ENERGY: Availability of Financing Tools Helps Industry Grow, CEO Says
By Julie Gallant, San Diego Business Journal, April 23, 2012
Growth at San Diego-based Sullivan Solar Power is reflective of the healthy climate solar energy is experiencing in the region, according to companies in the industry.
Approximate revenues for the designer and installer of solar systems for residential, business and municipal customers have increased from $12 million in 2010 to $18 million in 2011 and are on track to increase to $22 million this year, said CEO Daniel Sullivan. The latest projections are based on the last four years of growth and based on the company’s current sales one quarter into the year.
“Each month this year we have posted over $1.8 million in sales and we haven’t even started our peak sales season yet,” Sullivan said.
With 65 employees, Sullivan Solar Power also plans to hire four people to staff a new Riverside office this year and bring aboard eight people to staff its Miramar office and three people to staff its Irvine satellite office, according to Sullivan.
Sullivan said a big driver of growth in the industry is the availability of financing tools such as leases that enable solar system purchasers to make low monthly payments instead of paying for the solar system outright. Power purchase agreements in which the solar systems are owned by a third party also give consumers access to solar energy for less than the price they would otherwise pay a utility.
“For people who want to go green this allows them to do that without a significant capital outlay,” Sullivan said. “People just sign a lease agreement and now they can start saving money and save the environment at the same time.”
Cost Reductions
Added to affordability on the consumer side is a reduction in recent months of the cost of solar equipment, Sullivan said. That’s partially attributed to an oversupply of solar panels in the markets due to a global slowdown in demand caused by a weak economy and cutbacks in government incentives.
This year, the statewide advocacy organization Environment California Research & Policy Center released a report identifying San Diego as a leading city in terms of the number of solar roofs installed, with more than 4,500 projects on residential, commercial and government buildings as of the third quarter in 2011. San Diego also leads the state in the amount of electricity generated by these systems, with nearly 37 megawatts installed, the equivalent of powering 25,000 homes with zero carbon emissions.
Statewide, residential solar systems installed have been increasing steadily during the past few years, according to the California Solar Initiative. The volume it tracked was 13,000 in 2009, increasing to 19,000 in 2010 and 23,000 in 2011.
Such numbers are no surprise to companies like OneRoof Energy, based in the University Towne Center area, which is growing like gangbusters in the residential solar market. Alan Whiting, OneRoof’s chief financial officer, said the company founded just two years ago has hired 25 people in the last four months to bring its total workforce to 40 employees and plans on hiring an additional 50 to 60 staff members in the balance of this year. OneRoof also has plans to expand beyond the California and Hawaii territory and into Arizona, Connecticut, Massachusetts and New York.
Leasing Programs a Plus
Whiting gives much of the credit for the growth to the introduction of leasing programs that enable homeowners to lease rather than invest $30,000 to $40,000 in a solar system upfront. He estimates that 75 percent to 80 percent of residential solar systems are installed using leasing programs.
“Now almost anyone can have a solar system by just making leasing payments,” Whiting said. “They begin saving money in the first month because their bill is less than what the utility payment would be.”
“A lot of us want to do the right thing by having a clean energy system, but up until a few years ago it wasn’t a good economical decision,” said Whiting, adding that homeowners can lock in price protection from escalating utility rates during a 20-year term of a lease contract.
Whiting also attributes the 35 percent to 40 percent growth rate in the industry during the past few years to a reduction in solar equipment costs. Factories in Europe and Asia were increasing production capacity beyond what could be absorbed by the marketplace, forcing manufacturers to drop their prices.
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