Solar startup to lease residential rooftops

It may sound too good to be true, but it's really just creative mathematics for Pure Energies Inc.

The company knows that, under the province's new feed-in-tariff program, for every residential solar system it puts on a rooftop it can earn 80.2 cents per kilowatt-hour for the electricity that's produced and sold into the provincial power grid.

Over a 20-year contract with the province, it also knows it can get away with paying homeowners to lease out the rooftops and still walk away with a decent profit by the end of the contract.

"We're going to install over 1,000 systems in 2010 based on agreements in the pipeline right now," said Zbigniew Barwicz, president and chief executive of Pure Energies.

The company, founded last year after the Green Energy and Green Economy Act was passed into law, has designed its business model around new homeowners in Ontario and is targeting homebuilders as potential marketing partners.

Its first partner is Marshall Homes, which is initially offering the solar option to several of its new homes being constructed at its Kingsfield subdivision in Oshawa.

A 10-kilowatt demonstration system is being installed to showcase the option, but Barwicz said system sizes range from 3 to 10 kilowatts. A homebuyer with a roof large enough to accommodate a 10-kilowatt system would be paid $1,200 a year, with all related insurance costs covered.

At the end of the 20-year contract the system, which would still be operational for many years after, would be turned over to the homeowner for $1. If the home is sold, the new owner takes over the contract.

Marshall Homes gets $500 on each new home to pre-prep the roof for wiring, but its main interest in the partnership is to offer consumers a green option.

"Basically it's a way for us to help get solar out to the mainstream," said Craig Marshall, president and founder of Marshall Homes, which has also promoted the use of solar thermal and geothermal technology for new homes. "There are a lot of other builders interested in this concept, so I think you're going to see some uptake on this."

The general business model isn't new. Several solar companies have emerged in Ontario in recent months offering commercial building owners annual rents over 20 years for the right to install solar power systems on their rooftops.

But Stephen Dupuis, president of the Building Industry and Land Development Association, said Pure Energies appears to be the first company offering a similar deal to the residential market.

Barwicz said the systems will meet Ontario's 40-per-cent local content rule this year and in 2011 when it rises to 60 per cent, even though Pure Energies' solar modules will be made by Chinese manufacturer Suntech Power Holdings Co. Ltd.

That's because the power inverters will be supplied by German-based SMA Solar Technology AG, which announced it was establishing a subsidiary in Ontario that would manufacture 500 megawatts of inverters annually for the Canadian market.

SMA, in a release, said that up to 200 jobs would be created and that the production facility would begin operation in the fourth quarter of 2010.

The location of the facility has not been determined.

"Ontario's support program is a guiding light," said SMA Solar chief executive Gunther Cramer, adding that it has "potential in inspiring other Canadian provinces to follow suit."