CEO Scott Nguyen describes how solar is changing our relationship with energy
Back in 1996, I traveled to Vietnam for the very first time. I had escaped by boat as a toddler. And for someone that was raised on honey nut Cheerios and Houston Oilers football, the entire trip was an eye opening experience. But there was one incident that stood out in particular. My Aunt and Grandmother, they lived on the outskirts of Can Tho, a large metropolitan city along the Mekong Delta. And everyday while I was there, my Aunt, she would hop on her scooter and she’d go to the farmer’s market and she would buy the freshest of ingredients. I mean, I can still smell the fresh basil and cilantro.
But one morning, I woke up and things were a little bit different. It was monsoon season, and it had rained heavily that night. The rain had flooded the dirt roads and no one could actually make it to the market that morning. So with no breakfast, the best thing I could think of doing was to sit down, close my eyes and fall back asleep. But it kept on raining and raining all day. By dinner time, I was starving. But then my two cousins, age 10 and 12 at the time, they ran out into the yard. And in less than half an hour, they came back with two buckets full of frogs, frogs about half the size of your hand. Now I won’t say that I enjoyed dinner so much that night, and I can’t say I had more than a couple of bites. But the reason I remember this day so well, and the reason I bring it up here today, is because there was one single reason we were in such a predicament. My grandmother’s house didn’t have electricity. And that meant they didn’t have a refrigerator and all the conveniences that comes with one. What I loved about those daily trips to the market, the freshness of the ingredients, well it turns out it wasn’t done out of personal preference or any local foodie movement but actually done out of necessity.
And so that day, I learned a very important lesson. Energy is vital. From powering the refrigerator that we needed that day to the energy now powering all the smartphones in the world. Energy is what powers the nightlight that comforts our kids to sleep. And it is energy that holds back the dark. Without it, we have no modern day civilization.
But if energy is so important, how much attention do we actually pay it? Let me ask you guys a question. By a show of hands, how many of you have thought about energy, directly about energy, in the past day? OK, How about in the past month?
Well it turns out the rest of you guys are not alone. A study in 2016 by Accenture found that Americans, on average, think about energy for less than eight minutes a year. That’s right, eight minutes a year. And so if energy is so vital, why do we seem to take it for granted? Well I believe the answer lies with human nature. And human nature is all about relationships. Our relationship with the things that we use, the activities that we do, and the people we engage with. With energy, our relationship is virtually non-existent. We’ve simply been consumers of what energy makes possible with little to no awareness of the source of that energy. And it’s pretty easy to be oblivious to that. I mean our traditional energy infrastructure has put that original energy source far, far away from us.
For example, oil and gas production can come from remote platforms located hundreds of miles from shore. Electricity generated from coal and gas fired power plants generally must travel for miles and miles on high voltage transmission lines to eventually reach your home.
But that was the traditional energy infrastructure. Today, with the urgency of climate change and a global population reaching 9 billion by 2050, we are now in the midst of an energy transformation. A transformation that is being lead by solar. For the past two years, there was more solar power built than new coal, gas, and nuclear power plants combined! Now some cynics might say, “so what? It’s just another source of electricity.” And even some supporters might say, “solar is great. It’s a clean source of electricity.”
But today, I am taking it one step further. I am claiming solar is a gamechanger. And the reason I make this claim is because solar has one key characteristic that is different from all our traditional energy sources: solar puts power generation back in people’s hands, back in their control, and that makes all the difference.
About 1 million years ago, our ancestors were actually at a similar turning point. They had somehow figured out how to create and control another form of energy: fire. And it was this control of fire, and their direct relationship with it, that was a turning point in human evolution. It provided a means to eat cooked meat, increasing their metabolic intake to fuel their hunts and grow their brains. It provided warmth, allowing our ancestors to survive colder temperatures and expand across the globe. It provided light and became a gathering spot that increased social interactions and some say was the catalyst for the development of language. The key here is that humans were able to create their own fires and use it when they wanted and how they wanted it to not only have a profound impact on their daily lives but also on the direction of civilization.
Solar power can be our modern day fire. Prices for solar have fallen dramatically in the past 5 years. And people from all incomes we can now affordably install solar on their own homes. People are doing it here in Texas, up in New York, even in Alaska! And every single one of them is now able to produce their own power and consume their own power. It’s like each of us can have our own personal power plant, providing us a direct relationship with energy and a sense of control that we have not had with our traditional energy infrastructure. Like fire, this control appeals to our inherent desire for autonomy, our desire for relationships.
Case in point, have you have ever talked with someone that has installed solar on their home? They love it. They’ll talk about it every opportunity they get. They’ll even check their solar monitoring app a few times every day. But it is true that there’s this magical emotional attachment with solar. So much so that generally when you see photos of a solar powered home, let’s say on Facebook, it’s a photo of the family standing in front of their homes. Smiling, happy, proud. No one ever posts photos of themselves standing in front of an oil and gas well or even a coal fired power plant. And that’s because those things are so far removed. Solar on the other hand has so much more of a direct personal touch. And this strong personal touch is exactly what marketers strive for with consumer products. And believe it or not, solar is a consumer product. This is an extremely important point. Because consumers are directly purchasing solar, the rate of solar adoption is now governed by the social behavior of consumers with all their whims and all their irrational behaviors.
Now that fact might give you pause. You might be thinking “Woah. Relying on people, especially other people? That doesn’t bode well.” Well you would be wrong. The consumerization of solar has actually been a big plus! In the industry, there’s a term called “The Neighborhood Effect.” It’s based on research by Professor Varun Rai here at UT-Austin and Professor Kenneth Gillingham of Yale. And what they found was that if someone in your neighborhood had solar, maybe you’ve talked to them or maybe you just simply saw panels on their house as you drove by, then you would be 5 times more likely to go solar than someone who lived in a neighborhood without a solar home. What this implies is that solar is contagious. Furthermore, the purchase of solar is not always about the financial return, the payback period or the ROI. Many times, it’s just an emotional purchase. Sometimes it’s about fulfilling that internal desire for that product. And sometimes it’s about keeping up with the Jones. And the implications of this are huge!
For example, the amount of solar that was adopted between 2006 and 2016 exceed the EIA’s 2006 forecast by over 500%. They underestimated by 500%. This is the power of consumerization. Now this direct relationship with solar gives us another opportunity. It gives us the opportunity to build energy awareness. So let me take a step back and ask you another question. By a show of hands, how many of you have heard the term kilowatthour? Okay. How many understand what a kilowatthour is? Where we currently are in energy actually reminds me of the local food movement. Twenty years ago or so, most of us didn’t know where our food came from. What organic meant. We didn’t think about industrial feed-lots. Hell, I loved happy meals. But as more information about how we produce food became available, we became more aware consumers. We started wanting better foods. We wanted heirloom tomatoes, or pasture raised eggs, or hyper-local farm to table restaurants.
With solar, we can do the same with energy. By having our own systems, we start to understand what we produce, what we consume, and how we produce and consume that energy.
Let’s take my kids for example. At my house, I have this app on my phone where I can see in real-time how much energy my solar system is producing and how much energy my home is using. And every once in awhile, if you come to the house, you’ll find my kids running with the phone opened up to this monitoring app, and what they’re trying to do is use as little energy in the home as possible. They’ll turn off all the lights, the AC, and even once they asked me if they could turn off the refrigerator. That gave me visions of that time in Vietnam, and eating frogs. And I told them, “No. No. That’s good enough.”
And right now, we’re only at the beginning of this energy transformation. And what we’re already seeing is that solar can be so much more than a simple substitute of the old power plant. Take for example Foundation Communities. They’re an affordable housing non-profit based here in Austin. They recognize that affordable housing isn’t just about the rent but it’s also about the fact that over 5 million Texans right now have difficulty paying their energy bills, These families spend up to 30% of their income on energy compared to only 4% on average statewide. And so Foundation Communities said hey we’re going to install solar on all of our apartment complexes.
This is a photo of the Homestead Oaks affordable housing complex in Austin built in 2016. 140 families live there, and solar is lowering their electricity bill for all 140 of them. They can use that savings on other necessities, from books to groceries to medicine. And not only that, imagine the relationship that is being cultivated between solar and those families, especially the children that are growing up there.
Now solar’s reach doesn’t stop there. Everytime I think about how the energy landscape is changing, I think about that day back in Vietnam. A day where we couldn’t go to the market. The day where frogs were served for dinner. And all because we didn’t have electricity. That was over 22 years. Unfortunately, there are villages and communities that face that same problem even today. Over 1 billion people currently lack access to electricity. And given the high capital cost of building out the old energy infrastructure, for most of these people, a microgrid powered by solar is actually the best solution. Solar will be their 1st energy touch, and one that will have a profound, transformative impact on their lives.
As you can see, solar is more than just electricity. But can it be like fire? Can it have the same impact on us as fire did for our ancestors? I say that it can, but I’m going to also say that it must. Solar really holds the key to solving one of the greatest challenges facing humanity: Climate Change. And combating climate change requires scale. Yet, despite all the positive things you’ve heard about solar, right now, only 1% of homes in the US have solar. Therefore, to achieve the scale that we need in the time frame we need to combat climate change, we must leverage the power of our relationship with energy that comes inherent with solar. We need to combine the power of consumerization with the virality of social networks to drive a growth in solar that is akin to how Facebook achieved over 2 billion users in just 15 years. And we need to use these personal anecdotes and harness our collective energy awareness to overcome the abstract arguments that currently plague climate change debates.
So I leave you here today with a call to action, especially all the students in the audience.
What can you do to cultivate the bond between people and the energy that powers their lives?