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This article was originally published Sept. 4, 2013.
By Evan Marczynski
The Bellingham Business Journal
Solar-power systems have been seen as the future of alternative energy for decades. But price tags on solar panels—which can range from $30,000 to more than $90,000 for a building array—have often left them in the exclusive domain of property owners with plenty of spare cash.
Yet in Whatcom County, with state and federal incentives, low-interest loans and other initiatives, local proponents, manufacturers and installers are starting to say going solar can be affordable for just about anyone.
“You don’t even need to worry about whether it’s good for the environment or not,” said Alex Ramel, a policy and energy manager with the nonprofit Sustainable Connections. “It’s just a good financial decision.”
Along with the rosier economic outlook, nationwide solar production is growing. In 1990, there were 19 U.S. companies making solar panels—but by 2009, there were 101, according to the U.S. Energy Information Administration.
In Washington state, government officials and lawmakers plan a new push for clean energy jobs and the use of renewable power sources, according to the Department of Commerce’s 2012 State Energy Strategy. By initially focusing on the state’s transportation sector, commerce officials hope to cut statewide spending on energy, which when adjusted for inflation has increased 70 percent over the past two decades.
Washington spends more than $20 billion annually on energy, according to the commerce department, most of which is sent out-of-state to pay for power generated from fossil fuels.
In recent years, state lawmakers have initiated a series of incentives for residents to use renewable energy sources such as solar, wind and anaerobic digesters. When it comes to the incentives, solar users have a slew to pick from.
For one, the Washington State Department of Revenue 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.
On the federal level, part of the 2009 stimulus package included a 30 percent tax credit for owners of solar panel installations.
With panel installs requiring large chunks of money upfront, having the ability to recoup an initial investment is key to making solar financially viable, said Joshua Miller, manager of Western Solar Inc., a Bellingham-based solar installer.
“To make the economics of solar pencil out, you really need to take advantage of the incentives,” he said.
Miller said solar-panel installations have grown in Whatcom County over the past couple of years, in part from financial incentives, but also due to word-of-mouth popularity. He added that Western Solar encourages building owners to make other energy-efficient retrofits before buying solar panels, including weatherizing windows and doors and installing efficient lighting and heating systems.
The Leopold goes solar
David Johnston, majority owner of The Leopold retirement residence in downtown Bellingham, installed 36 solar panels on the roof of the historic building in March. The Leopold’s system is expected to produce 8,000-9,000 kilowatt-hours of electricity annually, which would be about 10 percent of the building’s total power consumption.
The Leopold financed the project with a low-interest loan from Banner Bank, which was procured with help from the Community Energy Challenge, a partnership between the nonprofit groups Sustainable Connections and Opportunity Council that helps businesses and homeowners reduce energy costs by implementing energy-efficient projects.
Johnston believes The Leopold will be able to pay off the cost of the panels within five to seven years—a return-on-investment period that Joshua Miller said is common for commercial projects, especially if owners take advantage of another solar-power incentive that pays solar producers for the power their panels generate.
“We take the long view on this, and being paid back over a period of five to seven years is acceptable,” Johnston said. “It’s going to work out really well for us.”
Local production equals more savings
Owners receive rebates from the state and Puget Sound Energy at a base rate of 15 cents per kilowatt-hour of energy produced. But if they use solar panels and power inverters made in Washington state, the rebate jumps to 54 cents per kilowatt-hour.
Itek Energy, a Bellingham-based solar panel manufacturer, built the panels used in The Leopold’s solar array.
Karl Unterschuetz, Itek’s project director, said the company’s production has nearly doubled each month since its founding in fall 2011.
“Right now, we’re anticipate our growth to continue through the fall,” Unterschuetz said. “The solar industry in Washington is gaining more traction. People are aware that it works, and the incentives are making it a good deal.”
Itek recently installed new machines on its production line, that Unterschuetz said could eventually push the company’s daily output from making 50-55 panels to close to 100.
Incentives have limited shelf-life
Miller said he sees a positive outlook for Western Solar, as well as the Washington solar industry in general, for the next two to three years.
Beyond that, however, growth in the sector will depend on whether state and federal lawmakers will extend incentives for solar power production. Washington state’s exemption on sales-and-use taxes for solar power equipment is set to expire on July 1, 2013, according to the Department of Revenue.
Miller was also concerned about the possibility that the solar industry could lose the federal tax credit, which would expire in 2016 unless Congress decides extend it.
With the incentives fueling the demand, Miller said it was vital they remain in place for solar manufacturers, installers and producers.
“We’re definitely going to see a slow down if that doesn’t get extended,” he said. “We’re so incentive based, it’s boom or bust with our business.”