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Sales of solar systems soar with declining costs

Rochester Business Journal
October 4, 2013

The use of solar energy in the United States today is still far behind Japan, China and Germany. And Upstate New York lags states like New Jersey and California.
 
But declining costs, along with increased efficiency and government incentives, are bringing new growth to the industry.
 
"In terms of new capacity on the grid, solar has been dominating for a while, but we still have a long way to go," says Ryne Raffaelle, vice president for research and associate provost at Rochester Institute of Technology.
 
He is a solar energy expert who previously directed the National Center for Photovoltaics, part of the U.S. Department of Energy's National Renewable Energy Laboratory.
 
Though the sale and use of residential and larger-scale solar energy systems is soaring, Americans still get the vast majority of their power and energy from a centralized energy grid. Moving consumers to make the switch to onsite solar power instead of total reliance on transmission lines from large power stations is a challenge for solar energy proponents and local installers.
 
"For most people, especially in the U.S., they are still ignorant or even fearful of what solar energy is," Raffaelle says. 
 
Solar energy systems use silicon photovoltaic cells that take in light and produce electricity without any moving parts. RIT already has several substantial solar arrays and has plans for more in the near future. It also conducts solar energy research, although Raffaelle says it is mostly for high-end applications likely to be seen on a satellite and not on a house.
 
Local consumers should not assume that Rochester lacks enough sunshine to make solar systems work. The area still gets more sunshine than Germany, where solar energy works just fine. Raffaelle has solar panels on his house, and he can see solar panels on every house when he flies to solar energy conferences in Japan. American consumers, though, remain hesitant to make the switch.
 
"It hasn't arrived yet because the installer base isn't there, the marketing isn't there and public awareness and education isn't there yet, even though it makes good financial sense," Raffaelle says of an industry he calls one of the weirdest in the world.
 
Ironically, homebuyers are not as hesitant to get a solar array when a developer includes it in the price of a new home and the cost is rolled into a mortgage. And new financing options such as leasing make obtaining solar units easier today. In addition, panels and cells currently produce more power than ever before at much lower prices.
 
Kevin Schulte, CEO of Sustainable Energy Developments Inc., says there are more than 110,000 homes in the Rochester area capable of producing solar power. Hundreds of Rochester residents saw solar systems at the Home & Garden Show in March.
 
"We're not just green or environmentally beneficial; now we're cost-competitive too," he says. 
 
Installers estimate the cost of a residential solar unit to be $6,000 to $8,000. It covers approximately 700 square feet of roof space for a 1,500-square-foot home. With a typical warranty of 25 to 30 years and relatively high local utility charges, a solar system can pay for itself in as little as five to eight years.
 
Joseph Clement, a project coordinator with Rochester Solar Technologies LLC, a division of O'Connell Electric Inc., estimates that consumers currently pay only about 30 percent of the solar array cost because of government incentives and an abundance of solar systems on the market.
 
The price consumers get from utilities for putting energy into the grid is also a factor in determining how long it takes to pay off the cost of a solar system.
 
Decentralized solar systems provide more than enough power for businesses and houses. The surplus is purchased by utilities and sent back on the grid, meaning there is profit to be had from a solar array once it is paid for.
 
Giving power back to the grid, however, has yet to become a smooth process.
 
"There is going to have to be policy about how this evolves," Raffaelle explains. "Utilities purchase power at a wholesale rate but have to pay you retail. That gets controversial, and it's much more arduous in the U.S. than in other countries."
 
Says Clement: "We are taking business away from the utility company, but distributing solar power helps them even out the grid because solar makes power during the day when demand is greatest."
 
It also cuts down on waste and inefficiency: Installers estimate that up to 25 percent of electricity is lost on transmission lines.
 
Rochester Solar Technologies is booked into November with installations.
 
Sustainable Energy Developments is involved in a project to cover a 10-acre landfill in Williamson with solar panels that provide close to 100 percent of the town's facilities energy consumption. The project is expected to be completed in March 2014.
 
A landfill makes a particularly good solar site; the panels turn otherwise useless land into a valuable power-generating asset.
 
"We like to make power where it's needed," Schulte says. "What we believe is every square (foot) of earth has enough power to sustain itself."
 
Government at all levels has embraced the growth of solar power generation and stepped in to offer incentives for growth. But incentives may be dwindling as the price of solar panels drops, thanks to increased manufacturer efficiencies. Gov. Andrew Cuomo announced the award of $54 million for large-scale solar projects from the NY-Sun Initiative in July, and tax credits at the federal level are good through 2016.
 
"Solar is a good example of government incentives working appropriately," Schulte says. "We see a tremendous growth opportunity for ourselves."
 
Educating a hesitant public is one of few things holding back explosive solar energy growth.
 
"Sunshine as a source of energy is inexhaustible. Wind is a nice resource but has real issues. Solar isn't prone to mechanical failure. There are challenges, but it's going to be a bigger part of our energy portfolio going forward," Raffaelle says.
 
Todd Etshman is a Rochester-area freelance writer.

10/4/13 (c) 2013 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.


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