Businesses, governments embracing solar

By: QUINN EASTMAN - Staff Writer | Monday, June 18, 2007 9:13 AM PDT ∞

NORTH COUNTY -- Pumping water up the steep slopes of the 500-acre avocado grove at Farm ACW near Fallbrook can cost as much as $50,000 a month.

Grove manager Mauricio Tapia hopes to cut the farm's energy bills in half, however, with the recent installation of a massive $7.8 million solar panel system, one of the largest solar-powered irrigation operations in California.

The system is a notable example of how large energy users are overtaking smaller, residential customers in the market for solar panels in San Diego County, industry analysts say.

Big businesses and governments are piling in, lured by tax incentives, state rebates and offers by San Diego Gas & Electric Co. and other companies to pay the capital costs.

Other examples include North County schools and water districts that are adding solar panels to the roofs of their buildings and carports. In May, retail giant Wal-Mart announced plans to install solar panels on 22 stores in California and Hawaii.

Solar panels still provide less than 1 percent of the electricity in SDG&E's market, according to figures compiled by Scott Anders, an energy policy specialist at the University of San Diego. That market covers San Diego County and southern Orange County.

But the increasing interest of businesses and governments means that the solar market is maturing, said Anders, director of the university's Energy Policy Initiatives Center.

"Residential customers were driving the market for the first three or four years of this decade," he said. "But the incentives are changing. Solar systems need to get big to grasp the economies of scale."

The maximum possible power produced by all operational solar panel systems larger than 10 kilowatts surpassed that of smaller, residential-type systems in 2006, Anders' figures show.

The larger solar panel systems were also being installed at almost twice the rate, kilowatt per month, of smaller ones in the first quarter of 2007.

A typical residential-sized solar panel system has the ability to produce a few kilowatts, about the same amount of power drawn by a clothes dryer.

Troy Strand, president of the San Marcos solar engineering company Independent Energy Solutions, says that he's seeing the market change, too.

"Right now, we're very interested in utilities, military and commercial," Strand said. "Our skills are more geared toward larger projects."

His firm designed a 100-kilowatt solar panel system atop the Reuben H. Fleet Science Center in San Diego's Balboa Park and an even larger system for Pfizer Inc.'s laboratories in La Jolla.

The science center's system is part of SDG&E's Sustainable Communities program, where the utility owns the solar panels and feeds the electricity directly into the power grid.

In return, SDG&E pays the museum rent for use of its roof and advises the museum on how its windows, lights and air conditioning can become more energy-efficient.

"We're trying to find more people with the right facilities," said Mike Niggli, SDG&E's chief operating officer, at the Reuben H. Fleet Science Center system's activation ceremony in April. The "right" facilities are apparently ones with large roofs.

Another one of more than a dozen participants in the program, developer Ryan Companies Inc. is planning to have solar panels installed atop industrial and commercial office buildings in Carlsbad that are part of its Bressi Ranch development.

Matthew Reid, an executive at Ryan, said he viewed solar panels as an integral part of an effort to make the project, as certified by the nonprofit U.S. Green Building Council, a showcase for energy efficiency.

Incentives changing

Big business is being drawn to solar, even though the rebate per watt to homeowners and businesses from the state for installing solar panels has been falling.

Solar panel systems in California costs between $8.50 and $9.50 per watt, which means that a small residential system generating about 3 kilowatts can cost around $25,000 to install.

A change brought by the new California Solar Initiative, administered by the state Public Utilities Commission, is one reason for increased interest from local governments and nonprofits.

Starting this year, they can get an enhanced rebate of $3.25 per watt of solar capacity installed, compared with homeowners' and businesses' rebate of $2.50 per watt from the state.

The 2007 change removes a disadvantage previously experienced by governments and nonprofits in that they were not able to claim federal tax credits, said Lon House, a Sacramento-area consultant who advises water districts across the state.

Owners of small solar panel systems get the rebate quickly after a check of their performance, but owners of larger ones get paid out over five years.

Getting a rebate requires that the solar panels be connected to a utility, which will reconcile what the solar panels generate with the owner's electricity bill over the course of a year.

Also, companies such as WorldWater & Power of New Jersey and SunPower, based in Sunnyvale, have begun offering to pay the capital costs of installing solar energy systems for big customers, private and public.

The companies own the solar panels and sell electricity to the local utility, and offer their hosts either rent or a set rate on electricity for a decade ahead.

"The solar market is becoming more sophisticated financially," House said.

In Valley Center, for example, WorldWater is negotiating with water district officials on a proposed 1 megawatt (1,000 kilowatts) solar installation on district-owned land near Lake Turner.

Residential rebates slow

On the residential side of the market, the Public Utilities Commission has seen a 70 percent drop statewide in the number of rebate applications for the first quarter of 2007, compared with a year ago.

The solar industry attributed the drop to a requirement, new this year, that homeowners getting rebates sign up for time-of-use metering. This would require them to pay more than they would otherwise for energy used in the middle of the day, when demand is high.

Sue Kateley, director of the California Solar Energy Industries Association, said that the potential drawback was muted in the San Diego area compared to the hotter Inland Empire, where more people have to have air conditioning on all afternoon.

Gov. Arnold Schwarzenegger recently announced a proposed fix that would relax the requirement.

Officials at the San Diego Regional Energy Office, recently rechristened the California Center for Sustainable Energy, who administer the rebates in the San Diego region, also said that the time-of-use metering was less of an impediment here than elsewhere.

Per-capita applications for residential rebates in the San Diego area are now coming in at more than twice the rate than those in the area served by Southern California Edison (around, but not in the city of Los Angeles), said the center's director of operations, Andrew McAllister, in an e-mail.

Energy center officials say what may hold back some homeowners is that installing solar panels is less cost-effective for households that use modest amounts of electricity because they pay lower rates than big users. The economic incentive to switch to solar is stronger for owners of spacious homes who may pay several hundred dollars a month, they said.

"Early adopters did it because they believed in it," San Marcos engineer Strand said. "Now economics are kicking in."

Even solar customers such as William Arterberry, owner of the Farm ACW avocado grove near the Fallbrook Naval Weapons Station, may find that their investments could take a decade to pay off. Farm ACW owns its solar panels outright and is eligible for a rebate of about $3.5 million, under the 2006 rate.

The avocado grower switched from SDG&E to its own generators during the energy crisis of 2000, but more recently, the high cost of diesel fuel drove him to invest in solar, gove manager Tapia said.

"The state needs more businesses like us," he said.

-- Contact staff writer Quinn Eastman at (760) 740-5412 or qeastman@nctimes.com.

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