Samuel Adeyemo and Christopher Hopper learned firsthand the challenges of installing solar power when, as first-year MBA students, they teamed up to build a system atop a school in Kenya in 2011.
The two (both MBA ’13) had bonded over entrepreneurial inclinations and an interest in sustainable energy, and were exploring ways to expand on Hopper’s background in electrifying off-grid communities in developing countries. They contacted the school in Adeyemo’s native Kenya and devised a photovoltaic project, from design to installation.
The project was a success — the school stopped experiencing power outages, ditched its diesel generator, and started saving money on its electricity bill — but Adeyemo and Hopper also found a curious imbalance. While the 50 kilowatt system itself took only a couple weeks to install, the design and preparation side ate up well over six months. In addition to negotiating a loan for the project, finding manufacturers who would ship to Kenya, and training local electricians and engineers on solar-specific skills, the two had to juggle an interlocking set of design decisions. What components should they use, and how should they be arranged and connected? What’s the optimal size of the battery bank? How much do all those differences change the cost structure and projections for how much energy the system would offset? “It was tricky,” Hopper says. “There are a lot of knobs to twist, and one thing here has implications elsewhere.”
Requests from other people interested in solar projects started to pour in. Adeyemo and Hopper sensed a business opportunity, but balked at each prospect’s time-consuming upfront design and preparation work. Surely, they thought, there was a streamlined process available to help duplicate a project like theirs in other locations.
“That’s when the big insight came,” Hopper says. “We looked around and found that there’s no really good solution that assists photovoltaic designers and installers throughout this whole lifecycle of a PV installation, taking it all the way from A, which is talking to customers for the first time with only the address and maybe some rough information, to Z, which is a fully spec’d-out system with engineering drawings, financials, and so forth.”
Adeyemo and Hopper switched their focus from installing to creating what they call the “digital infrastructure” of the solar industry, and software startup Aurora Solar launched.
After two years of development and validation tests with the National Renewable Energy Laboratory and the U.S. Department of Energy, Aurora is humming. Their software designs new solar installations from the ground up — generating everything from initial investment costs, optimal designs and potential permitting issues.
To give it a test, I asked Adeyemo and Hopper to design an installation for my childhood home in Indiana. I gave them the address and an estimate of my electric bill. In about 15 minutes, with a few button clicks, the two offered me a 3-D rendering of the house with rooftop panels arrayed to maximize the energy potential based on climate and sun cycles of that location, and took into account the shade cast by the three towering walnut trees in the front yard. The proposal also included complete up-front system costs, graphs pitting energy production against consumption for each month in a calendar year, and projected savings 25 years down the line.
That’s the power of the software being built by Aurora Solar, which won an innovation grant from Stanford’s TomKat Center for Sustainable Energy in 2013 and a $400,000 award from the U.S. Department of Energy’s SunShot Initiative in 2014. The young company’s goal is simple, but wide-reaching, Adeyemo says: “To be able to design the optimal solar installation from anywhere in the world, for anywhere in the world, all without traveling to the site.
Of the nearly $14 billion spent in 2013 on the solar industry in the United States, half the money went toward what are called “soft costs.” Those include all the things outside of the actual equipment, such as lead generation, system design, marketing, installation, permitting, and travel to prospective locations to get accurate estimations of sunlight and shading. And while the costs of solar PV panels and other hardware equipment are enjoying a happy downward plunge, the soft costs of that $14 billion aren’t budging.
What’s more, say an installer only closes one deal for every 20 proposals. Each requires as much manual overhead as the last, which can take hours and requires different programs that often don’t play nicely together. And each proposal needs to get amortized into the pricing of the signed deals, dragging down affordability. It’s a huge inefficiency. And it’s one that, like so many others before it, makes a pretty bull’s-eye for software.
“We want to reduce those soft costs and make solar more efficient and therefore more accessible to a broader audience,” Hopper says. Such cross-efficiency should help boost the already simmering solar industry.
“At some point we’re going to reach that tipping point where the whole cycle’s just going to perpetuate,” he says. “Increased scale makes it more attractive for the people implementing the processes. Financing’s going to be more accepted because there’s more historical performance. So costs come down, making it more attractive for more people, and volumes go up. With every step that the cost of solar comes down, it becomes more competitive in more areas. We just want to push down that cost basis as much as we can.”
"Solar’s going to be a good chunk of the energy mix. But the current tools and processes are not adequate for a lot of companies to get there." -Christopher Hopper
With the demand for solar rising and the costs for equipment falling, Aurora Solar might be entering the market at just the right moment. The industry as a whole is growing fast, especially in the residential and commercial segments. But in some ways it is struggling to adapt to the speed of that growth, Hopper says. “Solar’s going to be a good chunk of the energy mix. But the current tools and processes are not adequate for a lot of companies to get there.”
The latest figures from the Solar Energy Industries Association estimate that nearly 700,000 homes and businesses have solar installations. At the same time, studies have suggested that roughly 40 million households stand to save money by going solar.
While Aurora Solar is still in invitation-only mode, the early traction is promising. Their software is being used to process over 1,000 residential and commercial projects per week by a steadily growing base of installers, including several of the largest in this country and others across the globe, from Canada and Brazil to Dubai and India.
The team has grown to 10 members (nine from Stanford), including PhDs in computational mathematics and electrical engineering, and Hopper credits a change in mindset around solar for the company’s ability to attract talent. What once might have been an idealistic technology that didn’t necessarily make sense on the bottom line is becoming a practical solution. This tipping point trickles down into the young company’s culture, too.
“We don’t have to compromise with people,” Hopper says. “We don’t have to say, ‘This is an interesting problem, but you’re not really helping the world.’ Or, ‘This is a feel-good thing, but it’s not a business.’ This is both. The market is there, and the market is growing. At the same time, we’re doing something that has an impact, and that moves the world a tiny bit in the right direction. That feels good.”
This article was originally published in Insights by Stanford Business