The SEIA’s website counts 5,600 solar energy companies (manufacturers and installers) nationwide and says the industry “more than doubled the amount of solar electricity installed in the U.S. in 2011 compared to 2010,” with growth expected to continue in 2012.
(For an updated map listing solar companies and installations by state, go to www.solarworksforamerica.com/ States. For a ranking of states according to incentives available, see www.solarpowerrocks.com. For a database of state, local, and utility incentives, see www.desireusa.org.)
INCENTIVES AREN’T FOREVER Incentives weren’t meant to be permanent. In theory they would begin to go away once demand ratcheted up and materials costs came down. The theory has played out somewhat differently. Yes, costs are down. Dealers in solar estimate that panel costs today are one third to a half less than they were even a year ago. In just the last year Kulp estimates that his component costs have fallen by about a third. But in the meantime state incentives have gone away. Compare 2009 to 2012.“In the first six months of 2009,” Kulp says, “state incentives covered 25% to 26%” of the cost of a system. Roll in the federal tax credit of 30% and incentives covered somewhere between 54% to 56% of the cost of a solar system in central Wisconsin. A $45,000 system might net out to a $22,000, homeowner outlay.
What has happened? The system that cost $45,000 in 2009 now sells for about $35,000, and the federal tax credit — in place until 2016 — brings the price down to about what a system would have cost three years ago. So in Kulp’s case, the cost reductions in materials haven’t made a deep, dramatic difference in what a homeowner buying a solar system is going to pay.
BUY OR LEASE? It’s not the technology that has brought panel costs down. Low-cost Chinese-made panels have come into the U.S. market in a big way, driving down prices and squeezing American manufacturers. According to the U.S. Commerce Department, $3.1 billion worth of Chinese solar cells were sold in the U.S. in 2011, giving Chinese producers the largest share of the U.S. solar market.
American manufacturers fought back by filing a suit charging the Chinese with unfair trade practices. On May 17 the Commerce Department ruled in U.S. manufacturers’ favor and imposed anti-dumping tariffs of 31% to 250%, retroactive 90 days, on Chinese solar products.
If costs go back up, while incentives are going away, solar’s momentum could slow. But the current popularity of solar has a lot to do with the way systems are paid for.
Homeowners can lease a solar system in 14 states, and leasing has swiftly found favor. Homeowners who lease allow a solar company to install a system on their roof. The homeowner can pay little or no up-front cost and agrees to buy the power for a set rate. The length of the lease can be as long as 20 years, at which point the owner can buy the system at market cost.
PV Solar Report, a daily digest for solar industry professionals, estimates that as of February 2012, 70% of the residential solar systems installed in California are leased systems. Paul Witteman, CEO and director of sales for Greenspring Energy, a solar supplier and installer in Pennsylvania, Maryland, and the Carolinas, estimates that 30% of solar customers buy the system up front, 40% lease it, and another 30% secure their own financing.
Joe Bono, CEO of Solar Universe, a solar franchiser headquartered in Livermore, Calif., says that solar leases now make up 40% of the company’s business, and he foresees that leasing will soon be “the financing choice of the majority of our customers.”
