the power wall automatically basically islands, the home off. The home gets power from the battery, the solar system, the sun's out can continually recharge the battery and that home can have power when, when the grid style.

Mike Kirby: (37:38)
So there's a ton of people right now that installed systems over the last 10 years that are interested in adding a battery. There's people now that are looking at solar for the first time and are interested in doing a battery with their system. And so the market is finally maturing and I kind of view storage today is very similar to where solar was in 2010. Just kind of at the beginning. You kind of get people that it's more of kind of, Hey, they want to be at the front end of technology. It's, it's typically a customer that that is that a little bit higher income level cause it isn't an additional expense. But this is kind of the first wave. And, and storage is a major part of our strategy over the next decade. And that's why we're kind of, you know, we've been piloting it for the, for the last year.

Mike Kirby: (38:27)
We expected triple battery deployments in 2020 and we want to go crazy and in 2021. Mmm. But that's, that's why most people go with storage today is for backup power. The second reason, and this is much more in California Hawaii, Australia and some other markets that have some, some different setups. One example is in California, people get charged different kilowatt hour rates based on when they use power. So somebody might get charged, you know, 20 cents a kilowatt hour at night. But during peak time, during the day, they might get charged 35 cents a kilowatt hour. And so in those markets the Powerwall has the ability to, during peak times, if the solar system isn't covering 100% of the usage, then that homeowner can draw the balance from the battery so that they're not paying peak rates to the utilities. So in addition to having that backup and storage capability batteries also have an economic value proposition in some of these markets. And it's purely just based on kind of Tommy use and some other things. For example, like whether net metering is allowed would be, you know, if you can't sell energy back to the grid at the retail rate, you're going to need a battery anyway, so, or you're going to want a battery. So there are a variety of different flavors for kind of how this can work. But again, other markets have the backup power and the economic value proposition. Most of the Northeast, I'm in Maryland today, it's just backup power.

Dragos: (40:18)
Makes complete sense. My, my probably my last question or the topic is how do, how do you think, or how do you see solar panels and batteries affecting housing prices? Do you think it makes the house more valuable or do you think that will become more of a trend in the future? 

Mike Kirby: (40:38)
So [inaudible] if a system is is leased or is a PPA there are arguments that it's going to increase the value of the home because this person is locked into, you know, a cheaper utility rate and, and PPA rates, that's all our companies offer. Don't necessarily go down over time because utility rates increase and so you can increase the rate of your lease and still have a better value proposition and make a little bit extra margin. But at the same time, the incentives have gone down as well over time. So we just, and went from a 30% federal tax credit to a 26% federal tax credit. So that plays into the economics. So Mmm, it is definitely, there are some people that are going to get an increase in home value with a lease or PPA, but it's not something that we really, no, just say, Hey, it's, you'll just transfer it over and we don't promise or make any indications that Hey, this is going to increase your value when a purchase her alone where the customer owns the system.

Mike Kirby: (41:44)
A little bit different story. You know Berkeley renewable energy lab they've done a ton of studies over the last five years. There's finally starting to be data. That's showing that you know, solar systems do increase the cost of, of homes and it's going to vary by market. California obviously a big one, but the mid Atlantic Northeast where there's a lot of solar it has again proven in a, in a purchase situation to increase the value of the home. Again, there's a couple of different figures you can look at. But I, I kinda, I kinda like to look at it if I'm trying to value it, it's a combination of how old is the system, how much savings is this system going to generate over its remaining life? You have to systems 10 years old and it's gonna generate another $15,000 in savings.

Mike Kirby: (42:40)
I think like 15,000 is a reasonable starting point, or like how much the system's going to add in value because it's going to actually save that dollar for dollar. So there's a variety of different kind of methodologies that people use. But again, I, I think my personal position is cash or loan. We'll increase the value of the home and again, the amount I would never promise, but there's arguments we can make for, you know, whether it's 10, 20, 30, $40,000, a lot of factors go into it PPA or lease. Yeah, I wouldn't so Hey, it's definitely gonna do it, but it could for a variety of reasons. And then kind of the intangible part on this point is we're kind of shifting in demographics where we have a bunch of people that are between the age of 22 and 39 that are moving into home ownership slower than maybe previous generations.

Mike Kirby: (43:37)
Unfortunately. that demographic sees renewables, see solar as something that is really, really attractive independent of the financials. And so we're seeing a lot of that demographic want to pay for solar and want to have a home that has solar already because they kind of view it as awesome, this home has solar. That's one less project I have to do when I move in. Whereas that mentality, yeah, it hasn't occurred with other demographics but the market hasn't been around that long for that shift to take place. But that's some of their kind of intangible trends that we're starting to see. Again, just based on kind of when somebody grew up.

Dragos: (44:25)
Yeah, no, that makes sense. I mean, when asked the question, I kind of thought from that perspective cause I'm probably in that demographic and if I were to buy a house I'd be like, yeah, okay, cool. Has solar, that's something pretty cool. I'll pay, I'll pay more for that. Okay. So finally if we just zoom out of it, because we spoke about solar residential solar, I ask every guest to kind of step back and analyze the climate crisis that we're facing and all these four sectors that I think are all interrelated to basically rank them one to four depending on how important they think they are. Obviously some people rank them, some people just want to talk about their interdependence. It's absolutely fine with me. I know there's no textbook answers or anything like that, but what it shows more than anything is everybody's perspective.

Dragos: (45:16)
And I think it's very interesting to observe that. So the four areas are politics and policies. So we spoke a lot about that on this episode. Society. So stuff like activism, civil disobedience individual lifestyle changes businesses. So businesses emitting, having less submissions funding fossil fuels, lest having alternative transfer methods, stuff like that. And then finally, scientific research and innovation. So think about, you know, increase in efficiency and cost of solar and efficiency in cost of batteries, developing nuclear power for a base load energy source and all of that. So how do you see all these interrelate and rank them if you want to.

Mike Kirby: (46:04)
So they're all really important and it can all [inaudible] each one would come, can have the ability to be the most important factor in driving change and that, that would be almost like a lab and kind of the water's a lot more dynamic than that. I would say, I mean right now, based on our current situation in the U S business recently has been having the largest impact. Microsoft just made a commitment to eliminate all of their carbon that they've ever admitted since they founded the company. Blackrock has changed its investment thesis. There's a ton of Silicon Valley talent that is looking to get into climate as kind of their, their next step in their career. So there's this huge transition on the business side that's happening right now. It's something like I've never seen before in the last decade. And I think part of that reason is the failure of the current federal administration in the U S to take climate change seriously.

Mike Kirby: (47:24)
So it hasn't been kind of balanced. It's kind of been anti renewables like pro coal with obviously, you know, our current regime. And so businesses seem to have kind of felt that, you know, a lot of people, individuals are of taking a step back and saying, Hey, like I may not be a tree hugger, but it's probably better if we're not completely anti renewable energy. And so there's been this shift on the business side. And I think it's a nice step. Politics in general that is not going to impact whether this transition takes place, but politics has a tremendous ability to impact the speed of the transition. So I view it, you know, solar is going to be the largest noble energy source at some point in the next 30 years. Again, if politics is kind of the status quo that might, you know, rub up to that 30 year Mark if things happen politically that puts a price on carbon to cover the actual external costs.

Mike Kirby: (48:35)
Reduces fossil fuel subsidies, potentially pumps. Some incentives to move to renewables than public policy can speed the transition tremendously and that would probably make public policy like the number one factor in scaling. So it has the ability to manipulate the most. But again, if, if businesses take it seriously and that becomes a widespread phenomenon, then that could be the most important factor. Society and kind of activism. It's important, but I would say it's definitely not important as it doesn't have the reach that business at larger or politics has. It can kind of drive it and it can spur it, but it can't actually deploy. These types of put pressure. Yeah, it's, yeah. So it's, it's a it's complimentary and it has to be there in some way. Otherwise the other two things aren't, aren't going to be put to work.

Mike Kirby: (49:38)
But the other two things have, have the ability to really drive it. Scientific research and innovation. Definitely important. I'm a huge fan of nuclear energy. I think we you know, I look at what we're trying to do, which is again, scale the transition to renewable energy in the mid Atlantic. There's so many different things that have to happen and we're just like one piece of the puzzle in preventing catastrophic climate change. And nuclear is something that is, has the ability to have a tremendous impact over the next 50 years and a tremendous scale. And so I am for anything that is sustainable, that helps with energy efficiency. And that's ultimately, I'm going to put less carbon in the atmosphere and nuclear checks those boxes and building new nuclear is tremendously different than where it was 30, 40 years ago. So I just, again, it's a kind of an all out battle and I think that's a important piece of the portfolio of transitioning.

Mike Kirby: (50:54)
But in general, I think scientific research and innovation, like we have everything we need today. Obviously it needs to keep progressing, but no one is expecting, Hey, we're going to have this breakthrough in five years and all of a sudden the climate change, you know, climate fights going to be solved. That's not going to happen, but we, we have enough today to get it where it needs to go. And so again, I would say businesses, business and politics are definitely, you know, kind of tied for, for the first most important. And again, it depends on what's happening. Research and innovation, you know, again, that would be kind of number two where it can impact it in a variety of ways, but it's not we don't need a silver bullet. You know, we have the path, it's just a question of executing. And then society, again, important but more of a compliment to the other pieces.

Dragos: (51:56)
Makes a lot of sense. And I've, I've actually spoke to someone did an episode yesterday and they said something really similar about scientific research and innovation. He said something like, we have 80% of the technology that we need to make this transition anyway. We don't, I mean, obviously we would want things to be more efficient, but we actually have to implement stuff across. The other spectrums he was, he's, he was specializing in energy and he spoke a lot about how the biggest, biggest issue is with the transmission of renewable energy, especially across the States because you guys can produce most of your renewable energy in the middle of the country where not that many people live. And they live on the, on the coasts. So that's a big problem in the U S it's a big problem in even in places like Germany and so on. So you have to build all of infrastructure and that takes time and all that. Yeah, fascinating discussion. Thanks a lot for all the insights. I definitely learned a lot about solar and now I know what I need to do whenever there's a proper solar provider in Romania. I felt sick going to live here, which I don't think is the case right now, but probably we're going to get to that level at some point.

Dragos: (53:08)
So good man.

Mike Kirby: (53:09)
I really appreciate, appreciate the time and the conversation. So I said certainly feel free you know, shoot over. Any other questions, you know, we'd love to catch up again.

Dragos: (53:21)
Yeah, I'll, I'll definitely plug in your, your website and people can, can look at your services and if they're local, if anyone's listening from there, then they can install solar. They already know what they need to do. Awesome. I appreciate it. And we'll catch up soon. Cool. Take care, man. Did I go share again? Thank you so much for listening to this. You've been wormed episode. I really hope you enjoyed it as much as I did. Now you can find all the episodes on our website and it's www dot you've been both in audio and written forms so you can find the transcriptions on there. I'd love for you to reach out to me on Twitter and tell me what your favorite episode has been thus far, or if you have any feedback on the episode that you just listened to. My Twitter handle is at DRG Stephanie's school, so DRG coming from [inaudible], my first name, and then Stephanie ESCO, which is my last name. And finally, if you want to get notified when new episodes are out, subscribe to this podcast and consider dropping a review for us if you enjoy the content that's all for now. See you soon.