California start-up One Block Off the Grid aims to get customers group deals on solar energy. Can they get enough people to sign up?
NEW YORK (CNNMoney) -- In an office building in downtown San Francisco, 42 people are trying to sell solar power using a model previously used mostly for things like restaurant deals or haircuts.
One Block Off the Grid, a start-up company run by a 32-year old former online gaming entrepreneur, is hoping the power of online group deals can do for solar what it's done for the service industry. Call it the Groupon of solar power.
"The idea was to put this online and deliver it to thousands of people at a time," said Dave Llorens, who after running a company that made gaming software spent time working as a solar panel salesman before starting One Block. "No one wants to have a salesman in their living room, they just want the numbers," said Llorens.
The question is: will customers sign up online for expensive and sometimes complicated items?
The concept works like this: One Block finds locations nationwide where there are contractors that install solar power systems. These are usually in places were there are generous subsidies for solar power. They then screen the contractors, and see if they'll offer a discount if One Block can deliver a large enough group of customers.
Once the contractor agrees, the deal is posted on One Block's web site. Potential customers then sign up to have the contractor come over and offer an estimate. If enough people agree buy the panels, the deal "tips," meaning it takes place. The discount is usually in the range of 15%, plus a $500 rebate.
One Block has done dozens of these deals in locations across the country. Earlier this week, the company launched its first-ever nationwide deal.
As part of the campaign, One Block put together a map showing all the counties in the United States where they have signed up a contractor willing to offer a deal. They are currently running deals in about a third of the nation's 3,000-plus counties.
The map also has a handy online calculator where people can type in their address, plug in their monthly electric bill and a few other pieces of information, and see how long the payback period is for their house.
Llorens said they are typically only offering deals where the payback period is less than 10 years. If the payback period is longer than that, the map provides homeowners with contact information to what lawmakers in the area should be prodded to push for more government support of solar power.
The differences in support for solar between localities is striking.
For my apartment in New York City, which runs through about $50 a month in electricity, solar certainly makes sense.
After all the various federal, state, local and One Block discounts, the whole system would cost me $1,500, according to the calculator. My electric bill would be cut in half, so it would take 5 years to pay back the investment. Over 20 years, I save $9,000.
For my brother and his wife's house in Maine, it's a different story. Largely thanks to a lack of subsidies, One Block says it would cost them nearly $30,000 to put in a solar system.
Even if that dropped his electric bill to $50 from $150, they're still under water after 15 years.
"Contact your state leaders and let them know you want stronger clean energy policy in your state," says the One Block site, before listing the emails and phone numbers for various Maine politicians.
The company: Llorens started One Block in 2008 with $1,000 of his own cash. The firm has been relying on angel investors and venture capital money since then, including cash from New Enterprise Associates. NEA also backed Groupon, the online daily deals site the recently filed to raise $750 million in an IPO.
Llorens hopes to take One Block beyond solar panels and become a deals site for all big home eco items -- everything from energy retrofits to electric cars.
But he's got his work cut out for him.
With solar panels, he's competing with big one-stop-solar shops like SunRun and SolarCity that offer leasing programs that reduce or eliminate the hefty upfront costs for solar. Plus, those firms take care of the complicated paperwork associated with claiming the various tax credits.
With One Block, depending on who the contractor is, that responsibility could rest with the homeowner.
Llorens said he's also moving toward the leasing model. He said that working with a local contractor helps support local businesses, a benefit some of the larger solar companies don't offer.
Another challenge is being able to offer a big enough discount to entice consumers and contractors to his model.
"The model is powerful, it allows for national discounts," said Jessie Pichel, head of clean energy research at the investment bank Jefferies & Co. "But I'm not sure he can aggregate enough demand."
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