Vivint, one of the country’s biggest home alarm system companies, has for the past year or so been making moves in another booming business: third-party-financed residential solar. After all, it already has about 600,000 customers across the country using its home security and automation services, making the addition of a no-cost solar system a fairly simple add-on, as long as the customers are happy with the service to date.
The Provo, Utah-based company, which switched its name from APX in 2011 after a $565 million senior debt financing from previous equity investor Goldman Sachs, started its solar efforts in New Jersey and Massachusetts, where state incentives aligned with a large number of existing Vivint home security customers. In May it expanded to Hawaii, where high power prices help make the solar equation pay handsomely.
On Tuesday, Vivint announced its next market will be California, the state where pioneers of the business model, such as SolarCity, Sungevity and SunRun, have brought more than half of the residential rooftop solar in the state under the third-party ownership model. That’s some stiff competition -- although, as Tanguy Serra, president of Vivint Solar, said in an interview, there are millions of California homeowners that haven’t yet installed solar, making for a market with a lot of room for different players.
Vivint has lined up some hefty financial backers, including US Bancorp, which pledged a $75 million fund for the company’s solar business in March. In February, Kleiner Perkins and Google-backed startup Clean Power Finance announced it was working with Vivint as one of a number of partners it was using to pursue its own third-party solar financing plans.
“The funds provide the capital, but Vivint provides all the monitoring, the service quality, and the customer interactions,” Serra said. That’s an important relationship to nurture, given that Vivint is pledging to stick around over the 20-year life of the solar financing arrangement.
That customer interaction has led Vivint to plot some interesting linkages between its solar business and its home automation line, Serra said. For example, “Right now, we use the homeowners’ broadband to monitor the panels and the power produced,” he said. “Every month, we send the homeowners a bill for the amount of solar power they use … and we monitor in real-time to make sure the array is working.”
That setup runs on the same technology that Vivint now uses for its home security and automation systems, he said. Vivint connects to its home controller panel via GSM cellular, and thence to smart thermostats, lighting control systems, door locks, security cameras and other in-home devices via Z-Wave, the proprietary wireless technology that’s also being used by such would-be home automation players as Verizon.
Those thermostats, lights and other energy-using home systems can already be pre-programmed to turn themselves down when people leave their houses, or can remotely controlled via smartphone while they’re away, he noted. Now Vivint is working on a “generation 2.0” platform that can record up-to-date solar power output at the home, he said -- and that, in turn, could lead to linkages with home energy management
“Because you’ve got this remote control panel with a big touchscreen display, we’ll be showing the homeowners usage, as well as the solar production, on that panel,” he said. “If you show a power curve of when their solar power is produced, […] you can adjust people’s consumption behavior,” such as encouraging them to turn on energy-hog devices like dishwashers and clothes dryers when the solar system is cranking out the most kilowatts per hour, he said.
All of them connect via Vivint’s home gateway to a cloud-based system that’s accessible via website or smartphone. “If you log onto your own personal account, you can select the rules you want to apply, whether you want to be aggressive, or less aggressive, on saving your energy,” Serra said -- a set of features common to many of the companies contending for a slice of the as-yet-unformed home energy management market.
The company is also looking at more sophisticated applications, like pre-cooling homes using solar power when it’s at its peak production -- say, 3 p.m. to 5 p.m. -- and then letting air conditioners idle through the hours when people come home from work, to avoid stressing the grid, he said.
Vivint is working with partner 2Gig Technologies, which is partly owned by Vivint executives, to build its home automation devices, which it has been selling as part of its service since 2009, and it also works with Radio Thermostat Co. of America for smart thermostats, he said. On the solar side, Vivint uses Enphase Energy microinverters and Zep Solar mounting systems.
Of course, Vivint doesn’t have a monopoly on the idea of combining residential solar with home energy management. Big third-party residential solar financing companies like SolarCity have been monitoring and managing their “fleet” of solar systems for some time now, and could bridge into home energy management as an add-on to their solar installations. Indeed, SolarCity has also been testing out lithium-ion batteries from Tesla Motors to back up its solar rooftops.
Vivint has about 50,000 home automation system customers in California, Serra said, compared to about 100,000 in Texas and more than 100,000 in the Northeast, where it has concentrated its solar business so far.
Serra told us in February that the company was on target for 3,000 to 5,000 solar installations per year in its first six months in the business, and hoped to grow the business to match the 150,000 home system installations or so it does annually.
Of course, Vivint isn’t limited to pitching its existing customers for solar systems either. In fact, Serra said, solar sales could open the door to home security and automation sales.
Think of it this way: for the amount of money a homeowner can save on their monthly power bills with a third-party-financed solar system, they can cover, or at least partly cover, the $50 to $69 per month cost of Vivint’s home automation system.
As far as combining the still-expensive costs of home automation with a target market that has shown its interest in going green by asking to learn more about solar, it isn’t the worst sales pitch we’ve heard so far.