Those who would dismiss the solar energy industry in Michigan should think twice before they pull down the shade on what many see as a promising renewable energy sector.
That’s at least according to industry watchers and Michigan companies that see 2013 as a year with its share of potential for solar growth.
An example of that potential eventually could arrive right in Grand Rapids’ west side neighborhood. The city has secured state and federal grants to conduct a feasibility study for a large-scale solar array at the former Butterworth Landfill site along the Grand River.
If the project goes through, it would be city government’s second major solar installation after the 95-kilowatt array at the city’s water and environmental facility. To date, that system has offset almost 95,000 kilowatt-hours of energy use.
While solar is still playing second fiddle to wind when it comes to renewable generation, “balance of system” improvements are pushing solar closer to grid parity with coal-fired and natural gas generation.
Thanks to the U.S. Department of Energy’s SunShot initiative, which provides grants to companies working on building-integrated photovoltaic generation, West Michigan companies such as Cascade Engineering are continuing the effort to drive down costs.
“There is a whole lot more to be said on the subject,” said Bruce Goodman, an energy policy attorney withVarnum LLP in Grand Rapids. “But I think we’re at a point where within a year and a half or two years, solar will be cost-competitive.”
Many industry professionals point to evidence that shows the cost of solar has come down about 70 percent since the early 2000s. While the manufacturers have made the panels more efficient, they’re also realizing other opportunities to bring prices down by reducing the costs of wiring, installation and racking.
The current federal 30 percent tax credit for commercial and residential solar installations is a major factor when it comes to projects moving forward, sources said. With the payback on solar projects extending a lot further out than traditional building improvements – some payback periods extend up to 25 years or more – many looking to reduce their energy costs find that upfront barrier too prohibitive, sources said.
“I looked at it in a very different way when we installed our array,” said Keith Winn, president of Catalyst Partners, a sustainable-building consultancy based in Grand Rapids. “You can relate it to the stock market in that unless you’re a day trader, you’re investing for the long term and putting that investment away for the long haul.”
However, before dashing off to put together a solar strategy, Winn said building owners should start with the easy steps that have a much shorter payback period. They should start by considering simple building efficiency improvements, such as LED lighting and insulation, he said.
Beyond the low-hanging fruit, Winn said, he fully believes solar is a smart investment in the future.
“It’s a proven technology, and it’s even viable in this region, where we don’t get as much sun as the Southwest,” Winn said.
With respect to the proposed Butterworth project, Winn said he hopes the city is able to pull it off.
Michigan companies also have a play in the solar products supply chain. For example, Contractors Building Supply Inc. in Manistee recently signed a deal with an India-based company, Sonali Energees, to produce 300-watt solar panels.
Allan O’Shea, former president and founding member of the American Wind Energy Association and current vice president of the Great Lakes Renewable Energy Association, is at the center of the new partnership.
He said the company is about eight weeks away from production.
O’Shea expects 2013 to be a year of significant change for the solar industry.
“I’m not trying to sound like the undying optimist, but I’m seeing some indicators out there with companies and what they’re doing,” O’Shea said. “Everyone gets excited about wind and the big numbers associated with it, but solar is catching up.”
With the numbers his company is extrapolating, O’Shea estimates he’ll be able to produce a 3-kilowatt system for $9,000 installed. At roughly 13 cents per kilowatt-hour, the energy return on investment is about nine- to 10-year payback, he said.
“Our company is ready, and we’ve made some serious investments,” O’Shea said. “I think the industry will be selling performance-based solar in urban environments very soon.”
Even with such confidence, O’Shea still cautioned that at least a decade’s worth of work remains before solar has its real day in the sun.
Elijah Brumback, Crain’s Detroit Business.