Pa. companies shying away from solar power


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Jeff Farbacher is in the minority. Two years ago, he decided it was a wise business move to put a 42-kilowatt solar array on the roof of the Zelienople plant where his company, Acutran, makes electric transformers.

The panels produce enough power to supply one-third of Acutran's electricity demand, and Mr. Farbacher expects to recover his investment in the next two years.

Not many small businesses get to that point.

Though no concrete statistic can back up what solar installers know to be true, it's evident that residential solar systems far outnumber commercial ones in Pennsylvania.

It's not for lack of incentives. Commercial clients get a federal tax credit for one-third of a solar project's cost, accelerated depreciation and up to $52,500 from the Pennsylvania Sunshine program, which is set to close at the end of the year.

It's also not because solar doesn't scale well. Such technology is actually more cost-effective with larger systems.

And it's not the Pittsburgh cloud cover. If Western Pennsylvania's sunshine isn't enough for a robust suntan, it can certainly power solar panels with the region's average of four hours of sunlight daily.

Add to that the falling price of solar panels and it can seem puzzling that home-owners are the ones opting for the capital expenditure, while small businesses are largely shying away from it.

Joe Morinville, president of Energy Independent Solutions LLC in Coraopolis, says the issue isn't just about the money; it's how quickly it can be recovered. "They're looking for a very close return-on-investment scenario, sub-five years. We're not seeing that for them right now."

Instead, the current payback period for commercial clients in the Duquesne Light territory is between six and eight years, he said. That's still ahead of the eight- to 10-year timeline for residential clients.

Mr. Morinville's financial models show that over a period of 25 years the cost per kilowatt of solar power will be about 7.9 cents for residential clients and 6.4 cents for commercial clients. According to PAPowerSwitch.com, a website run by the Public Utility Commission that compares the rates of utilities and competitive suppliers, Duquesne Light's current rate is 6 cents per kilowatt hour for small businesses.

Despite some high-profile solar adopters, such as Ikea and Kohl's, smaller businesses aren't jumping on the bandwagon.

"Solar just hasn't been economical for commercial customers for a long time," said Dave Grupp, head of portfolio and key accounts for Downtown-based energy supplier Direct Energy Business, which launched a $124 million solar fund last month with California-based solar energy distributor SolarCity.

The fund is specifically designed for commercial and industrial customers, who Mr. Grupp said have been underserved by the industry.

The fund will finance, install and own solar systems for participating businesses, who will be asked to sign 20-year agreements to buy the power generated by the solar panels. Mr. Grupp said a few companies in Pennsylvania have shown interest, but he expects most of the fund's recipients will be from states with better established solar markets, such as New York, New Jersey and Maryland.

Creative financing, such as lease-to-own solar deals, power purchase agreements and tax equity financing, are being offered by solar firms, but they take a certain sophistication and perhaps a lawyer to navigate, said Adam Rossi, president of Bridgeville-based installation firm Adam Solar Resources.

"The mom-and-pop pizza shop down the street isn't going to figure that out," he said. "If all that was just turnkey for everybody, it would be so much easier."

Mr. Rossi said about 90 percent of his work is residential. When he gets a call from a business, the conversation usually starts with a question about the return on investment.

Then it usually ends.

businessnews

Anya Litvak: alitvak@post-gazette.com or 412-263-1455 First Published October 17, 2013 8:06 PM


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