3 ways to know when the time is right to install solar
By Bill Hatton
Solar energy, both photovoltaic and thermal, is expected to be the fastest-growing renewable electric- generation source, excluding hydropower, through 2040. That’s according to the U.S. Energy Information Administration. The federal agency estimates that solar will end up with about 7.5 percent share of that market by that time.
The industry itself backs up those numbers: Photovoltaic installations experienced some of its highest-quarter growths in the industry’s history in 2013. That’s according to the Solar Energy Industry Association. It anticipates strong growth in commercial solar power installations this year.
When is the time right for a company to go with solar? Geoff Mirkin, partner at the commercial- and residential-installation firm Solar Energy World, Elkridge, MD, says most of his commercial customers have three common qualities:
1. The building is solar eligible. That means the building has a flat roof or a sloped roof that faces south, and it’s unshaded. “We look at a rooftop and ask, ‘Do they have either a flat roof that gets a substantial amount of sun during the course of the day, or do they have a sloped south-facing roof that gets a substantial amount of sun during the course of the day?’” says Mirkin. “And, do they have enough space?”
Note: Solar goes beyond rooftop panels. There are building- integrated photovoltaics that generate electricity. For example, there are solar products that are installed over glass, giving windows an electric-generation function.
2. They have cash that’s not giving them a return on investment they’re happy with. ROI in solar requires a combination of financing, tax credits, possibly state grants, and renewable energy credits. Together, in the right circumstances, these can improve cash flow.
“A lot of times, people may have money sitting in investments,” explains Mirkin. “They may have money sitting in a one-percent interest bearing account. If they moved it over to solar, that cash position could get them 10 or 12 or 15 percent. They can move that money and get a better return, instead of sitting on it.”
When is it not right? “We meet with people all the time and they look at the economics and say, ‘This is great. How do we get started?’” says Mirkin. “And then we run the finances and their company credit rating doesn’t enable for them to qualify for the lease or the purchase. They need to be profitable; not everyone has the tax liability, so the tax credits don’t make sense for them.”
3. They are in a position to take a long-term view. There are a variety of ways to finance solar, but usually it takes about 10 years to recoup the investment. After that, a company basically has a “free” (or low-maintenance cost) of electricity.
“When we do an investment review for someone, we show them what the utility costs are going to be if they did nothing, and what the cost of solar’s going to be, and then draw it out of a 10- or 20-year cash flow,” says Mirkin. “We show them the tax credit they can get; we show them the depreciation numbers, and then we show them what those energy credits would be worth.”
Spotlight: How solar works
When it comes to generating electricity, the engineering principle is simple: Spin a magnet inside a copper coil. (More technically, it’s “create an oscillating magnetic field within a conductive material.”) Hook up conductive wires in a circuit to the coil, and electric current starts moving down the wires.
The hard work in power-generation occurs in spinning the magnet. You can do it one of two ways: You can start a fire and boil water; steam rises through blades, and the blades turn the magnet. Or you can take advantage of natural forces, such as waterfalls or wind, to turn the magnet. Turn a big enough magnet quickly enough, and you’ll generate an electromagnetic field that can power a city.
That’s where the energy industry breaks into niches. Dig deep enough into the hot parts of the earth—you have geothermal. Splitting atoms give off heat; that’s nuclear. Use incendiary fuels, and you have the natural gas, coal, and oil industries. Focus the sun enough to boil water, and you have solar thermal.
Beyond turbines, there are other methods of creating electricity. Squeeze certain kinds of crystals and they’ll generate some voltage. Friction can cause electrons to “rub off,” creating a static charged field. And certain materials will naturally generate an electromagnetic field when light strikes them: They are called photovoltaic (PV) materials. Photons (sort of a energy unit of light) hits these semi- conductive materials, and that energy causes outer-ring electrons to fly off. These electrons knock electrons off the next atom in a circuit, and so on, until you have electric current.