Dip in solar cost leads to installation boom

In 1990, the average cost for one watt of solar-generated power was about $100. Today the cost is roughly $4 and it's expected to drop even further in 2012, says Chad Dickason, principal with Hamilton Solar of Reno.

Those reductions, coupled with rebates from utility providers and the federal government, are translating into big business for solar installation companies and parts suppliers, who are enjoying an increase in sales from commercial and residential installations throughout northern Nevada.

Eric Dahlgren, owner of Lux Energies in Reno, says solar installations account for about 30 percent of the company's revenues. But when the electrical contracting company was founded in March of 2008 it had no presence in solar systems. And Reno's Hamilton Solar has capitalized on the increasing prevalence of solar to grow from just three employees a few years ago to more than 50 today. The company employs about 35 to 40 installers and field workers.

Since the start of NV Energy's SolarGenerations program in 2004, there have been 597 projects installed in homes, schools, businesses and public buildings throughout northern Nevada, the utility says. These projects generate up to 9 megawatts of electricity. Statewide, NV Energy has paid about $80 million in solar incentives.

Bruce de Jong, president of AIMS Power, which produces the inverters that convert solar-generated direct-current power to alternating current, says the drastic decrease in cost of solar panels has led to the rise in installations. Costs have plummeted due to increased competition among solar panel manufacturers.

AIMS Power recently completed a nine-kilowatt solar array on its headquarters at 9736 S. Virginia St. at a cost of roughly $70,000, de Jong says. NV Energy offered a rebate of $2.30 per watt, and AIMS also received a one-time 30 percent tax credit. The company expects to recoup its $28,000 out-of-pocket expense in as little as two years.

"Going forward, depending on how much we use and generate will determine how much we save on our electric bill," says de Jong, who also installed a similar-sized facility at his home.

Rick Crocitto, owner of New Yalk Pizza, also plans on installing a solar system on 10 covered parking spaces at the venerable pizza parlor's new location to be constructed on South Virginia Street near Winco in South Meadows.

Crocitto, who operated New Yalk Pizza on Kietzke Lane for 24 years, says he can save 20 percent or more on his utility bills, which currently run about $1,500 a month. He's also contemplating installing a solar water heater at his new restaurant.

Other businesses in the region that have completed solar projects include Server Technologies of South Meadows and Pack-it, Stor-it, Park-it mini storage in Fernley.

"We are seeing prices where it makes sense financially for businesses," Hamilton's Dickason says. "It is getting to the point where businesses are getting good returns."

Despite the drop in price, solar panels still make up the largest expense of a solar facility. Other expenses referred to as "balance of systems" in the solar industry include racking to hold the panels, inverters to convert DC power to AC, and labor. Incidental expenses include building permits and man lifts to access roofs where panels typically are installed.

Currently about 96 percent of solar panels are manufactured overseas. China is the global leader, with about 65 percent of the market share, says Dickason. Solar power is used in two ways: The facility is either tied into the grid and excess power is sold to a utility, such as at AIMS Power and the Fernley mini storage site; or it is intended for "distributed generation," which means it's used only at the installation site.

The latter is expected to make up considerable amount of future installations in the industry.

"I think we will start to see more and more businesses that are ready to evaluate and move forward on solar projects; the numbers are there," Dickason says. "Over the next 12 to 18 months we will see a significant market growth that is targeting commercial businesses."

Lux Energies' Dahlgren worries that any changes to federal rebates could delay the volume of future installations. However, the industry could benefit from reduced costs for the balance of systems, he says.

"It is a lot of money up front," Dahlgren says. "It is a big investment but you know you can't count on the sun rising every day."