Will Arch Rao’s Span Benefit from U.S. Renewable Energy Subsidies
Photo: Arch Rao’s LinkedIn page
June 2, 2023
The generation, distribution, and consumption of solar, wind and other renewable energy in the United States is getting a major financial boost. Analysts estimate that manufacturers and users of electrical vehicles (EV), commercial and home solar panels and other equipment will receive $369 billion – possibly far more - in subsidies under the Inflation Reduction Act of 2022.
Span, based in San Francisco, is one of the companies which could benefit. Its electrical panel “sits at the heart of the electrified home,” writes founder Arch Rao, 40-years-old, in a blog post on the company’s site. Span’s panel connects EV chargers, heat pumps, rooftop solar panels, battery storage and electric home appliances.
The 2022 law, provides several incentives to low-and-moderate-income households, including up to $6,500 for an upgraded load center, such as a Span panel, and new electrical wiring. A span panel costs $4,500, excluding installation charges and taxes.
In addition, there are incentives for appliance upgrades, from up to $850 for an induction cooktop to as much as $8,000 for heat pumps and space heating.
Span’s panel monitors and controls every circuit and uses internet-based wireless communications. It serves as the power router that “intelligently manages household electrical loads.” Homeowners can manage every circuit in their home from a smartphone or tablet, even remotely. Span also sells an EV charger that integrates with the home electrical system to provide fast charging without a costly service upgrade.
In April, at a time when funding for most startups has dried up, Span raised $97 million in a new funding round. Investors included Amazon’s Alexa Fund and Qualcomm Ventures, the venture arm of the computer chip maker Qualcomm.
The traditional electrical panels, which have changed little over the past 40 or more years, require a complete, expensive overhaul to connect to the new renewable energy devices. Yet, given the complexity and risks of a home’s electrical wiring, the installation of a Span panel is not a simple plug-in. It requires hiring an electrician and that too one who has been trained to set up a Span panel.
Several Competitors
One of Span’s larger competitors is France’s Schneider Electric, which has a market value of $99 billion. Schneider, which sells a wide range of electrical products including in the U.S., has long established chain of distributors, retailers, and installers.
In contrast, Span appears to be bypassing the distributors and retailers. Instead, it seeks to attract homeowners looking for new electrical panels and EV chargers whose business could, in turn, attract local installers to earn additional income by learning how to install Span’s products.
Virginia based startup Lumin offers products that compete with those from Span. In January, Lumin announced a tie up with Itron to provide smart panels integrated with the meters installed in homes by electric utilities. The panels will “manage load throughout the distribution network, including down to specific circuits within a home” according to a statement from Itron. A Washington state-based supplier of meters to electric and water suppliers, Itron has a market value of $3.2 billion.
The competition and the lack of wide installer network is likely a major obstacle to Span’s future growth. Apparently, this may be why, despite the large potential market for smart electric panels, Span was only valued at $600 million in its April funding round.
Rao plans to use part of Span’s latest funds to integrate every high-energy load in the home into its panel, through partnerships with major refrigerator, washing machine and other appliance brands, such as Kenmore, and solar panel and storage providers, such as Sunrun.
Archan (Arch) Rao, founded Span in 2018, believing that the road to mass adoption of solar and battery storage requires an intelligent electrical panel. Span, which started with a team of four, launched its panel in 2020 and EV charger two years later.
Earlier, from 2013 to 2018, Rao was head of products, application and sales engineering at Tesla Energy, part of Elon Musk’s Tesla Motors. In 2011, Rao co-founded Verdigris Technologies. For about a year, he worked as an energy consultant at LCG Consulting. From 2008 to 2010, he was founding engineer and director, business development at Joby Energy. From 2005 to 2008, he was a graduate researcher at Stanford Environment Consulting.
Rao earned a MS in mechanical engineering from Stanford University, 2004-2006; from 2006 to 2008 he pursued a PhD in energy, also at Stanford, which he discontinued. He earned a B.E. in automotive engineering from the University of Madras, India, 2000-2004.
Span, which has more than 220 employees, has so far raised $231 million in total funds. Its panels are installed across the U.S. in 47 states. Nearly eight out of ten Span customers have adopted clean energy and home electrification products such as solar, battery storage, or an electric vehicle in their homes.
“Our mission drives us to design, build, and deploy products that electrify,” states Rao in a blog post on Span’s site. “Why? To aid in decarbonizing our world and slow the effects of climate change.”
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