What you need to know about solar panels in your home

on your roof. How can you figure out what's best for you and what do you need to consider before switching? My guest is belong to, he's the founder of the startup Solar AI. His company has a software program that offers an instant estimate and how much it would cost to install solar on your roof. Welcome to the conversations. Thank you for coming in today. So good to see you in the first off. Let's talk about solar AI what inspired you to launch the company three years ago in the midst

of the pandemic? And how did the idea come about? I think quite a lot of it was probably a push from climate anxiety. Initially, three years ago, I had no background about solar was never like an electrical engineer, did like a finance major and then went on to management consulting. But at that point in time, I first joined kind of like a corporate innovation team. They really

focus on decarbonization problems, right? So I first joined them initially as like an entrepreneur in residence and eventually then started studying the problem statement of rooftop solar quite closely at that point. One of the things which stood out to me was that the energy industry has this measurement called the level IZED cost of electricity, right, which is kind of like how much it cost and to end across the value chain from mining extraction through

production and finally downstream to distribution. What is that unit cost of different energy sources From about 2015 globally? Rooftop Solar has already fallen that below any other kind of fossil-fuel energy, right? But when I was first looking at the problem statement, looking around Singapore, I mean, you rarely see rooftop solar panels installed, right? And then that just really begs the question of okay, if solar is already cheaper than all

other energy sources, why isn't adoption so much higher? That was when I really started exploring and testing out solutions then? Okay. So how has solar a eyes performance been so far? I wonder, you know, what sort of milestone have you achieved since the company's inception. Yeah, I remember when I first started looking at the problem statement, of course, I mean, the first thing that I usually do is go on Google and try and search to learn more about solar, right?

Because I knew nothing at that point in time. I remember when I was searching about rooftop solar content, there was a lot of content from Australia or us, right? But then some of them might be misleading. So I think one of the examples which stands out the most is in Australia because they are on the southern hemisphere, your solar panels should be oriented kind of like northwards, right? While in the U S northern hemisphere, they should be oriented southwards.

And so you'd read all these articles saying like okay to optimize your solar system, you know, your panels should face south or Your panels should face north. But in Singapore, because we're on the equator, actually the angle of your solar panels don't differ, but it doesn't, it doesn't change much instead like the flatter, your panels are the more sunlight it captures, right?

Since then. I mean, we've written a lot of content and these days like our website brings in about 15,000 monthly readers from across the region. And over the last year or so, we've completed in 2022,

completed more than 100 solar projects. Of course, it's still baby steps at this point in time, but we're really looking to kind of scale that up, especially with like a new offering that we launched about six months ago called a Rent to Own solar model where we allow customers to kind of not have to pay the upfront cost of solar, which is oftentimes quite hefty but rather just pay for solar as a service on a monthly basis where we cover all the installation, of course, as well

as repairs and maintenance on the system. Really interesting. That's a really unique concept. And I wonder how, how does this help rooftop solar become more accessible to underserved property owners? I think when it comes to rooftop solar because in the market is still so new, right, most people, when they're thinking about solar, I mean, they don't know someone else who's had a solar system for

maybe more than 2 to 3 years. Right. While solar panels are typically wanted for 25 or 30 years, If they don't know someone else who's had a solar system for more than 2-3 years, it's very difficult for them to see through that kind of time horizon. If you pay up front for a solar system, the typical break even period is about seven years or so. Right. And so most people hesitate because a lot of our customers will ask us, you know, what if maintenance cost

becomes really expensive? What if like my system fails after a couple of years and valid questions? For sure. Exactly. And in a market when there is still quite a lack of awareness or maybe misunderstanding about how the product works. Sometimes it's quite complicated. It is good for them to cross that hurdle to say okay, I'll pay like 20 $30,000 upfront for rooftop solar system.

So these rent to own models that we crafted were really kind of created to de risk rooftop solar ownership, right by allowing them to install solar without having to worry about any out of pocket costs in the system because we'll cover all of those. And typically on a monthly basis, for example, our average customer might pay about 250 to $300 per month. Typically, their electricity bill savings is already 350 to 400. So they already have

the net kind of $100 savings. Even while paying off the rooftop solar system after 10 years, they convert to their ownership. Quite an investment that can actually pay off for many of the households. I'm sure there are a lot of listeners wondering what are some of the factors that they need to consider before they install these panels? I mean, how, how you determine the suitability of the property of a rooftop panel? Yeah, generally because the cost of solar has

fallen quite a lot for the average lender homeowners. For example, if you actually calculate the annualized return of your savings from installing a rooftop solar system, typically the annualized returns are between 15 to 20% per year. So actually, if you think of it as like an investment class, it is prob probably one of the best performing investment classes out there. So the general rule of thumb I think is really that if you have a roof, it probably just makes

sense to go ahead and install solar, right? You could choose to have solar as a service model where you don't pay any money up front or you could just choose to pay it upfront altogether. But generally the couple things to look out for, you really want to try and maximize your roof space for solar panels. Of course, taking into consideration that there may be certain parts of your roof which might

be shaded. Typically, if your roof is shaded or some panels in an array are shaded, they may actually affect the performance of the outputs of the other panels in the same string. So shading areas you would probably want to avoid if there are trees, then maybe you might want to request for them to be trimmed a little bit for instance. And otherwise, because solar panels are installed on your roof, of course, for some homeowners or like property owners with older roofs, especially like

tall roofs which might be brittle. They may want to consider doing waterproofing. At the same time with the solar installation, typically customers with kind of either metal or concrete roof of which like for industrial properties. This is extremely common typically for new houses, most architectural styles are using metal or concrete roofs as well. These roof materials are all non penetrative in terms of installation. So it's really kind of fast free and then it's really just okay. I

have this amount of roof space. Let me try and maximize the number of panels I can install. That's very interesting. You talked about this being a long term, 5, 10, 15 years for people who need to move around. Is that even? Yeah, the ability of the question if you look at like the total cost of installing rooftop solar system, that's maybe about in Singapore, like maybe about 50% of that is the hardware, meaning solar panels, the inverters, any cables, et cetera and then 50% of which is labor.

So because labor causes such a hefty component. If you look at uninstalling and reinstalling a solar system onto a new roof also because the roof structure might be different, the roof size might be different. Typically, our advice to customers is if they have installed solar, just tag it onto the property value because now you are essentially selling a home with like free electricity, you know, like that definitely is with something that's selling point. For sure. I wonder how

the AI fit into all this process. So when we first started one of the early hypothesis that we had was if you look at the total cost of solar right, the industry has this term, they call the soft costs, which is generally cost of sales as well as paperwork permitting, customer service negotiations. Also that costs which are not related to the actual installation of the solar system. Right? Soft costs in the rooftop solar industry is typically between 25 to 35% of total costs.

And in comparison, for example, the panels themselves are typically around 30%. So soft costs are as high as if not, maybe even higher than the solar panels itself. And so our theory was really like, okay, let's identify ways to try and minimize this soft cost in

terms of customer education. And so then from there, we've really built quite a few kind of computer vision models to be able to read satellite imagery, essentially to do edge detection, to identify where are the areas of the roof edge, start to identify these polygon and then start to do some assessment on what is the usable error for rooftop solar. The intent of it is really to kind of automatically assess what is the solar potential of different roofs, right from our company's perspective.

And that ends up becoming a sales engine to identify specific segments of customers in the region. But then at the same time on our website, and we have also built this into a self service, instant solar assessment tool. So customers would be able to click into pre assessed rooftops and then instantly get, what is the solar potential of their roof? How much could they save? What is the expected costs? Because they,

There's still quite a lot of misconception. I mean, some customers might feel like, you know, like a solar system is really expensive because five years ago I checked in with my architect and he told me it was like $100,000 just to allow customers to like self educate and start to understand the value of solar. It's very interesting. Have there been any case where a client comes up to you? Can you check if this is feasible? And you said sorry, not your place

has ever had some kids. I mean, of course, with rooftop solar systems, you would only be able to install it if you own a roof with quite a lot of people who are, for example, myself. I mean, I live in the H D B I can't install solar even if I really, really wanted to. So there have been inquiries like that, that we would then have

to kind of just politely explain to that. Unfortunately, you can't do it or in some cases like condominium penthouse owners who would be able to install solar based on Singapore's current metering structure, there's also some limitations. So if you essentially are like a single property owner,

meaning owner occupied, right? Or if you're a commercial property, Like you own the entire building and pay a single electricity bill, if you generate excess solar in Singapore sp group would actually pay you for that excess solar energy for a residential home. It might be about 80% of the current sp retail tariff. So this quarter is maybe about 30 cents. SP would pay

you about 24 cents for any solar that's generated. If you're a commercial property owner, you would be then paid based on the wholesale market rates which fluctuates on a half hourly basis based on demand and supply. But for instance, if you are a condominium owner or attendant in an M C S D because of this thing called like the master submitters scheme.

If you, I know this starts to get a little bit technical, but if you generate excess solar, that excess solar electrons would actually just end up going into one of your other tenants. And so then in that case, you have no way of getting compensated for that access because the entire building overall before it is fed outside to the grid would already then consume that

solar energy. So in some cases, it's less feasible just from an economics perspective, maybe unless they start to consider a battery storage system, but then that battery storage is also have their own set of kind of like economics as well.

is still completely connected to that distribution board. Meaning in the evenings, actually, when the amount of sunlight starts to decline, your inverters will actually shut off automatically. And then thereafter, you basically just continue pulling electricity from the grid in the daytime. When solar energy is generating electrons

will flow in the path of least resistance. So whatever appliances are consuming electricity too, first pull it out from the solar panels and then while they're doing that, they stop pulling electricity from the grid. And so then typically your daytime energy consumption or like what you're paying your electricity retailer would be significantly lower. Interesting. So the assumption is that the solar panels go on the roof you talked about in the Singapore being land scarce.

There is a bit of the issue with the living in condominiums. HDB with the amount of urban shading as well. Do these factors affect the scalability of the business? Would you say that's one of the biggest hurdles in a way? Because ultimately, the main constraint is really that we are land scars. But then if you kind of look at Singapore's potential energy mix overall, I mean, we don't have space for like wind as well. So if you talk about greening the grid for Singapore

solar is probably still the best option out there available. Hypothetically, if we do soul arise all routes in Singapore and we've done some kind Like data science behind this, you could probably contribute about 15% of samples total energy consumption. So it's still low. But that's primarily because as a country, I mean, our energy use per capita is extremely high primarily from like the

industrial processes. But as a business, ultimately, which tries to attract external invest this, we would have to then also have a regional road map. And ultimately, that is really our ambitions as well because the single goal for us as a company is really to try and massively scale rooftop solar adoption. Well, the good news is that solar power, as you mentioned, isn't a fringe technology anymore. It's gotten cheap so fast over the past decade or so. But why is that take up so slow? You did

mention the education and the people having doubts. But what do you think it's stopping them? I think it is those factors combined with kind of the fact that status. Cool. Right. If we're using electricity, we really only need to pay for it when we turn on the switch, when you're switching to solar, that's inherently like a sizable upfront cost of capital that you need to fork out the ever which rooftop solar system cost would be about 20,000 for

a standard kind of inter terrace house. And of course, that is like an investment that you would then require like 578 years to see back your returns and then really start to get free electricity from that point onwards in the market. When most people don't really trust or fully understand the product, I think that is really like the main blocker. But then in the last one or two years as well, we've seen rooftop solar adoption in Singapore increase a lot worse.

Some partners, these are like solar installers when we first met them two or three years ago that maybe doing like 2 to 3 projects a month and that was maybe like a good month. Um These days, they could be doing like 30 40 projects back to back every month, like residential projects. So we've seen that 10 X increase over time, which is really encouraging as well. It certainly is. And with the demand, obviously, they're growing number of other

solar solution startups as well. I wonder how stiff is that competition in this market? And then how do you plan to stay ahead of the game? This is something that we would look out for in the last couple of years. There have been a lot of companies in Singapore who moved into the solar industry. A lot of these are generally engineering companies who then started to extend into rooftop

solar in terms of our business model. This is not actually a bad thing because as a company, we typically work closely with installer partners to really supply the labor to do rooftop solar and installations. Of course, the higher that supply the more partners we are able to work with and the more capacity we have to be able to build projects to customers. Ultimately,

we are a product or customer service layer, right? Customers typically discover us mostly through Google search and then thereafter we provide them with these kinds of zero upfront cost offers which for the residential segment at this point in time or the only company in Singapore that does it. But then at the same time, this is also like a business model which is well established in other parts of the world, right? So in us, you have a lot of listed companies like Sandra and solar city who

are all operating on this model. And in Europe may be the largest companies are maybe about 56 years old, right? So Southeast Asia as a region is maybe 10 years behind us, like five years behind Europe. And we're really taking all of that learning and what's worked for consumers to try and apply them and In the region. And your goal is to convert 5000 properties across Southeast Asia to solar by 2025, 2 years left coming along. So there's still a lot to do.

Our expansion plans is really over the next 1.5 years to start to move into Philippines. Their electricity prices in us dollar basis is about the same as Singapore, right? But of course kind of cost of living adjusted. That's about three times higher. The benefits of solar is even more heightened when your cost of retail electricity is expensive, right? As well as when your cost of solar installation, primarily from the labor component because panels and inverters, these are all global supply

chains are really standardized, right? When your labor component cost is able to be reduced, then the kind of cost savings that you get from installing solar compared to just taking electricity, but really creates a lot more savings for these customers. What do you envision for the future of solar energy in Southeast Asia? And how does a solar ai fit into that vision? I really am hopeful that in the region, rooftop solar would be able to start to contribute a really significant

share of the grid. Of course, there are some kind of teething problems which we would have to address as an industry over time in terms of kind of the dark curve of solar, which is when solar is generated typically in the daytime. But of course, there's still continued energy usage and some of these problems will have to be addressed. But then I am really bullish that solar can play a really large role in this as a company. Our mission ultimately is really to make it as simple as possible

for any property owners to get solar. So firstly, starting out from like an education and awareness perspective, thereafter, we have then, you know, six months ago, launched off for us to really eliminate that problem of like having to pay a high upfront cost for rooftop solar. I mean, ultimately really drive this forward just to kind of take it every step of the way and like remove any barriers to entry for customers to get solar. Brilliant us.

Let's hope the sun keeps shining on your business and we see higher adoption of renewable technology like solar in the region as well. Well, thank you so much for coming in. No problem. Pleasure talking to you. Thank you. Thanks to my guest, belong to and thanks to all of you for tuning in. We hope you enjoyed this episode but do remember to subscribe and like this podcast. So you know, when a new episode drops, you can find cnn's climate and sustainability coverage online. At Sienna dot Asia.

The team behind this podcast is Joanne Chan Cyan Win, Jacqueline Chan and Christina Robert and I'm Julie, you signing off.