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HomeMy WebLinkAboutNewspaper article 0 it N • 4 � r - , Y�I =iM1 _ Q G en Q �ren V=.. � �:'�.-•.... - �Ai llf• y V ON Q00— a P" OR,-. _ ,err_ ,Y '..'i.�.4�. ., � : `-RK Q MgpC STFInrR FOR THE NEW YORK TIMES mVV:N o A Roof Diagnostics crew installing panels in Holmdel,N.J.Creative financing has set off a boom in solar installations. O? x Mass-Marketing Solar Power Cosa) x Homeowners Jump at Systems Paid For by the Installing Company By DIANE CARDWELL working through big-box chains like Home Depot or Lowe's,we HOLMDEL,N.J.—Jay Nuzzi, a New Jersey state trooper, taking advantage of hefty tax breaks, creative financing tech- !, T� had put off installing solar panels on his home here for years,de- niques and a glut of cheap, Chinese-made panels to make solar It terred by the$70,000 it could cost.Then on a trip to Home Depot, power accessible to the mass market for the first time.The num- i O► he stumbled across a booth for Roof Diagnostics,which offered ber of residential and commercial installations more than dou- bled over the last two years to 213,957,according to Greentech .. Mr. Nuzzi had to sign a 20-year contract to buy electricity Media,a research firm. to generated by the roof panels,which he would not own. But the Major players in the installation business, like SolarCity, •E rates were well below what he was paying to the local utility. Sunrun and Sungevity,are thriving even as the other side of the .� "It's no cost to the homeowner—how do you turn it down?"Mr. industry — solar module makers — has been squeezed to the NNuzzi said on a recent overcast morning as a crew attached 41 breaking point by fierce competition from Chinese manufactur- w " ers.In a case to be decided later this month,a coalition of solar � o shiny black modules to his roof."It was a no-brainer." U (� Similar deals are being struck with tens of thousands of manufacturers has asked the United States government to im- T pp 3 homeowners and businesses across the country.Installers,often Continued on Page 4 'C B4 N Installer-Paid Systems Bring Solar to Masses From First Business Page Some analysts caution that de- spite all the activity, the sector pose steep dudes on the imports, still faces hurdles, like the high arguing that the Chinese compa- costs of bringing in new custom- mes are violating international ers and getting financing. "It's trade rules. not clear to me that anyone yet "You hear a lot of the gloom has cracked the code of scaling and doom about the industry and, the business massively," said you know, 'The manufacturers Dickon Pinner,co-author of a re- are losing jobs, they're shutting cent McKinsey report on the in- down,' but if you look at where dustry. the actual money is in these sys- Solar customers can finance tems and where the jobs are,it's their systems in a variety of really in the installation," said ways. Businesses often purchase Lynn Jurich,Sunrun's president. them outright so that they can Big corporations like Google, reap the savings and take advan- U.S. Bancorp, Morgan Stanley tage of tax incentives and depre- ciation.and Bank of America Merrill Lynch see the potential for But homeowners are i - ingchoosing to avoidid the steady profits in rooftop solar upfront costs. In California, the projects and have been supplying country's largest market, more the capital to help cover the than 70 percent of residential cus- upfront costs,which typically run tomers putting in solar this year have opted to sign a lease or pow- er purchase agreement with someone else owning the sys- Homeowners agree tems, according to PV Solar Re- to buy the power, but part The structure of the deals var- get the panels free. ies by company and state,but the overall approach is generally the same: Customers agree to pay a fixed monthly charge or rate for $30,000 or more for a single-fam- all the solar power produced,and ily home.The investors say they the companies that finance the believe the returns,generally 7 to systems pay for the installation - 13 percent,are relatively safe be- and take the value of any tax cause the solar providers gener- breaks or renewable energy ally sign up only homeowners credits for which the customer and businesses with solid credit. would ordinarily be eligible. In addition, installers say that Some companies concentrate on people tend to pay their electric financing and use local contrac- bilis even when facing other fi- tors for sales and installation, nancial problems. while others do everything them- "We have customers that are selves: foreclosed," said Lyndon Rive, Through such arrangements, chief executive of SolarCity, one industry executives say,custom- of the largest installers."They're ers can lower their power bills, still paying their electric bill so escape the uncertainty of fluctu- they still pay us." ating energy costs,and avoid the The company has raised more complex bureaucracy of federal than $1.4 billion to finance its and local credits,rebates,grants projects and is so confident in its and tax breaks. future that it is planning an initial However, the approach does _ public offering of its stock. The not work everywhere. Thus far, company has declined to com- installation companies have been ment on the stock offering. most active in states where the Industry executives even pre- price of electricity from the utility dict that solar leases could one is high and there are robust in- day be bundled and sold as secu- centives, like California, Hawaii rities like mortgages and other and much of the Northeast. loans. And the transactions are not THE NEW YORK TIMES BUSINESS THURSDAY,MAY 10,2012 r 7m r� X E E tr " m � ygyi for y 's t .. PHOTOGRAPHS BY MARC STEINER FOR THE NEW YORK TIMES At a kiosk in a Home Depot store,Rob Bender of Roof Diagnostics examined a potential customer's property on a satellite view. case,brought by a group of man- ports benefit consumers, and ufacturers who say they cannot they have urged the government ` compete against Chinese compa- not to penalize the Chinese man- s` <c t nies able to cut their prices below ufacturers. #, their costs because of unfair sub- For now, those cheap panels sidies from their government. are helping to keep business The Chinese companies aim to brisk for installers large and _ monopolize the market and then small across the country. raise prices, American manufac- "We have our suppliers calling turers say. and dropping their prices on a E "The game is simply rigged, daily basis to move inventory. plain and on its face," said Ben That works in our favor," said :. .� Santarris, a spokesman for So- Heshy Katz, president of Green larWorld Industries America, Power Developers,an installer in ® which originally filed the trade New Jersey. "We can offer our complaint and makes panels in clients an installation at 30, 40 Oregon. percent less than two years ago." The Commerce Department Roof Diagnostics hired almost likgr;" has already imposed modest tar- 50 new employees in March and iffs on Chinese-made silicon cells April, said Kelcy Pegler Jr., who The co-founder of Roof Diagnostics, Kelcy Pegler Jr., started a based on a preliminary finding of started the solar division at his solar division at his father's roofing company four years ago. improper subsidies. On May 17, father's New Jersey-based com- the department is scheduled to pany about four years ago and without risks for both sides.If the utility instead. Customers are announce its determination of has expanded to Massachusetts systems do not produce the committed to a long-term con- whether the Chinese companies and New York. promised electricity, the agree- tract, raising complications if engaged „dumping, or selling We turned a roofing company comments often require the compa- they sell the house or want to get products below fair value,which that did solar into a solar . could lead to steeper duties. ny that does roofing in supportport of of nies to reimburse customers for out of the deal. Those on the installation side solar,"he said. "We're really are what they have to buy from their Another concern is the trade of the business say that cheap im- a solar company now."