Let The Sun Shine In
With interest in solar power surging, it might be time to broaden your array of services.
Using the sun’s rays to heat water and air first grabbed Duane Wood’s interest in the early 1980s, when the U.S. experienced a large-scale energy crisis. As the costs of fossil fuels soared, Wood—co-owner of Santa Fe Air Conditioning in Gardner, Kan.—experimented with homemade solar collectors and even built a passive solar home. As the crisis eased, however, consumer interest in solar energy waned—until about six years ago, when prices for oil and natural gas began climbing again. Consumers and legislators alike began clamoring for more energy options, especially environmentally friendly ones. Wood saw the opportunity to capitalize on his 30-year interest in renewable energy, and in 2007 his company launched a new division: Santa Fe Wind & Solar.
“At the time, wind gave you more power for your investment, because PV technology was so expensive,” recalls Wood. “But solar technology itself has matured, and the systems have gotten much better and cheaper. Just in the last five years, installed costs for solar have gone down from $10 per watt to about $7.”
Behind that decrease is the price of solar panels, which dropped by 50 percent in 2011, according to the Solar Energy Industries Association (SEIA), Washington, D.C. That price reduction has not been lost on the people who pay utility bills. U.S. Solar Insight, a report recently released by SEIA and GTM Research, notes that the number of PV installations in the United States doubled from 2010 to 2011. By 2016, the report estimates, the United States and China will take the lead in solar installations, displacing the current market leaders of Germany and Italy.
A Sunny Forecast
If the past is any indication, sustained growth within the U.S. solar market will depend upon financial incentives and government policies. For example, the Arizona Corporation Commission set the goal of generating 15 percent of the state’s energy from renewable sources by 2025. In support of that goal, the state’s regulated utilities must spend more than $1.2 billion to subsidize projects aimed at increasing energy efficiency and renewable energy.
Even though Arizona registers about 360 days of sun annually, “the solar market might not even exist if the subsidies weren’t there,” believes Mike Donley, president of Donley Service Center. Since the late 1970s, the Phoenix-based contractor has installed residential solar water heating systems, which pump a propylene glycol solution through a roof panel and a heat exchanger in the water tank; an electrical back-up kicks in if needed.
“When the subsidies came back a few years ago, solar took off again,” adds Donley, whose firm installs at least a handful of solar systems each a month. “We’re a plumbing contractor as well, so we always provide a solar option whenever a water heater goes out.”
Doing the math for customers often proves persuasive, even though a $7,500 solar water heating system typically costs nearly seven times as much as a standard water heater installation. But factor in the 30 percent federal tax credit for purchasing a solar energy system (which has no cap), Arizona’s tax credit ($1,000 maximum), and utility rebates of $.50 per kilowatt hour, and the cost differential between the two systems drops to about $1,600—a more manageable number for homeowners.
Another plus in solar’s favor: ongoing energy savings will accrue monthly—and multiply as utility rate increases outpace inflation. Donley reports, “Many of our customers say they can turn off the electric back-up to their solar water heaters for eight or nine months of the year, which really reduces their annual electricity costs. In many cases, customers have a four-year payback” on the system’s installation cost.
Payback on a PV system takes longer, because the more sophisticated systems cost more. But they also generate electricity to power homes and businesses; a growing number of states have given utilities approval to install special meters to handle any excess electricity produced.
Virginia’s move to allow such meters prompted Kelleher Corporation to move into PV installation three years ago. “If you consume less than you produce with the solar cells, you can move that surplus through the meter and into the grid. The utility pays you for that excess electricity, making it advantageous to install the technology,” says Joe Kelleher, president of the Richmond, Va.-based company. As an added incentive, utilities in some states pay more than retail value to purchase the excess electricity generated.
Kelleher points to lingering effects of the 2008 recession as one reason his residential customers aren’t rushing to install solar systems. In addition, renewable energy hasn’t yet entered the state’s mainstream culture. Kelleher expects consumer attitudes will change should Virginia’s electricity rates start escalating. In the meantime, his company will continue promoting its solar capabilities along with its heating oil, cooling, plumbing, and electrical services.
“In part, we’re off setting the fact that heating oil isn’t very green, while solar is not only green but also coming on strong,” observes Kelleher. “We wanted to put solar in our mix now so when people are ready for it, we’ll be ready for them.”
The Green Angle
U.S. consumers’ interest in solar power remains high, as evidenced by results of the Energy & Environment Consumer Survey released in March by Pike Research. Solar energy topped the list of 13 clean energy technologies, with 77 percent of respondents having a “very favorable” or “favorable” view of it.
“People are definitely curious about solar, but convincing them to spend the money can be difficult,” notes Duane Wood. “The people who typically buy our systems want to do their part to protect the environment.”
For instance, Santa Fe recently installed a thermal water heating system for the Johnson County Community College’s Horticultural Science Center. The Kansas college points to the new system as one way it is fulfilling a strategic initiative to “champion environmental sustainability in the college infrastructure.”
Another Santa Fe customer, a Ford dealership, touts the PV panels on its roof along with the hybrid vehicles in its lot. “Businesses can use solar not just for electricity, but also for marketing purposes,” says Wood, whose own business uses a solar water heating system to provide in-floor radiant heat and two wind turbines to generate electricity. “On their websites, businesses can even embed the web-based monitoring system that enables you to see how much energy each solar panel is generating and how much carbon is being offset.”
With the car dealership installation, Wood initially faced the prospect of obtaining a special use permit—until local officials realized the rooftop solar array wouldn’t be visible to passersby. “Some cities and many homeowners’ associations won’t allow solar panels, primarily because the old panels were pretty hideous,” cautions Wood. He usually overcomes this obstacle easily by showing examples of today’s more attractive, flush-mounted solar panels and obtaining a variance.
Seeing the Light
Ready to help customers turn sunlight into hot water or electricity? Here’s what you’ll need:
- Installation training. Typically offered by manufacturers, the training usually takes a few days and may require you to pass an exam. It covers specifics such as charging a solar water heating system with glycol or hooking up an array of PV panels. You’ll also need to check your insurance coverage and possibly purchase safety gear, assuming installers will be working on pitched residential roofs.
- An electrical license. Inverters must be connected to the PV panels to convert the solar-generated DC power into power the utility can harness for electricity. Depending on the state, other requirements may apply as well. In Arizona, for instance, Donley Service Center must maintain a license as a Residential Solar Contractor.
- A customer-friendly approach. Even environmentalists may get discouraged by all the hoops they must jump through to receive the financial incentives for solar installations. In its commercials, Donley assures customers that it will explain how to qualify and apply for tax credits. The company also offers same-as-cash financing to customers awaiting those credits. “That saves people from having to pay the full installation cost out-of-pocket. About half of our solar water heating customers take us up on that,” says Donley. Santa Fe packs its website with numerous solar-related tips and FAQs and offers a detailed site inspection to determine optimal placement of solar panels. (Duane Wood quickly learned to charge $150 for a site visit—which is then applied to purchase of a solar system—to distinguish serious shoppers from the merely curious.)
- An elevator speech. In both business and informal settings, Wood rarely misses the opportunity to talk about renewable energy. In fact, he jokes, “It seems I do a lot more talking than installing!” But more than once he has gotten heating and cooling business out of a solar-related conversation—and vice versa.
Wood notes that most solar panels carry a 25-year warranty and, as a reliable technology, don’t off er much potential for service calls. Excepting the occasional replacement of glycol and a tank with water heating systems, he says, “You basically install it and forget it.”
As for competition, Santa Fe faces some within its Missouri and Kansas service area, primarily from companies that install solar systems exclusively. “Solar is still a small market for us right now,” adds Wood, “but it’s getting better all the time.”
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