Even with a production floor full of high-tech machinery at Bellingham’s itek Energy, which produces solar modules, one item Karl Untershuetz is particularly eager to show off is a small, modified table that allows workers to efficiently attach frames onto finished panels.
Unterschuetz, the company’s business development manager, said the table’s design was not developed by a highly paid research and development team, but instead by two employees on itek’s production line.
“Our efficiencies are found by the people that are working there, most of the time,” Untershuetz said.
Skilled staff members are one of several reasons itek’s directors give for the company’s success.
The solar manufacturing industry in Washington state is small, with itek being just one of two firms—the other is Arlington-based Silicon Energy—that produce solar panels and inverters that are certified by the state Department of Revenue as “made in Washington.”
But since its founding in September 2011, itek has grown to be the leader.
This year, the company is on pace to build four megawatts worth of solar modules, which would be twice that of its 2012 output. With a current staff of more than 30 people, itek expects enough activity in 2014 to add a second production shift.
And as company directors prepare for more business in 2014, they also have plans to compete on a grander scale.
Kelly Samson, itek’s vice president and founding principal, said he believes the company’s business model has benefited from an early decision to keep its ownership group small, focus on high-quality production and build a strong support base with firms that install itek’s products.
Samson also credited the expertise and initial vision of company president John Flannagan.
“More than anything else, frankly, it’s a very dynamic industry,” Samson said. “We have the virtue of being fairly nimble. We’re a small ownership group that can make decisions.”
Samson said the company has been in capital-spending mode for most of its early lifespan, mainly pouring money back into its production facility, which is located at 3886 Hammer Drive in Bellingham’s Irongate Neighborhood.
itek bought two new laminating machines in 2012, which quadrupled its hourly production capacity. Its also recently added machinery to make the process of laying out and soldering individual solar cells into panels more efficient.
Looking ahead, Samson said the company expects a lucrative future in producing a next-generation solar module with smaller, more energy-dense cells that would be easier to install onto small roof spaces.
“There’s a gap in the product offerings nationwide right now in that space, and I think that’s where we’re headed,” Samson said.
Unterschuetz said itek’s products are currently sold exclusively business-to-business, mainly to solar installers around the region. The company has also begun selling modules to a few electrical-supply firms, he said.
The high cost of solar-panel installations for homes and businesses has been a consistent challenge for players in the market.
To combat this, Unterschuetz has focused on developing good relationships with vendors, which he said has helped the company negotiate better prices with suppliers of solar cells and other materials necessary for itek’s modules. The company’s focus on developing technology to give its panels better efficiency and power output has helped make them attractive to buyers, Unterschuetz said.
State and federal government incentives help, too.
Tax exemptions and other incentives have helped make solar-power systems affordable for more home and business owners. Standard panel arrays can come with hefty price tags in the tens of thousands of dollars.
A major boost comes from the state Department of Revenue, which offers a complete exemption on sales-and-use taxes for equipment and labor needed to install solar systems that produce 10 kilowatts of power or less. It offers a 75 percent exemption for larger systems.
Also, under a renewable energy cost recovery program enacted by Washington state lawmakers in 2005, utility companies can pay incentives to customers who produce electricity through rooftop solar systems, earning tax credits equal to the cost of those payments.
But incentives have built-in shelf lives.
The cost-recovery system will expire in 2020 if it is not extended by lawmakers. And the tax exemption, which was set to expire this past summer, was extended in its final hours by the Legislature. It will be available to solar-panel owners through June 30, 2018, or Jan. 1, 2020, depending on their equipment types and sizes.
Samson said cutoffs on incentives make it more difficult to predict ebbs and flows of the solar business, which is already a risky and fast-moving industry.
He supported a recent measure, House Bill 1301, whose main sponsor was state Rep. Jeff Morris, D-Mount Vernon, that among other items would replace the “sunset” provision in the cost-recovery program with a rolling 10-year voucher system. Instead of having to apply for incentives each year, renewable-energy producers would be able to receive vouchers guaranteeing incentives for a full decade.
Morris, a longtime proponent of solar and other renewable energy options, has said such changes would give solar customers assurances that the incentives enticing them to buy panel arrays would not disappear before they are able to pay off their costs.
Samson said that most of his colleagues and competitors have long lists of changes they would like to see made to the current incentive programs.
But the cut-off dates on cost-recovery and incentive programs add uncertainty to the future of the solar business, he said.
“Not only is the time running out, but more importantly, it doesn’t really reflect the evolution of the industry,” he said.
Evan Marczynski, staff reporter for The Bellingham Business Journal, can be reached at 360-647-8805, Ext. 5052, or firstname.lastname@example.org.