In line with other news posted today on solar industry developments, we bring you the scoop on the state of solar in the U.S. from Mike Hall, President of Borrego Solar. Borrego Solar is unique in that they have a particular social focus. In addition to getting homeowners and businesses to go solar, they also help schools and affordable housing projects with their solar needs.
I heard Mike lead a panel on the solar industry at the GreenWest Expo two weeks ago. Today I had the pleasure of interviewing him to gain a better appreciation of two main obstacles in solar panel adoption in the U.S.: inconsistent state/federal policies and financing. With a revised federal policy framework that resembles that of many European countries, we could begin to see even more solar panels on roofs in coming years. This, coupled with new financing structures, could really help to propel the industry forward.
Triple Pundit: Why is there currently a shortage in solar cell production?
Mike Hall: There is currently not enough refining capacity to make the cells. Making solar panel cells is an energy-intensive purification process from sand. Manufacturing plants usually require a large capital investment (around $500 million) and investors need to know that the demand is there to justify such an expense. The present “stop-and-go” federal support does not help to encourage investors in this direction.
Triple Pundit: What about thin-film solar?
Mike Hall: One of the big things that’s happening right now is that 20% of solar cells are going into thin-film production. Thin-film solar uses surrogate materials. They’re about half as efficient as traditional solar panels, so they are less expensive, but you need more space. There’s a trade-off between efficiency and costs. There are only a couple of companies that are able to really pull this off right now.
Triple Pundit: Where does Borrego Solar stand in relation to thin-film and pv cells?
Mike Hall: We’re excited about thin-film. In the U.S. market, there hasn’t been an attractive offering yet. In the next few years there might be more options, such as rolling out thin-film across wide acreage on the ground. With roof applications, however, you’re trying to get as much power out of a limited space as you can.
Triple Pundit: What about solar-thermal? How do you think solar-thermal adoption by utility companies may influence your business?
Mike Hall: I don’t think it will impede on our business. We create renewable energy at the site. I think solar-thermal will definitely grow in its market, but we’re in the distribution-generation game.
Triple Pundit: As we know, federal/state incentives and rebates for solar panel adoption are not systematized here in the U.S. To complicate matters, such policies currently have a limited time span. If you could craft the most ideal policy for the industry, what would it be like?
Mike Hall: In our current system, you feed the power into the grid and the utility credits you for that power. In this way, installing solar panels only makes sense where electricity production is the most expensive. In contrast, in many European countries, the federal government pays you for every solar hour you produce for, let’s say, twenty years. The same rate is paid to everyone, regardless of whether you’re a homeowner, business owner, or investor. This encourages you to find the least expensive place to put solar panels and it is easier to justify and account for your initial investment. Also, the current patchwork of policies doesn’t allow solar businesses to scale very well. Every time you join a new utility company, there are different rebates in place. It is challenging to scale a business every time you have barriers to overcome.
Triple Pundit: What new forms of financing exist to make solar panels more attractive to homeowners and business owners?
Mike Hall: In addition to equity products, there are new creative systems called Power Purchase Agreements (PPA). PPAs can offer substantial returns on investment, but you don’t actually own the system. You benefit from reduced energy costs and little up-front costs, but the system belongs to the initial investor. In the end, it is an economically advantageous option, but there is an education barrier to help people understand how this agreement works. Our company has worked with 30-40 owners so far to complete a PPA.
Overall, on the financial side, you have to buy your electricity from somewhere. When you purchase solar panels, your returns increase over time as electricity rates increase. I think people are not used to investing in assets that last 20-30 years. With increased education, I think more people will begin to realize the financial benefits of being a solar panel system owner.