Vermont's solar forecast: Sunny
Installers can't keep up with customer demand
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John Blittersdorf, owner of Central Vermont Solar & Wind, has nearly a full slate on the "to-do" board in his Rutland office. High fuel prices and public awareness of alternative energy have helped make Blittersdorf's business brisk. Photo by Jeb Wallace-Brodeur |
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By PATRICK JOY Staff Writer - Published: August 20, 2006
MONTPELIER – In its first year of business in 1998, Global Resource Options, a solar-energy business based in White River Junction, grossed $100,000. This year, the company's sales will approach $12 million.
Like other installers and suppliers across the state, Global Resource Options is riding a solar energy boom in Vermont.
Hundreds of solar projects worth millions of dollars are in the works. And with a new round of state grants for solar installations about to open, suppliers and installers expect to have trouble keeping up with demand.
"We've had a five-fold growth in sales since 1999 and it has definitely spiked," said Jim Grundy, president of Elemental Energy in East Montpelier, a local installer and also a board member of Renewable Energy Vermont, an alternative energy advocacy group. "We're actually booking projects for next summer, and we're building a new facility."
The story is much the same for other installers in Vermont who have seen their businesses double or triple in the last few years. The state had just 10 installers in 2001; now there are 20. And industry leaders say the market could support many more. State incentives partially funded more than 200 renewable energy projects inx 2004 and 2005 – the bulk of them solar – and the next round this fall could help foot the bill for another 250 in the coming two years, according to the program's director.
And solar technology is more affordable than it was even 10 years ago. The panels, that convert solar energy into electricity, are more efficient, start-up costs are falling and the advent of net-metering in the state – a technology that allows solar users to sell excess power back to utilities – has taken the edge off the upfront investment in the technology.
Installers and industry analysts, however, said the single largest factor in the current boom is consumer awareness.
Clean option, clean conscience
Global Resource Options CEO Jeff Wolf said the landslide of media reports on global warming, heightened international fuel demand and even the price of gasoline at the pump have been a boon to the solar energy industry.
Start-up incentives are larger in southern New England, but Vermonters seem willing to pay upfront for solar systems, even if the price tag is substantial and the payback period is more than a decade.
"There is a culture and an aesthetic of 'OK, let's do it,'" he said. "There is a growing cultural awareness that we are in a complete mess with our overall energy supply and security. Oil prices are rising and there is nothing we can do. Propane prices are rising and there is nothing we can do. Well, here is something we can do. People are realizing that there is more to an electron than cost."
Rutland area installer John Blittersdorf of Central Vermont Solar and Wind said he is seeing the same driving force in the southwestern Vermont market.
"There is really a combination of three things driving it now. First, the general awareness of energy issues. If you read any news you know what's going on. Second, the environmental movement and the third is off-grid systems."
Blittersdorf said high construction costs have made extending the power grid to remote homes cost-prohibitive.
"The price of wire is going up and up and some people are getting quotes to extend a line that are astronomical, $60,000 to $100,000. I can put in a heck of a solar system for less than that."
Many Vermonters, however, still do not realize that solar is a viable alternative.
Andrew Perchlik, executive director of Renewable Energy Vermont, said that while alternative-energy awareness is growing, solar is still far from mainstream.
"This isn't a standard building option like a granite countertop yet," he said. "But I think that's the way we're headed."
Perchlik said energy independence is an increasingly attractive option for new home construction, and said people with existing homes are electing to install the technology both for financial and ethical reasons.
"There are folks out there just wanting to produce their own power and lower their environmental footprint," he said. "People that have been critical of the way power is produced and now want to walk the walk."
Perchlik said the state needs more qualified installers, especially in the Bennington area, but that the skills can be hard to come by.
"This isn't something that is well established like the plumbing trade," he said.
Incentives fueling demand
The demand for installers is likely to spike even further when the next round of state incentives becomes available this fall.
Installers say the incentives often put the alternative systems within the reach of average families and that savvy shoppers have likely been delaying projects until those upcoming grants become available.
"The incentive is definitely a driver, even for smaller projects," Grundy said. "If (homeowners) have been on the fence, this can push them over."
The Vermont incentive program gets its funding largely from money paid to Green Mountain Power and the Central Vermont Public Service Corp. in the wake of the 2001 sale of the Vermont Yankee nuclear power plant to Louisiana-based Entergy. Entergy is also paying into the incentive program through the state's Clean Energy Development Fund.
Incentives are available for both solar and wind projects. The initial round paid for 200 renewable-energy systems and wrapped up in the summer of 2005. Nearly $850,000 was awarded during that round.
A second round, totaling about $800,000, began in September 2005 and added 250 new renewable-energy systems. By January 2006, incentive funding for solar installations had been exhausted. However, in July, the program received a boost of $500,000 from the Vermont Clean Energy Development Fund, according to the program's Web site.
But despite the hundreds of systems it has helped to provide, Vermont lags far behind neighboring states in the amount of aid it gives homeowners looking to make the switch. Connecticut and New Jersey, for example, offer enough money to fund about half of start-up costs, while the next round of Vermont's plan will provide only about 20 percent of those costs for homeowners.
That difference explains why regional installers say Vermont's market is lagging slightly behind the rest of the region.
"Vermont's market is growing, but not quite as fast as other parts of the Northeast," said Montpelier-based installer Leigh Seddon, whose Solar Works Inc. is working on projects across New York and New England. "Places like Massachusetts and Connecticut have existing programs that are very well funded."
Supply chain shortages
That sizzling New England market is causing some problems in the supply chain as producers struggle to keep installers stocked with panels, and refined silicon becomes harder to obtain. Refined silicon forms the heart of a solar panel; it absorbs a small amount of the energy from the sunlight that strikes it. The energy then knocks electrons loose from the silicon, producing the flow of electrons known as electricity.
"The panel supply is tight, lead times are long and certain brands are just not available," Grundy said. "We're also seeing raw material shortages. These panels use highly refined or purified silicon and the other market that uses that silicon is the computer market. In computers, we're talking about grams, but in solar energy, we're using pounds and in some cases tons."
Grundy said the panel production process is stalling out at refineries.
"As the other capacities have increased, the refining hasn't been expanded," he said.
David Hill, director of Vermont's incentive program, said it's often difficult for the relatively small Vermont market to compete for panels. Delays, however, don't mean the panels won't show up eventually.
"Globally, the supply chain is tight and we tend to be a small market and competing against the bigger guys with more market clout can be tough," he said. "On the other hand, the industry that we have is well established and doing well enough to secure a supply."
Wolf said companies like his Global Resource Options have benefited from long-term supply agreements.
"There are shortages out there, but we've been able to secure an $88 million contract with Evergreen Solar out of Massachusetts for a four-year supply. But, some people are seeing a crunch."
Start-up costs high, but technology evolving
Even if the panels and installers are available and home owners are able to secure incentives, the cost of going solar is still substantial.
Installers say systems that can provide the majority of a household's power cost $25,000 to $40,000. In Vermont, even with a 20 percent contribution from the state and a $2,000 tax break from the federal government, a system won't pay for itself for more than 10 years and possibly closer to 20.
Vermont's net-metering program helps shorten that horizon. Homes equipped with solar panels but that also remain tied to the power grid can spin their meters backward during the sunny summer months, building up credit at their local utilities for when the clouds emerge in the winter.
The high start-up costs are also balanced by evolving technology, which has seen panel efficiency increase 50 percent in the last decade, from 12 to about 18 percent.
Cheaper options are on the way as well, with something called thin-film technology leading the list of future alternatives. Flexible rather than rigid, thin film is less efficient that standard panels, but could be used to cover standing-seam roofs for less money, turning the entire tops of houses into solar generators.
Solar water heaters are also a prudent first step for homeowners without the capital to upgrade to a solar-electrical system. With a pay-back horizon of less than a decade, a solar water heater is within the reach of almost any household.
"The demand is high for those, but maybe not as high" as the solar electrical systems, Grundy said. "The economics are actually better with solar hot water, but the electrical systems have more sex appeal because they are perceived as high tech."
Integrated solar hot water, household heating and electrical systems are also on the way, and radiant floor heating is also available, but not widespread.
No end in sight
Installers and industry analysts see no end in sight for the solar boom. Many expect prices to continue to drop and incentives to rise.
"We're looking at doubling in the next year," said Blittersdorf of Central Vermont Solar and Wind. "We have a year's worth of orders staring us right in the face."
Solar Works' Seddon said his company is growing quickly.
"It's been steady, but also very rapid in the last few years," he said. "What many people don't realize is that New England has very good sunlight, only about 20 percent less than a sun state like California."
Grundy predicted the incentives would be gobbled up quickly this fall, and said he does not expect a drop-off in the current demand for the technology.
"I foresee demand continuing to increase and it may be some time before we see things catching up," he said.
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