Solar AI Technologies is looking to drive the installation of solar panels amongst households in Singapore, where adoption of the renewable energy has remained low. The local startup believes its "rent-to-own" service can address key factors behind the low uptake, such as hefty upfront costs and lack of confidence renewable energy can be an alternative power source.
Solar AI's rent-to-own model lets homeowners pay a monthly fee to tap solar energy, without having to pay any upfront cost to install or maintain the panels. By taking over the costs needed to implement and upkeep the system, the startup is hoping to address a top barrier that has kept adoption low in Singapore, according to Solar AI's co-founder Bolong Chew.
Founded at the start of the pandemic in early-2020, the local startup was incubated and seed-funded by French energy group, Engie. Chew was a resident at Engie before leaving the conglomerate to establish Solar AI.
The startup is targeting to convert 5,000 properties across Southeast Asia to solar by 2025, with future plans to expand into the Philippine and Malaysian markets. The former offers significant potential because local electricity prices are equivalent or higher than Singapore's, but with lower manpower costs, solar systems can be installed in the Philippines at 20% to 30% lower costs.
Chew is hoping to have "boots on the ground" in the Philippines in 2024, followed by Malaysia in 2025. For now, though, Solar AI is focused on expanding its home base in Singapore, where it will look to build out its processes and beef up its capabilities before embarking on its regional expansions plans, he told ZDNET.
To date, it has signed up 28 residential customers, including 12 who have subscribed to the company's 10-year rent-to-own plan. The remaining 16 customers are on the five-year plan. The average customer pays SG$250 a month and chalks up savings of between SG$300 and SG$350 in monthly electricity bills.
With the majority of Singapore's population, or roughly 80%, living in public housing apartments developed and owned by government agency HDB, Solar AI's target clientele comprises mainly owners of private landed properties as well as commercial properties.
HDB has its own renewable energy initiatives, announcing in 2019 a target of 540 MWp by 2030 when it hopes to generate 648 GWh (gigawatt-peak) of solar energy a year. This is part of the national goal of reaching 1.5 GWP by 2025 and 2 GWp by 2030, amongst other targets outlined in the Singapore Green Plan.
HDB in February this year unveiled plans to suit up 8,400 HDB apartment blocks with solar energy, with installation of solar photovoltaic (PV) systems slated for completion by the third quarter of 2025. Of the targeted 8,400 HDB blocks, solar panels already have been installed on the rooftops of 2,700 apartment blocks, with the remaining to be rolled over progressively over the next two to three years, according to HDB.
Trust, awareness needed to drive solar adoption
Such initiatives will go some ways in driving confidence and awareness that solar energy can be a viable power source, which Chew believes still is lacking in Singapore.
He noted that the cost of ownership had dropped significantly by 89% over the past decade, but solar energy uptake remained low due to a general lack of trust that it could serve as a reliable alternative. Furthermore, cost savings could take a few years to actualise, leaving few homeowners willing to invest in a system that they also knew little about in terms of maintenance requirements.
According to Solar AI, it costs homeowners an average of SG$20,000 to install a rooftop solar system and more than SG$150,000 for commercial property owners.
And while solar panels have a lifespan upwards of 25 years, providing a long-term investment for owners, most remain hesitant to fork out the upfront capital needed to install a system that would only reach breakeven point after five to eight years.
"The perceived risk of solar energy is high," he said, adding that this drove Solar AI to offer its rent-to-own service, providing a zero-upfront cost option while removing the need for homeowners to maintain their system.
A portion of the customer's recurring monthly bill goes towards the startup's revenue.
Chew wants to reach a customer base of 500 landed homes by next year, as well as land the company's commercial customer.