Let the sun shine on

Solar power booms in California, and more Central Valley customers are hopping aboard.

By Jeff St. John / The Fresno Bee

(Updated Sunday, July 30, 2006, 8:28 AM)

Jeff Brown has never seen a better climate for solar power than he's seeing today, and neither have his customers.

Brown has been installing solar power systems for 25 years, and his business, Solahart All Valley Energy Systems in Clovis, kept growing at a respectable 20% to 30% per year over most of that time.

But in the past three years, Brown estimates his business has grown 400%, for a very simple reason — while electricity keeps getting more expensive, installing photovoltaic solar power systems in California has never been cheaper.

"We're getting more and more walk-in customers, which we're not used to seeing, and we're definitely running more appointments," he said. Solar electricity "has gone crazy in the last three or four years. It's gone through the roof."

From the smallest home solar panel arrays to massive, megawatt-generating systems for industrial and agricultural clients, solar power is booming in California — and the central San Joaquin Valley is beginning to catch up to the rest of the state.

Solar power generated in the state has grown from about 3 megawatts in 2000 to 177 megawatts this year, a remarkable 5,900% increase, according to statistics from the state's solar incentive programs compiled by Environment California, a Sacramento-based nonprofit advocacy group.

That's still only enough to meet about one-third of 1% of the state's peak electricity needs, said Bernadette Del Chiaro, clean energy advocate for the group.

But with this year's creation of the California Solar Initiative, which will provide $2.9 billion in solar rebates over the next decade, solar power could grow to 3,000 megawatts by 2016, enough to cover about 6% of the state's peak power needs, she said.

In the Valley, solar power has grown from almost nothing before 2000 to roughly 12 megawatts today, said Mark Stout, an energy consultant with Fresno-based solar power company Unlimited Energy.

Several large-scale projects completed in the past year, like the $6.4 million, 1.1-megawatt system installed by Clovis-based fruit packer P-R Farms and the $1.5 million, 232-kilowatt system installed on the roof of OK Produce's Fresno warehouse, have helped that increase, Stout said.

But the majority of the Valley's growth in solar has come from systems of 30 kilowatts or less on hundreds of rooftops of homes and small businesses, with typical installation costs before rebates ranging from $15,000 to $150,000, he said.

"We're doing 10 systems a week" in that size range, he said.

A combination of state programs helps pay for solar installation costs. Stout said federal tax rebates and accelerated depreciation allowances for solar power systems — and the ability of solar power generators to reduce their electric bills by feeding power back into the electricity grid, known as "net metering" — allow customers to cut the base installation cost by at least half.

Take two extremes: P-R Farms' 1.1-megawatt system and the 5-kilowatt system Dr. Harcharn Chann installed on the roof of his Fresno home last year.

At P-R Farms, owner Pat Richiutti paid $3.2 million — about half of the system's total cost — with the rest covered by state rebates.

"It had to be an economic benefit, but it's also going to be an environmental benefit," Richiutti said. "It had to make sense on both sides."

He said it will take about 11 years to pay back the costs of installing the system, which provides half his company's peak power needs. So far, "the payback schedule seems to be on track. Hopefully, it will become accelerated" as electricity costs rise, he said.

Chann, owner and president of Cardiac Care Physicians Medical Group, said his $50,000 home system cost him about $25,000 after state rebates — and since then, his monthly electricity bills have fallen from about $500 to about $25.

"If I'm saving about $400 a month, that's $3,600 a year," he said — enough to pay back the cost of his solar power system, which he paid for in cash, in about six to seven years. He's since installed a 10-kilowatt solar power system on the roof of his office, which he said has reduced his monthly electric bills from about $1,000 to about $50.

While he does consider solar good for the environment, "my social goals are great, but if they don't save me money, I don't follow them," he said.

That's the kind of talk Brown said he is used to hearing.

"My customers are pretty much middle and upper-middle income, and they're conservative," he said. "The No. 1 reason people are doing this: They want control."

Brown added that the solar incentives now in place have not only reduced the amount of time it takes to pay back the cost of a solar power system with savings on electric bills, but in some cases have allowed customers to begin making money from a new solar power system right away.

"On a 30-year loan," he said as an example, "it doesn't cost you anything. The cost of the system, with interest and everything, is less than the cost PG&E will charge for electricity" that solar power generators can save by feeding their own power back to the utility.

That's what Mark McAfee, chief executive and managing partner of Organic Pastures Dairy Co. in Kerman, expects from the $1 million, 200-kilowatt solar power systems he's planning to install at his company's new creamery.

In addition to his company paying only about $300,000 of the total project cost, "We will be cash-flow positive from day one," he said. "The spread gets better and better as energy inflation continues to take its toll." While his company's interest in solar power is also based on his belief in sustainable energy and environmental stewardship — "we can't live on borrowed energy to live for the long term on this planet," he said. Making money on sustainability is vital for his business to survive, he said.

But Stout said such large-scale projects are relatively rare in the Valley, generating about 2 megawatts of power compared with about 60 megawatts across the state.

He said he believes there's a fairly simple explanation. Since the inception in 2001 of the California Public Utilities Commission program to fund such large scale projects, applications have far outpaced the money available, he said. And with the state's largest solar power companies concentrated in Southern California and the Bay Area, "it's a lot easier for them to develop [large-scale] projects in their backyards," he added.

That's one reason Richiutti considers himself very fortunate to have gotten P-R Farms' solar project on the funding list in 2005: "We were one of the last ones to get on it before the money ran out."

The program is almost too popular. At one point last year, Pacific Gas & Electric Co. received more applications in one day than it had money for the entire year, said spokesman Paul Moreno.

But the funding increases called for in the newly created California Solar Initiative should loosen that bottleneck, Stout said. In the case of PG&E, the initiative will boost 2007 funding to $154 million.

Moreno said the utility has given out about $130 million since 2002.

For Valley projects, that means "next year there probably won't be a waiting list," Stout said — and that could mean more large-scale projects like those at P-R Farms or the $8.3 million, 1.2-megawatt project being built by plastic container manufacturing company Peninsula Packaging in Exeter.

On the home front, Fresno City Council Member Henry T. Perea is proposing a city program that would provide up to $2,000 in rebates for homeowners who install solar energy.

That could be a boon to Valley developers, some of which, like Valley Pacific Builders in Fresno and Sundowner Homes in Visalia, are already building subdivisions with solar power systems included.

Only a few potential problems are clouding the horizon for the continuing growth of solar, Stout said. One critical factor will be whether Congress extends the federal tax credit for solar power systems, which is now set to expire next year.

"The federal tax credit is critical for businesses," he said. While the 30% credit is capped at $2,000 for home systems, there's no cap for business systems, he said.

Brown said the solar boom has driven up prices for silicon, the main ingredient in photovoltaic solar cells, and that price inflation could persist for the next 18 months or so.

Of course, the entire rationale behind providing solar power incentives is to bring down prices by allowing the industry to become more efficient and establish economies of scale, said Environment California's Del Chiaro.

If the California Solar Initiative can meet its goal of seeing a million roofs in the state equipped with solar power systems in the next 10 years, "we should get the price of solar cut in half," she said.

And the Valley will likely play an important role, she added, "given the growth in new homes there, and the obvious sunshine."