Jonathan Port and Pheng Port stand underneath a solar trellis at their company Permacity Solar, a solar energy business in California. (Photo: Kim Schneider)
The demand for solar power in the U.S. and worldwide is rising. Factories that make solar silicon are working hard to keep up. That’s keeping the price high for homeowners, but installers say their phones keep ringing with new requests. Living on Earth’s Ingrid Lobet reports on the sunny outlook for the solar industry.
GELLERMAN: It’s Living on Earth. I’m Bruce Gellerman. Solar promises an infinite supply of clean energy. So despite the fact that the cost of solar cells has been increasing lately, more American households than ever are running their refrigerators, computers, and lights off photovoltaic panels mounted on their roofs. Living on Earth’s Ingrid Lobet has our story.
PORT: You see the solar? That's the trellis product - that's big enough to run a house on the West side of LA.
PORT: Recently we've seen a much higher increase in residential demand. Without advertising, we are probably getting like 10 calls a week.
LOBET: And Port says people don't seem as concerned about how long it will take to pay back the cost of solar panels through reduced electricity bills.
PORT: You know before people kept playing these payback games. They'd say it's a 12 year payback and they'd say 12 years? I want three! We’d say three? We'd say how many years are you going to be paying for electricity? For the rest of your life!
LOBET: Permacity puts solar systems mostly on top of businesses and existing homes. Developers have rarely been persuaded to add 15 thousand dollars to the cost of their new homes. But recently there was an exception, a builder who had been considering integrating solar into his developments.
PORT: And he called me up very excited having seen the Al Gore movie. He says, "Jonathan, I've seen the light, everything I do is going to be photovoltaic now." And immediately orders three systems just like that.
LOBET: Across the country in Vermont, Jeff Wolfe runs Global Resource Options, a solar company that installs systems in the Northeast. He estimates his call volume has doubled over the last year, also without advertising.
WOLFE: We’re beginning to talk about the perfect storm, high-energy prices, natural gas oil and now electricity in many areas.
LOBET: Compared to when his company started 8 years ago Wolfe says, people who approach him now seem to know more about the technology, and have fewer doubts.
WOLFE: The questions really are now not, "Why should I do this?" but "How does it work for my house here?" It's a huge leap forward in cultural awareness.
LOBET: More and more states are making it less expensive for homeowners to install solar systems with installation rebates or tax credits. In Washington DC, Rhone Resch at the Solar Energy Industries Association watches the popularity of solar electricity spread, state by state.
RESCH: As soon as these programs get put in place, we see an almost immediate rise in inquiries at the installer level. Just to give you an example, in California since the beginning of this year we have seen about an 80% increase in the amount of applications for new solar systems to be installed on both homes and businesses.
LOBET: And states are making it more financially attractive just as people are getting higher bills.
RESCH: In many parts of the east coast we've seen electricity this year alone rise by 70% and consumers are trying to figure out, "what can I do to actually lower my energy bill?"
LOBET: But the cost of solar electrical systems, often 15 or 20 thousand dollars, even in states with incentives, means it's still beyond the reach of many households. For years, prices had been going down. But demand was so high in Germany, in Japan, in Spain and the United States, that it sucked up all the available supply of one crucial solar element: silicon.
RESCH: Solar historically has been a very small consumer of polysilicon, basically purchasing the scraps and the leftover materials of the integrated circuit industry where today we have grown to the point in 2006 where we will consume over 50% of all the polysilicon produced in the world. We are now the polysilicon industry's largest customer.
LOBET: Resch says no one expected that.
RESCH: Our growth rate has been so rapid over the last 6 years that it caught a lot of companies short-footed, and we are now seeing them respond. The good news is the market’s working, and new polysilicon plants are coming online in 2006, 2007, 2008, such that there will be a full tripling of the polysilicon feed-stock by 2010 throughout the world.
LOBET: But meanwhile, when the material is scarce? The price goes up. And according to installers, some of that increase has been passed on to homeowners. Again, Jeff Wolfe.
WOLFE: Consumers are paying between 5 and 10% more for systems than they did a couple of years ago.
LOBET: While this doesn't seem to be hurting sales in some places, there are still others, like Houston, Texas, where even solar installers say they can't recommend solar-powered electricity to the average homeowner. Kevin Conlin at Solarcraft in Houston does a strong business selling solar panels to the oil and gas industry. Sun-power runs many of the computers on drilling platforms and out at remote Western wellheads. But when Conlin gets calls from homeowners fed up with their air-conditioning bills, he discourages them on solar.
CONLIN: When people call with those types of inquiries, as a businessman, I'd love to sell them a solar system, but as a professional I have to ask them if they've done all the other things to their home that have a better payback and are more cost-effective.
LOBET: So Conlin counsels Houston callers to put in compact fluorescent bulbs, shade their windows and lay in attic insulation. Even in cities and states with no solar helping hand, there is one sun-powered technology that does make financial sense for most people - solar hot water. Not the shiny sparkly blue panels of solar electricity, but the flat black of water coils directly absorbing the sun's heat. These solar thermal systems cost around $4,000. That's after the federal government's $2,000 rebate available to anyone. These systems are as common as weeds in some countries, but still rare in the United States.
RESCH: Israel has actually a requirement on all new home construction to include a solar thermal system. Spain has the same requirement and Germany in fact has a strong demand for solar thermal systems. So just to give you some perspective, in the United States we are installing about 6,000 systems a year. In Germany they’re installing 80-thousand systems per year, and in China they’re installing 250-thousand solar water heating systems per year. So we are way behind the curve.
LOBET: Installers say customers just aren't as interested in solar hot water. Jeff Wolfe in Vermont says it's a question of pizzazz.
WOLFE: It's not as glamorous, quite frankly. With solar photovoltaics you can make power and actually have your electrical meter spin backwards, and having a customer see their electric meter spin backwards the first time is just a truly memorable experience for them and for us. The smiles from ear to ear and the giddiness at sending power back into the grid is great to watch. There is no comparable experience for solar hot water.
LOBET: Wolfe says people are working to increase the visuals, the wow factor for solar hot water. Even with solar hot water and electricity less popular in the United States than some other countries, and even with the shortage of silicon, growth in this industry is very strong. The amount of solar real estate, total solar megawatts installed in the United States, has increased 250% in the last three years.
For Living On Earth, I'm Ingrid Lobet in Los Angeles.
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