How to Succeed in Solar Power

“Working in the solar energy market is no easy feat. It requires a thick skin capable of withstanding the ever-evolving federal and state regulatory environment, which typically changes during each election cycle. Contractors also must stay knowledgeable about the industry’s fast-paced technology advancements, including module production, installation techniques and battery storage.

For the contractors that can overcome those hurdles, solar is a lucrative industry. In the United States, there are 55.9 gigawatts of total solar capacity, 250,000 people employed in solar-related jobs and 1,748,000 installed solar energy programs, according to the Solar Energy Industries Association.

And the industry is only expected to continue growing. According to the latest U.S. Solar Market Insight Report from GTM Research and SEIA, 2.5 GW of photovoltaic systems were installed during the first quarter of 2018, representing 13 percent annual growth—a number on track to compete with 2017’s growth rate. However, that expansion is contingent on policy at the state and local levels, which is not reassuring for contractors relying on a dependable economy for business growth.

“We’re trying to find ways to generate revenue outside of solar because the industry is so unpredictable and we never know what the next regulation will be. When it’s good it’s good, but when it’s bad it can be tough. Preparing for that has been extremely difficult,” says Erik Krivokopich, vice president of business development for M Bar C Construction, a San Marcos, Calif.-based design and construction firm specializing in solar carports, ground mounts and shade structures. “It’s a ‘solarcoaster’ because you can’t predict what states will get incentives and whether they will change.”

POLITICAL UNCERTAINTY

The federal government currently offers a 30 percent solar investment tax credit to incentivize businesses and homeowners. Created by the Energy Policy Act of 2005, the credit was scheduled to expire in 2016. In late 2015, it was extended to expire in 2021, though the credit will decrease between 2016 and 2021.

In and before 2021, homeowners and businesses will receive a 22 percent tax credit. After 2021, homeowners will receive no credit, and businesses will be eligible for a 10 percent credit.

“The federal government has had a consistent tax credit. It’s been threatened, but it has been a consistent 20 percent to 30 percent tax credit,” Krivokopich says. “In the next three years, it will go down to 10 percent, and then states will be incented to do more.”

Almost every state offers credits or incentives as well, with California, Massachusetts, New Jersey and New York leading the way. “In California, the incentive stays constant; the state wants to go green,” Krivokopich says. “California has a goal of 50 percent renewable energy by 2030. Its aggressive, and I don’t see it changing anytime soon.”

On the East Coast, New York launched the Clean Climate Careers initiative in mid-2017, which aims to dramatically increase the state’s solar capacity and create 40,000 jobs related to renewable energy and building efficiency. As part of that initiative, the state invested $1.4 billion in 26 large-scale renewable energy projects, including 22 utility-scale solar farms.

By 2030, through its State Energy Plan, New York aims to achieve a 40 percent reduction in greenhouse gas emissions compared to 1990, as well as generate 50 percent of the state’s electricity from renewable sources and increase energy efficiency by 600 trillion BTU.

While federal and state incentives provide a push in the right direction to increase U.S.-based renewable energy, the instability related to election cycles and political gains leads to uncertainty for many contractors.

“Some states, like New York, have politicians who aspire for higher things and want to brag that their state has most renewable energy. We’re caught in that trap,” says Jason R. Ashlaw, director of performance improvement for  Demco New York Corp., an East Syracuse, N.Y.-based electrical subcontractor that’s the largest solar installer in the state.

At the federal level, in early 2018 President Trump imposed the 30 percent Section 201 tariffs on imported solar modules and cells. The tariffs will decrease 5 percent year over year for four years, and the first 2.5 GW of imported solar cells are exempt from the tariffs each year.

Previously, international manufacturing companies forced U.S. manufacturers to significantly drive down prices, making it hard for domestic companies to compete in the market. Supporters praise the tariffs for allowing domestic manufacturers to be more competitive; others fear the tariffs will put some solar projects in limbo, threatening jobs.

In late May, President Trump also imposed 25 percent tariffs on steel and 10 percent on aluminum imported from the European Union, Mexico and Canada.

While the tariffs are expected to increase American steel and aluminum manufacturing, they’re also driving up materials prices—costs that will be passed on to the solar industry, as many supports for solar structures are constructed with steel.

TECHNOLOGICAL ADVANCEMENTS

In addition to monitoring changing incentives and regulations, contractors working in the solar industry need to keep up with rapidly changing technology. In the past five years, the efficiency of modules has more than doubled, providing twice the production.

“We started doing solar when it was expensive, at $6 to $7 per watt; now it’s $2 per watt. With carports, a certain size panel is producing much more than before using the same footprint,” Krivokopich says. “The cost per watt has gone down based on the square footage price. So the same size structure can produce so much more power.”

The panels have become easier to install as well. The first system Ennis Electric- a Washington, D.C., area electrical contractor that specializes in solar—installed required support from underneath the roof. Today, panels can be laid on the roof, plugged together and held down with cinder blocks.

Education about panels has improved as well, allowing companies to install panels for optimum results. “Wind load and other environmental factors are considered in the drawings,” says Ennis Electric Project Manager Garth Ganow. “They review and design panel systems at a certain wind speed and also determine what tilt angle will maximize output. That’s all planned further in advance.”

As the industry and technology mature, so do the codes. Many provisions in today’s National Electric Code are related to solar. In the beginning, solar was a “grey area” in which little was known, according to Ganow. Electrical contractors put a simple label on power inverters’ disconnect switch, which presented a safety challenge for fire departments that need to know how to shut down all electrical components in a building. Now, electrical contractors must label every conduit, combiner box, utility meter and disconnecting means, as well as add a placard showing the system and its location.

“As the industry starts to mature, the regulations seem to get stiffer,” Krivokopich says. “As solar becomes an actual trade, which it will, people will start to put in specifications that require us to jump through more hoops. I think it will be more difficult to do design-build work in the future and it will be more competitive, so mom-and-pop shops will be able to bid on jobs just like an electrician.”

SOLAR IS HERE TO STAY

Though the solar industry is still in its infancy and no one truly knows where it will go, Ashlaw predicts a solar set next to every small town in the United States, as the sun is a renewable resource available everywhere. “In my town, we have a major river that’s dammed every 15 to 20 miles, but not every town has that luxury. Every town has the luxury of the sun,” Ashlaw says.

Community-driven solar production presents an economical way for local governments to power their towns or sell power to larger utilities.

Solar also presents an opportunity for job creation across the country. Often, solar farms are created in rural areas of the country with few job opportunities.

“The shining star in all of this is the number of employment opportunities solar has created,” Ashlaw says. “You can hire people who don’t know a lot about solar, but have a good work ethic and like working outdoors. They can be trained in a short time and be very effective. It gives a person a chance to get a good job.”