Selling solar on the conservative side of town

Republican “red” states hate environmentalism, right? And California is the place to be for cleantech startups, no? Not so, says cleantech installer Standard Renewable Energy, which does its business in middle America and just closed off a second round of venture funding.

SRE, headed by a former Enron trader, is busy selling solar cells, wind turbines, green insulation, efficient cooling and other systems to people in Texas, Oklahoma, Louisiana and other states the environmental elite enjoy jeering at. It’s busy expanding its sales and installation teams, and has taken a total of $15 million in funding over the course of a year.

One of the major selling points for SRE is its carbon and energy calculator, available on the front page of its site, that gives potential customers an easy view of how much they could save with cleantech power and building supplies installed. At present, the calculator only displays the numbers for solar panels, but the company does on-site evaluations for all its solutions, delivering personalized recommendations.

On the surface, running a carbon calculator and cleantech business in those states doesn’t seem to make sense, because it’s a common belief that only consumers in states with large rebate and subsidy programs for solar will install such expensive systems. The CEO of SRE, John Berger, thinks their willingness to pay is actually linked to their electricity bills, though, and those are highest in hot southern states where demand skyrockets in the summer.

Those rates keep going up, Berger says, and they show no sign of stopping their climb. SRE has about 400 customers at present (many of those are businesses like restaurants, with more than one location) and will bring in up to $30 million this year. That’s a healthy business, but Berger has some unconventional expectations for the next three to four years.

First off, he says, prices for power generation feedstocks like coal, oil and natural gas will climb stratospherically. Berger forsees crude oil at $200 per barrel in about three years. It’s currently hovering at a price about half that figure, which many people already consider back-breakingly high.

The high prices will goose customers into buying more and more solar panels for their homes and businesses, he says, which will in turn cause the demand for solar to stay ahead of supplies. I recently reported on a study that holds the opposite view, and most investors also seem to think an oversupply of solar cells is on its way. But if Berger is right about energy prices, he may well turn out to be right about demand, too.

Those factors would work out fine for his business. SRE already employs about 130 people, and is adding on more installers with the new funding. It’s also expanding its territory. Berger says he “might” expand into California, but for the most part he intends to stay in the hot states of the south, with Florida, Georgia, New Mexico and Arizona all being possibilities.

The $15 million total funding SRE has taken is made up of a $7 million round taken a year ago, and the new $8 million investment led by Quercus Trust. SRE is based in Houston, Texas.