Rayo, Sparrow Ventures’ latest initiative, has developed a real solution with its first subscription model for solar energy. In a fragmented solar market, Rayo helps contribute to the energy transformation by providing financial as well as administrative support to individual family homeowners in Switzerland and facilitating access to solar energy. A model that captures the zeitgeist, as evidenced by the start-up’s rapid growth. Read the blog post to learn how the idea of the innovative business model came about, how Rayo was born virtually overnight and why the timing of the business model is just right.
The global energy crisis and economically volatile markets have inflated electricity prices and created shortages. This results in widespread uncertainty for people and the need for self-sufficient power supply has increased.
Swiss policymakers have recognized that solar energy must be a central element of the future supply of energy and they are drafting new legislation for binding expansion targets in relation to photovoltaic systems, or a minimum feed-back tariff as part of the Energy Mantle Decree. Electricity generated from renewable energy sources must increase sevenfold over the next 12 years — that is the target. A tenfold increase in installed photovoltaic capacity on roof surfaces from the current 2.6 percent to 26 percent is to be achieved by 2050.
Political developments have propelled solar energy forward
These events have focused attention on solar energy and given the issue a massive boost. Demand from customers is greater than ever. According to the SFOE (“Solar Energy Statistics”), the growth rate for photovoltaics in Switzerland in 2022 was 58 percent.
As a result, numerous suppliers of solar installations are shooting up like mushrooms and crowding into the Swiss market. Roofing or electrician companies also offer solar and photovoltaic systems in their portfolio, resulting in high fragmentation and unclear responsibilities. Numerous questions remain for homeowners.
Rayo provides a response to the current energy crisis
As a venture builder for the Migros Group, Sparrow Ventures has continuously followed the topic of solar energy and developments in the market because renewable energies are strategically relevant in the Migros Group.*
Due to current events, the venture team around Rayo delved deeper into the matter at the beginning of 2023. Market analyses and customer interviews have shown that the desire for individual, sustainable solar solutions and energy self-sufficiency is increasing.
At the same time, owners of detached houses are often reluctant to make an acquisition due to initial costs and high administrative effort (applying for subsidies, submitting projects, etc.). Maintenance of the solar installation can also be something of a deal breaker. Long story short, the interest is there but the uptake is rather low. Of the approximately one million detached houses in Switzerland, fewer than ten percent have solar installations.
Rayo on the road to scaling
With the goal of developing business model innovations, solving the problems of the Swiss population and improving their everyday lives in various areas, the Rayo team went to market in early March 2023 with an innovative offering — a subscription model for solar power.
With a subscription model for solar installations, this start-up provides a solar power solution that reduces electricity costs and enables energy independence. The goal is to make solar energy accessible to all homeowners, thereby advancing the energy transformation. In a first step, owners of detached houses will be approached, as great potential has been identified in this segment. Increasingly, the business model is to be offered in apartment buildings or in the public sector.
Convinced by the business model and due to the positive developments, Migros invested a higher single-digit million sum in the growth of the young start-up in June. Part of the funding will be used to continuously expand the partner network of installation companies, initially in German-speaking Switzerland. Further regions in French-speaking Switzerland and Ticino will be developed gradually.
In the months since entering the market, the team has reached more than 1,000 qualified inquiries. In addition to the online communication, which has been intense from day one to publicize Rayo, the media presence has drawn attention to Rayo due to media work and has given the business a strong boost. New contracts are signed on a weekly basis.
On the way to scaling, the task now is to increase brand awareness across Switzerland. To this end, the team is developing a marketing mix of online and offline activities. The standardization of services with all partners is another project to ensure a uniform standard of Rayo quality everywhere.
Although fewer solar installations are typically installed in the fall and winter, the Rayo team awaits the cold season with a positive attitude. In particular, due to the electricity price hikes predicted for 2024, they expect increased demand and are stepping up their efforts to encourage customers to think about the topic now.
The federal government has set high climate targets for Switzerland (see above), and so has Rayo. Demand for the innovative solar solution persists, and acquisition measures are being added. With the ongoing installations in full swing, the team has its hands full in the coming weeks and months, because even though we will soon receive less energy from the sun, next spring is sure to come.
Since 2021, Migros has been using 100 percent renewable electricity for cooling, lighting, transport, etc. The bulk of the energy required is generated by the company’s photovoltaic systems on the facades of its stores, on the roofs of parking lots, or on industrial buildings.
What is Rayo and what exactly does the start-up offer?
Rayo promises their customers an all-round care-free package that does not include any acquisition costs. Instead, you simply pay a fixed monthly amount over 20 years for your customized solar solution. In addition to the photovoltaic system, the price includes all services from installation, maintenance, and repairs through to insurance and a smart home app. With the help of these, energy consumption can be optimized and adjusted to suit individual needs.
The spheres of mobility and energy, still separate at this time, should coalesce to an increasing extent in the future. A power plant on the roof is used to generate solar energy for the home’s electrical system and to power an electric car. Optionally, the Rayo comprehensive solution can be supplemented by a battery storage system for the surplus solar power, or by an e-charging station. To this end, Rayo and Migrol are using synergies and skills sets within the Migros Group. Rayo is a member of Swissolar, the professional Swiss association for the solar industry.
Authors: Stephanie Burtscher, Head of Communications, & Lorena Tschirky, Venture Architect