As the founder and operator of Climate Tech for nearly two decades, James Quasi has seen a lot. From solar to geothermal, energy audits to energy storage, he's had a front-row seat to help homeowners tackle reducing their energy usage.
He was also able to observe what makes a startup successful: “You have to be able to model the energy system with a high degree of accuracy, and you have to be able to raise money,” Quasi told TechCrunch. “That question always comes up.”
He took these observations to heart and founded a company that aims to accelerate residential electrification across the U.S. by helping homeowners select and finance the projects that mean the most to them. Called Balto Energy, the Southern California-based startup has been operating quietly, with Quazi recently revealing details about the new venture exclusively to TechCrunch. The startup has raised $1 million from KDX, Leap Forward Ventures, and others to get its operations off the ground.
Quasi was semi-retired until recently as CTO of Dandelion, a home geothermal energy startup spun out of Alphabet's X division, and before that was an executive at SolarCity, but after he started looking into recent changes to California's homeowner solar incentives, he couldn't stay away from the industry.
Known as NEM 3.0, the new regulations extended the payback period for solar panels but significantly shortened the payback period for solar panels coupled with batteries. While intended to encourage consumers to store solar power for later, it had the unintended consequence of slowing California's solar market.
For Quasi, the solution to installers' woes was easy to see: They needed to expand beyond just solar panels. Many were starting to install batteries, but Quasi knew they needed to add other electrification projects to their roster, like electric vehicle chargers, heat pumps and heat-pump water heaters. “We found that some of these contractors were interested in doing other parts of the work,” he said.
But solar panels are one of those products that have a pretty straightforward selling point: They save customers money on their electricity bills. Homeowners can also save even more money by using heat pumps, but the math behind the selling point gets much more complicated.
Today, most solar installers are limited to installing rooftop panels and the occasional battery, forcing homeowners to rely on a host of other tradespeople, from electricians to plumbers to HVAC specialists. To go fully electrified, contractors must be willing to act as de facto general contractors and see each task as part of a system.
“We don't yet have good tools to guide homeowners on what their experience will be like,” Quasi says. “We don't have a holistic view.”
Quasi hopes Balto will be that tool. While many homeowners' electrification journeys begin with solar power, Balto's starts there too. For homeowners, the technology is mature and the financial benefits are widely known. For Balto, there are many solar installers who could benefit from additional work beyond installing new panels. The startup will charge them a fee for access to the platform, which includes a range of sales tools. In the future, it will be available to other contractors. “We were adamant that we wanted a path that was contractor-agnostic,” Quasi said.
Balto acts as a kind of decision tree to help homeowners decide where they want to start and what projects they want to tackle and when. Are they only interested in saving money? Then a relatively simple solar and battery installation with an EV charger might be the answer. Or maybe they want resilience against extreme weather and natural disasters? Then they might also want to electrify their home more, including heating, cooling, hot water, and cooking.
“We need to help people understand what their options are and what is best for them,” Kouachi said. To make a compelling recommendation, Balto uses utility data provided by its customers to model household energy use.
But all of these projects can be costly. Solar panels alone tend to cost tens of thousands of dollars, as do heat pumps. All-in electrification plans would be even more expensive, a sum that most homeowners can't afford, and high interest rates make homeowners reluctant to borrow money.
Quasi believes offering financing other than loans could ease the burden. “Loan-financed housing projects actually bring a lot of benefits. There are a lot of follow-on things that could be monetized, like depreciation allowances or renewable energy credits that can be sold to other companies,” he said.
That's because Balto will own the solar assets for a period of time and will be the recipient of the credits. Some of the revenue will come from that revenue stream, and some will be used to lower interest rates on financial products that it offers to customers. “You might take out a loan today, but [for solar]”If the loan is for 20 years, the interest rate could be 12 percent. We're looking at half that or even less,” Quasi said.
If Quasi is right, we'll see in a few years that creative financing is what's really needed to accelerate the electrification of American homes. He expects that when that happens, “infrastructure that pumps flammable gas into people's homes” will fall out of favor. “It's one of those things that we look back on and say, 'That was crazy. We shouldn't have done that.'”