Sunny with a chance of profits
Virginia’s race to cash in on solar
- September 28, 2010
The U.S. solar power industry is on fire. Demand for photovoltaic, or PV, systems, which convert sunlight into electricity, jumped by a staggering 2,500 percent from 2000 to 2008, according to the most current figures available from the Department of Energy.
Virginia rooftops glitter with evidence of this movement, though we’re late to the party. During the 20 years he’s owned Blacksburg-based Solar Connexion, Brian Walsh has seen incremental, consumer-driven growth, primarily in the residential market. Until now.
“Eight years ago there were four of us in the state,” says the veteran installer. “Today there are around 300 solar contractors.” And the commercial sector is scrambling on board.
What’s made the difference? Public policy. “It used to be a 25- to 30-year investment. Now, with all the incentives, it’s a 10-year payback,” says Walsh. “Maybe less.”
In August, Walsh completed a 21,000-watt solar panel installation in Radford on a former Goodyear tire factory, now home to ACME Panel Co., manufacturer of structural insulated panels. The owners calculate they’ll profit from the investment in as little as seven years.
Three key factors affect payback, explains Patrick Farley, an architect who owns Richmond-based Sunflower Solar and serves on the board of the Virginia Solar Energy Association.
The most basic is demand offset. The more electricity generated on-site, the less a building has to buy. “All the money you don’t pay to the utility goes into your pocket,” says Farley, “and the cost of energy is going up.” Even with Virginia’s relatively cheap, coal-dominated power, commercial rates jumped 30 percent in the past decade.
Add to this growing incentives. Last year the federal government dropped the cap on its investment tax credit for renewable energy investments, including PV. “Now it’s a straight 30 percent,” says Farley. “That’s real money.”
Also last year, $15 million in federal stimulus package rebates caused a stampede for solar projects in the commonwealth. Distributed by the Virginia Department of Mines, Minerals and Energy, the funds spurred nearly 8,000 kilowatts of new solar installations in the commercial sector alone.
Though many states, including our neighbor Maryland, and coal-rich Pennsylvania, sweeten solar deals with incentives of their own, Virginia has not yet offered any state-level funds. What we do have are local incentives. Alexandria, Charlottesville and Henrico County are among the nearly two-dozen localities offering property tax exemptions for PV installations. And as of this past July, local governments can establish Property-Assessed Clean Energy (PACE) financing programs for PV systems.
The final factor speeding investment payback, says Farley, is the Solar Renewable Energy Credits program, or SREC. Every time a building generates a megawatt of power, it earns a certificate, an inter-state tradable commodity sought by utilities to satisfy states’ Renewable Portfolio Standard (the legal minimum amount of electricity a utility must generate from renewable sources).
ACME owner Joe Fortier is looking forward to cashing in his SREC. Fortier was one of the lucky few to make the rebate wait-list, and he took the federal tax credit. Add energy savings, says Fortier, “and the system pays for itself.”
It’s no surprise the commercial sector is finally catching on to solar, notes Farley. “When you invest in this technology, it’s like installing a cash-flow machine.”