Hazy days for solar

SunLion marketing manager Matt Santoff stands among solar panels at its Dairy Road showroom. (Justin David Graybill/Sunday News)

Ben Zook walked into his Belmont Solar showroom on a sun-splashed Friday and hefted one of the solar panels.

It was relatively light, but solid.

Zook said that description also applies to his business volume in Gordonville, where he focuses on off-grid setups for Old Order Amish.

But some other installers here are faring less well, as the solar energy industry tries to cope with stormy weather.

Just last year, the solar industry was basking in good times. Worldwide, an explosion of low-priced solar panels led to an installation frenzy.

Solar became the fastest-growing global energy sector.

Plenty of projects by agriculture, utilities and other companies are still in the pipeline.

But several factors have made the industry's outlook cloudy.

The recent flood of new construction has generated an oversupply of solar renewable energy credits.

(Solar installation owners sell the credits to big electricity suppliers so the suppliers can meet state minimums for having solar sources of electricity.)

In Pennsylvania, the abundance of credits has caused their market-set value to tank.

And that's not the only shadow on the solar industry these days.

All of the state's Sunshine rebates for new solar energy systems, championed by former Gov. Ed Rendell, have been handed out.

Gov. Tom Corbett's administration has no plans to put more money into the rebate program.

So new applicants only can get a rebate if an already-approved project falls through.

All this, coupled with the sour economy, is causing demand for solar installations to dim here.

Some solar installers already are opening offices in states with better incentives.

"People are going to lose jobs" in Pennsylvania, said Dylan Kautz, vice president of operations at KC Green Energy in Lancaster.

"We're looking to operate in other states (in addition to Pennsylvania) because we know that Pennsylvania is not going to be supportive."

SunLion Energy Systems Inc., 2330 Dairy Road, is hiring New England residents to staff a new office in Westborough, Mass.

Solar supporters are pinning hopes on a bill that could resuscitate Pennsylvania's solar industry by adjusting the price of renewable energy credits and barring transactions across state lines.

Zook said his business is here for the duration.

While the trends worry him, he said, the sun will keep shining and prospects one day will brighten.

"We created this boom and bust cycle ourselves."

Cliff on the mountain

Solar remains a sliver of the energy market.

But solar panel prices have dropped by two-thirds since 2008.

That set off a solar boom, as have government rebates and subsidies.

The roots of the Pennsylvania surge, though, actually go back to 2004.

At that time, Harrisburg directed utilities to buy more solar energy each year through 2021 until the total reaches one-half of 1 percent of Pennsylvania's electricity portfolio.

But the market grew 500 times faster than expected, according to the PennFuture environmental advocacy group.

Since 2008, the first year of the Sunshine subsidy, Pennsylvania installers say their ranks have grown from about 30 businesses to more than 700.

Solar capacity in Pennsylvania nearly doubled last year, said PennFuture solar program project manager Sharon Pillar.

The industry is rightly shifting from subsidization to independence, said Ben Groff, residential contract manager of Advanced Solar Industries in New Holland.

"Some of us are going to leave the market" after recently jumping aboard to reap the Sunshine windfall, Groff added.

"Some of us are going to adjust."

SunLion marketing manager Matt Santoff also sees a bright lining in the solar cloud.

The end of Sunshine dollars means "we no longer have to pay prevailing wage on solar projects that are tied to the rebate program," Santos said.

That saves customers money and cuts administrative costs, he said.

But there are negatives, too.

Pillar said the proliferation of solar installations has depressed the value of solar renewable energy credits, from $300 two years ago to about $30.

Market volatility makes it tough to predict how long it will take for a solar investment to pay for itself.

Now, Pillar added, though federal incentives remain in place, "people are not investing" so much in solar.

"They've come to a cliff on the mountain."

Businesses are feeling the pinch, said Smucker's Energy salesman Javan Lapp in Kinzers.

"It's getting harder to sell the systems."

He said his 3-year-old company with 10 employees is digging in and diversifying.

"We're going to stay here," said Lapp, who like many of the installers interviewed for this story also sells wind turbines.

But Smucker's is also increasingly pursuing solar jobs in neighboring states, he said.

Massachusetts, where SunLion was scheduled to open its new office last week, is known for its strong solar rebate program.

Pennsylvania, an early solar adapter, is "really falling behind" other states, KC Green Energy's Kautz said.

Many installers are not shy about assigning blame.

"Our current governor isn't solar's best friend," Lapp said.

Jim Cramer, the founder and president of Phoenixlink Inc., a Lancaster solar installer, said he believes "the industry's taking a beating at the hands of oil and gas."

Solar advocates point out that the short-lived Sunshine money –– $180 million in rebates for residential and business solar development –– pales in comparison to breaks the state gives traditional fossil-fuel industries.

Patrick Henderson, the governor's energy executive, said the Sunshine program "was intended as a one-time shot in the arm ... that definitely worked."

State leaders "absolutely want (solar) installers and businesses here," Henderson added, but those businesses must be self-sustaining.

"What we don't want" is to tweak the market every few years, he said.

But Pillar said other states have expanded their alternative energy program goals to support real-world demand.

Pennsylvania installers hope Harrisburg does just that by passing House Bill 1580, a bipartisan proposal introduced last month by Rep. Chris Ross (R-Chester).

Among other provisions, the Ross bill would roughly double the portion of solar energy that utilities must buy in 2014.

"That would make a huge difference," Pillar said.

Without it, "we're going to lose the bulk of our solar market."

Contact Sunday News staff writer Jon Rutter at jrutter@lnpnews.com.

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