By Stephen Bennett
Arden Steiner, a fuel oil dealer, and Dries van Wagenberg, an entrepreneur active in the petroleum industry, share a sunny outlook about their new venture. They are partners in a distribution company, Rayviance, that is marketing a solar-powered system of the same name for space heating and domestic hot water.
Steiner, a principal in Affordable Fuels, a heating oil marketer in Middleburg, Pa., said, “People are looking to supplement their oil heat, or their gas heat. They’re looking to save money. Particularly in our area a lot of people are using electric space heaters and things of that nature. But the bottom line is they’re supplementing their oil heat.”
The technology of the solar units was developed for a project by the U.S. Agency for International Development in Nepal in the early 1980s. The factory is in Malaysia, the partners said, but the distributor in the United States had become inactive. After researching the technology of the device, Steiner last year purchased the remaining inventory—seven units—and began to sell and install them.
From his oil dealer’s perspective, Steiner said, “here was a technology that allowed me to diversify, to have an additional line of income and to integrate into current oil systems.”
The initial installation was in spring 2014 in a house in Middleburg, Pa., that had an oil-fired boiler and an electric hot water heater for the summertime. The Rayviance system was integrated with both of those systems, Steiner said. In its first season—from the beginning of May through September—the home used “no electricity whatsoever, no oil whatsoever,” Steiner said. “The only source of domestic water heat that they had was this solar unit.” That included one morning when the residents and houseguests—seven people in all—each took showers without running out of hot water, Steiner reported.
Since then units have been integrated with heating oil equipment at three more residences and at a commercial greenhouse. About the greenhouse project Steiner said, “We feel we have extended the growing season by twelve weeks using no other power than the sun.” That installation included a self-contained heat exchanger and a manifold system using radiant heat from PEX tubing set into the growing beds of the greenhouse.
Dairy farmers in Amish and Mennonite communities, also known as “the plain people,” are prospective customers, the partners said, in part because dairy farmers must sanitize their milking system every day. “That requires 140-degree water going into the system and it must be 120 degrees when it comes out of the system,” Steiner said. Further, Steiner said, people in “the plain community look to use little to no electric power, so they’re running diesel motors connected to refrigerant systems to cool their milk.” That the solar device uses no additional power appeals to that market. “Think of it as an on-demand solar unit,” he said. “There’s no storage tank, and no extra circulator pumps. It uses no electricity or any other energy to generate this hot water.”
The partners said they had put together a certification program for selling and installing the systems. They are not “incredibly difficult” to install, Steiner said, but considering the units generate water temperatures well over 200 degrees, there are safety guidelines that must be followed. Correct integration into the existing system ensures that domestic water remains domestic water and water for heating purposes is used for heating, Steiner noted.
Another important step is the installation of the mixing valve to ensure temperatures for domestic water comply with those required by local building codes, Steiner pointed out.
Rayviance, which is based in Lewisburg, Pa., and is the sole U.S. distributor of the solar systems, will issue certificates to those who complete training, Steiner said.
Depending on a number of factors, the price of the units to customers can range from approximately $5,500 to approximately $7,500, van Wagenberg said. One of those factors is the size of the structure. The systems are in three sizes.
“A lot of it has to do with the demand of the home,” Steiner said. A two-bath, three-bedroom house has different water demand than a seven-bedroom, four-bath house, he noted.
For dealers, a gross margin on sales of the units should be somewhere around 25% to 30%, the partners said, again stressing that variables, including what a local market will bear, can influence that margin.
As to whether prospective customers will be largely residential or commercial, Steiner said that would likely depend on a fuel oil dealers’ existing customer base. Affordable Fuels’ customer base is 85% residential and 15% commercial, Steiner noted, “but there are other dealers that have more commercial customers. The return on investment is actually more aggressive for commercial than residential,” he added.
Leveraging “good, warm relationships with your customers,” is key, Steiner said. “If you have a customer base of five thousand, you can pick your top 5% and have a meaningful conversation” with them, he suggested.
As a fuel oil dealer selling the solar systems, Steiner said, his goal is to integrate with customers’ existing equipment. “There’s a tremendous benefit to the return on investment if I can utilize some of their current equipment.”
He said of Rayviance, “we stand alone without government tax credits.” He rated that a plus, observing that subsidies can go away “if an administration changes, or a focus changes in an administration.” He added, “If there are tax credits or other subsidies available we’d certainly help our customers get those credits. But it’s great to be able to walk in and say this system pays for itself without help from the government.”
Steiner estimated that the return on investment for a homeowner “is looking to be five to seven years and commercially we’re looking at three to five years.”
The units, constructed with type 304 stainless steel, Pyrex and copper, are designed for a 25-year service life and “not a lot” of maintenance, Steiner said.
For more information, visit the Rayviance website at rayviance.com.