My first engineering challenge was figuring out how big a solar collector I had to build to heat the water for my own household. Back then (1975) there were no commercial solar products to buy, there were no “standard” designs and there were no “rules of thumb” to fall back on. It was difficult to find any reliable data even on how much hot water a typical household in California uses. I designed and built my own pump control system from scratch, tracked down a small, reliable pump, put together the system and crossed my fingers.   Thank goodness it worked, or maybe I would have found another line of work. Needless to say, we have come a long way since then. Nowadays the engineering challenges are far more “conventional”, in that there are now codes and standard practices to interpret and follow. Perhaps our biggest challenge now is to use what we’ve learned over the years to evaluate the assertions of the various suppliers and manufacturers of new products and decide whether we believe their claims, so that we can determine which products to recommend to our customers.

2 - How is the rate of growth for solar installations for commercial buildings comparing with the growth of residential solar?

On the whole, both residential and commercial segments have grown substantially over the past 5 years, but local, state & federal incentives can have a huge impact on the growth rate at any particular moment in time. For example, each time the California state rebates reach a point where they are about to reduce to the next lower level, there is usually a large increase in sales activity, followed immediately by a slowing. Since the residential and commercial rebates have different pools of funds which reach their capacity levels at different times, activity spikes and lulls in each sector will occur at different times. Last year, due to the uncertainty around whether the Energy Investment Tax Credit (EITC) would be extended there was a huge surge in large-scale installation sales, since the year-end deadline was looming. Once the EITC was extended, commercial activity fell way off and has still not recovered. Year-to-date, largely due to the spike in sales activity at the end of 2008, commercial installations are up by about 130% over the same period last year, and likewise residential installations are up 55%. However, in recent months I’ve been seeing those numbers eroding downward, except for a spike in the last two months month caused by an impending residential rebate reduction. 

3 - Which type of installation generally gives a better ROI - Commercial or Residential?

Commercial projects have always outperformed residential projects in ROI, mainly due to the ability of a business to depreciate the solar equipment, especially since the depreciation schedule for renewable energy property is highly accelerated. In addition, until just recently, the residential solar EITC was capped at $2,000, while business has had available to it the full 30% EITC. And now, due to the Stimulus, business also gets to take their EITC as a tax grant, so their money comes in the form of a check within 60 days following the completion of the project (not so for homeowners). However, thanks also to the Stimulus, homeowners now receive the full uncapped 30% EITC. One other advantage businesses have is that they usually can accommodate larger systems, which allows for reduced costs due to economies of scale.

4 - What industries and businesses are the next growth area for solar installations?

Just about anyone who uses electricity is a good candidate for solar. The low-hanging fruit are the folks who use lots of electricity (factories, office buildings, municipal buildings, apartment buildings, restaurants, big box stores, groceries, and just about any medium to large business), and then there are the sites where the incentives and financing programs are better (San Francisco, Sonoma County, Palm Desert, for example). I guess that it would be easier to list who’s NOT a good candidate for solar: someone whose building is in the shade, someone who uses no energy, someone who uses so much energy that they can negotiate a special low rate from the utility. But even if you buy energy at a low cost, the public is becoming more and more appreciative of businesses which value the environment, so an investment in solar can be as important for marketing value as it is for the operations budget. Even utilities, which buy energy cheaper than any business can, are factoring an increasing percentage of renewables into their energy mix. Of course, with the Renewable Portfolio Standard and AB32 requirements, the utilities are getting a strong nudge from the government. I should also mention that we continue to see a steady market in residential distributed generation, which I predict will accelerate once property-tax based financing becomes widely available, which could happen in as little time as a few months from now.

5 - What about Solar Water Heating (SWH) systems in commercial settings --- are they growing too?

Indeed, commercial SWH is ready for growth, and in fact our commercial and multifamily SWH business has been growing pretty steadily for the past 5 years or so due to the volatile increases in natural gas costs, the increased public awareness about the dangers of Global Climate Disruption, and the creation of the federal 30% tax grant to replace the tax credit for the next 2 years. In addition I am expecting a strong growth surge in commercial and residential SWH business once the long-awaited CPUC SWH rebate program rolls out. The promised roll-out date is 1/1/10, though the CPUC staff recommended making SWH projects eligible for rebates retroactive to the date of the staff report in July of 2009. The plan is to ratchet down the rebate over time, so for those willing to take a leadership position it’s a good time to take action.

6 - What are your thoughts on why solar is such an important source of alternative energy?

First of all, let’s stop calling it “alternative” energy. The only reason it’s called that is because we think that fossil fuels are “cheaper”, but that’s only because we haven’t ever acknowledged the true cost of exploring, mining, extracting, processing, protecting, refining, transporting, burning and (especially) cleaning up after fossil fuels. If tax breaks for oil companies and publicly subsidized clean-up programs weren’t paying for a large part of those costs we would be calling coal and oil “alternative” energy. Solar is simple and clean, non-polluting, long-lasting, quiet, odor-free, and safe. We build PV modules and solar hot water collectors with little pollution or waste, put them out in the sun and they produce free energy for as long as they last, and they last a long time.

Of course, all forms of renewable energy are needed in the mix if we are to succeed in turning around the Titanic that is Global Climate Disruption. But solar is the most widely-distributed and plentiful renewable power source on the planet. At current PV module efficiencies, the average home in California has enough roof space to provide all of the home’s energy needs from solar alone. On top of that, solar energy is most available right when it is most needed – during the peak hot hours of the day. PV equipment has virtually no moving parts, so the durability and reliability of the average PV system far surpasses most other renewable energy sources.

7 - What have been the most important changes over the past 33 years to support the growth of solar energy in the U.S.?

Well, if you go all the way back to when I started my company, there have been two cycles of support, separated by a long period of reversal of support. In 1976 the Carter administration created the 10% Energy Investment Tax Credit, which has never gone away, and which was just recently increased to 30%. The State of California chimed in with its own state solar energy tax credit in 1977 (AB 1558) while the federal government increased the EITC to 40%, which added up to 55% combined federal and California state tax credits. This started a boom in the California solar industry which lasted until about 1986, when President Reagan and Governor Deukmejian allowed the federal and state credits to expire, effectively eviscerating the then-nascent solar industry. We then went through a period I call the “solar doldrums”, until 1998, when the State of California created the Emerging Renewables Buydown Program, which established our first PV rebates. This was a watershed moment for the industry, and the growth curve for distributed generation PV really began at that point.   Ever since then, except for a few funding glitches, some sort of rebate has been encouraging and supporting the PV industry in California, and more and more other states have jumped in with their own programs. But I have to say that California set the example and is still the dominant force in PV adoption in the US.
 

I should mention that just last week a Feed In Tariff bill, sponsored by the California Solar Energy Industry Association (of which I am proud to be the current president) was sent to governor Schwarzenegger’s desk. This bill puts into place a fixed purchase price that the utilities will pay for renewable power, similar to the hugely successful program in Germany. If the governor signs it we could see a whole new era of PV adoption in California.

8 - What do you think we are in store for in the next 5 -10 years as far as solar is concerned?

In 10 years solar will be considered a “mature” industry. In the shorter term I would expect to see far more utility-scale PV, along with other large-scale solar power technologies (concentrating thermal, concentrating PV, nanotechnology, etc.), driven primarily by renewable portfolio standards in most states (perhaps mandated nationally). There will very likely be a carbon cap and trade regime within the next 2 years which will tilt the playing field less uphill than it is today. If the government does the right thing the funds generated by the cap and trade will be distributed in a way that supports and encourages renewable power. So solar’s penetration into the commercial and residential distributed generation markets will strengthen, especially as new financing modalities mature (power purchase, lease purchase, property tax funding) and the new Feed In Tariff takes hold. Within 3-5 years the rising cost of “conventional” power combined with the dropping costs of solar will truly bring solar power into the mainstream and remove once and for all the moniker of “alternative” from our industry’s lexicon.

Gary Gerber