Alternative Energy

Brighter Days Ahead

Central Ohio’s solar sector continues to grow, powered by new technology, consumer interest and a strong showing by related startups.

By Bill Melville
From the May 2013 issue of Columbus CEO

Central Ohio’s average four hours of sunlight a day might sound like a pittance compared to the sun-drenched vistas of the American Southwest. But four hours goes a long way in terms of providing energy for the burgeoning Central Ohio solar energy industry.

“You can make money at solar here. The paybacks are in the five- to seven-year range and getting better,” says Tom Van Cleef, CEO of Worthington-based Shine on Solar.

Rooftop solar panels have become more common. Statewide, the solar industry now has more than 300 companies and employs 7,500 Ohioans, mostly through small businesses. Even during the worst years of the Great Recession, the region’s solar industry grew. Consumers can search for a solar energy firm through an interactive map at www.ohiosolarenergy.org, created by Ohio University and the Ohio Development Services Agency.

Westerville-based SolarVision started operations not long after Ohio’s alternative energy legislation passed in 2008 and has since completed $25 million in projects, says company President Greg Kuss. That includes a project at Evening Street Elementary School in Worthington and a 25-acre project in Celina. “On a sunny day, we’ll power more than 5 percent of the city,” he says.

Once employers get past the upfront costs, solar energy becomes more palatable. Even the country’s largest employer has turned to solar: Wal-Mart installed solar panels on 12 Ohio Wal-Mart and Sam’s Club stores, although none in Central Ohio. But their solar strategy likely makes that a matter of time. “You see companies that are known for managing their finances well making the decision to add solar,” says Eric Zimmer, CEO of Tipping Point Renewable Energy and chairman of the advocacy group Advanced Energy Economy Ohio.

Not all large solar projects have fared well. In January, the Public Utilities Commission of Ohio denied approval for a massive solar farm in southeast Ohio, essentially scuttling the project. The partnership between American Electric Power and Turning Point Solar would have generated 50 megawatts of power through 225,000 solar panels on 500 acres. What the ruling means for subsequent large projects is unclear.

Although Ohio has enough sunny days to make solar viable, the power source has other roadblocks. Coal-fired energy remains relatively cheap, and solar (like other renewable energy sources) runs into some political resistance. The state offers no incentive for solar construction, creating a big impediment for those without the means to fund a project upfront. “The person looking for two-year payback on what they buy is not looking for solar,” Van Cleef says.

Solar was a small part of Ohio Senate Bill 221, passed in 2008, which required electric utilities to get 25 percent of their power from alternative sources by 2025. However, solar incentives were carved out of the bill. Sen. Bill Seitz (R-Cincinnati) has introduced legislation that would review the impact of SB 221 and modify or eliminate alternative energy incentives.

As some lawmakers debate such incentives, the industry wants to expand them. Solar installations bring construction jobs, and the development of new technologies is driving some startups. “We have a solar industry with lots of people ready to be employed and come into the state if we can expand those initiatives. There is a lot of capital ready to be deployed in Ohio,” Zimmer says.

One of the biggest challenges has been the size of the solar energy carve-out. Only required by SB 221 to amount to 0.5 percent of energy use, the actual amount falls to 0.25 percent because the other 0.25 percent can come from contiguous states, Kuss says. “Every time you turn around, someone is putting in a megawatt here or a megawatt there. It has been well-received, but our solar carve-out is so small we are saturated,” he says.

Supply and Demand

Despite the financial hurdles, interest in solar energy is increasing. “The demand is slowly growing. We’re seeing good interest from homeowners. We’re also seeing some commercial and corporate customers,” says Gerald Kelly, director of communications for Athens-based Third Sun Solar, which has completed Central Ohio projects including panels on the Ohio governor’s mansion near Bexley.

“The return on investment might be 10 years out. That is a different model, and it takes people time to get their arms around it,” Kelly says. Once the system is paid off, the panels generate free power for decades. Most solar panels last about 40 years.

Financial concerns have increased the obstacles for widespread use of solar power in Ohio. The state has no limits on project size, which some states do enforce. That, in turn, has driven down the return that adopters can receive on solar certificates. “A couple of very large projects have come in. The consequence of that is one of the financial drivers was the solar renewable energy certificate market. That market has collapsed,” says Steve Giles, vice president of alternative energy for Dublin-based Hull and Associates. The company also operates Hull Energy, an asset development subsidiary.

Ohio’s low utility rates haven’t hurt interest in solar energy, likely because of a widespread recognition that rates won’t remain this low forever. Also, panels put commercial and residential users in the driver’s seat. “People see solar energy as a cleaner, better way to get power and a strong protection against future utility rate increases. You have some control over what your electric bills will be,” Zimmer says.

Hull advises clients how to take control of their energy consumption, based on which energy source and technology best fit their business. “Energy rates have become more volatile. Businesses need to have more ability to control energy and monitor their supply. Plus, there is still an increasing trend in businesses wanting to be more sustainable. All these things have to come together to give customers the ability to make informed decisions,” Giles says.

Oversupply has helped the industry and should produce more small-scale solar projects than in the past. The sector has received the most attention from commercial users, says Gary Rawlings, director of technology commercialization for TechColumbus. “[Commercial buildings] would hit peaks in the middle of the day when supply is at its peak. Residential still fluctuates a lot. The peak need for residential is early morning and late afternoon,” he says.

Aggressive time-of-day pricing, which could give solar producers credit for energy generated at peak times, hasn’t made any inroads into the market, Giles says.

Only American Electric Power incents solar energy system costs for residential customers, through a renewable energy technology program. In exchange for committing renewable energy credits (RECs) to AEP, the company will provide an incentive of $1,500 per kilowatt hour; the maximum incentive is 50 percent of the system cost or $12,000. The program has an annual funding cap of $400,000. Nonresidential customers can receive up to $75,000, with a $600,000 funding cap.

There is also an REC program under which customers can sell credits for $262.50 each in 2013. However, the price drops every other year until it reaches $50 in 2024, a factor that could entice potential solar customers to act sooner rather than later. There is no national renewable energy credit market, and those sold in Ohio are only tradable in adjacent states, Van Cleef notes.

The lack of state incentives is seen as a hindrance for widespread development. Solar energy’s lack of emissions and byproducts makes it popular among green energy advocates and environmentalists. But despite the appeal, for a business or homeowner, any solar investment still must demonstrate savings and efficiency. “If they really want to offset power with solar, they need some incentives. They need data to justify putting in solar or not,” Rawlings says.

Solar suffered a black eye after the collapse of Solyndra, the solar panel manufacturer that went bankrupt after receiving a $535 million U.S. Energy Department loan guarantee. With widespread availability of cheaper Chinese panels, the domestic solar panel is essentially gone. Local entrepreneurs have filled in the gaps: Except for the panels, Ohio businesses can produce the rest of the components for a solar installation, Van Cleef says.

Schools and government entities have been active in the solar sector thanks to its long-term cost savings. The city of Westerville’s electric division has pushed for energy efficiency and promoted solar energy as a key component. The city of Columbus has numerous solar projects and takes advantage of buildings that offer easy installation, such as its transportation garage on Groves Road. “They have huge space and large roofs where they can put panels in,” Rawlings says.

Local Innovations

Several new avenues for funding have emerged. TechColumbus has funded multiple solar projects. Van Cleef started Solar Cascade, a nonprofit that helps entities that could not otherwise afford solar (think schools, libraries and small businesses) crowdsource their funding. Installation begins when a project hits $50,000 raised.

Since launching in July, Van Cleef has proposals in various stages of funding, including seven Worthington City Schools buildings. During the life of the panels, the district estimates it will save about $100,000 per school. The district has been a leader in the field, installing solar panels at Evening Street Elementary in 2010 that can generate 60 kilowatts of power.

Technology improvements are helping to boost solar output. A panel that produced 70 watts a generation ago can product 200 watts today, Giles says. The challenge is boosting the amount of power that gets from the panel to its destination. “The panels are big and costly. The reason they are big is they deliver a small amount of power. If you get more power out of the panel, you can shrink the size of the panel,” says Waseem Roshen, founder of SS Power Technology.

His company received initial funding from TechColumbus and is working to increase solar energy’s viability for homeowners and smaller businesses. “We funded him to create some initial data. If it proves as valuable as [Roshen] thinks, it might make an impact,” Rawlings says.

SS has changed the traditional solar panel setup by adding an extraction circuit. “Most of the power is actually lost within the panel itself. With the circuit, we can extract all the power almost all the time,” Roshen says.

The company has demonstrated the ability to quadruple the power from a two-cell panel. Now, it is seeking funding to demonstrate with a 36-cell solar panel, the standard size. “Commercially, that is what is viable,” Roshen says.

Later this year, Tipping Point plans to launch SolarBlox, a one kilowatt solar panel that is pre-mounted and ready for installation. The price drop on solar panels has helped, Zimmer says. “If you look at the total cost, it used to be about the panel. The panel used to cost $2.50 a watt. Now you can get them for 70 cents. Now that the panel cost has come down, people are looking at how to drive down the soft costs. It is a dramatic reduction in the cost to install solar,” he says.

Greater acceptance of solar technology in Central Ohio is not a matter of if, but when, Van Cleef says. Demographics favor increased solar adoption, Kelly says. “Among younger customers and professionals, they have a positive view of renewable energy. It’s a technology-savvy population that sees solar, which is a semi-conductor industry like computers, as helping the environment,” he says.

With various entities pushing for greater efficiency, a glut of cheap panels and new funding streams, Central Ohio could see a wave of small projects to rival the larger ones proceeding statewide. If the state legislature were receptive to solar incentives, a growing industry could become a booming one. “We have already seen in other states that 500 small projects versus one project creates a much better industry,” Giles says.

Zimmer says Central Ohio has both the companies and the developing technology to brighten the region’s solar profile. “The day is not far off when it will be ubiquitous. We had a false start in the ’70s. I don’t think that’s the case this time,” he says.

Bill Melville is a freelance writer.