Newspaper article International Herald Tribune

A Boom for Solar Panel Installers ; U.S. Companies Thriving Even as Manufacturers Are Being Squeezed Out

Newspaper article International Herald Tribune

A Boom for Solar Panel Installers ; U.S. Companies Thriving Even as Manufacturers Are Being Squeezed Out

Article excerpt

Households and businesses are cutting utility bills by taking advantage of tax breaks and low-cost Chinese-made solar panels.

Jay Nuzzi, a New Jersey state trooper, had put off installing solar panels on his home here for years, deterred by the $70,000 cost. Then he stumbled across Roof Diagnostics, a local company that offered him a solar system at a price he could not refuse: free.

Mr. Nuzzi had to sign a 20-year contract to buy electricity generated by solar roof panels that he would not own. But the rates were well below what he was paying to the local utility. "It's no cost to the homeowner -- how do you turn it down?" Mr. Nuzzi said on a recent overcast morning as a crew attached 41 shiny black modules to his roof.

Similar deals are being struck with tens of thousands of homeowners and businesses across the United States. Installers, often working through home improvement chainslike Home Depot and Lowe's, are taking advantage of tax breaks, creative financing and a glut of cheap, Chinese-made panels to make solar power accessible to the mass market for the first time. The number of residential and commercial installations has more than doubled over the past two years to 213,957, according to Greentech Media, a U.S.-based research firm.

Major U.S. companies in the solar installation business, like SolarCity, Sunrun and Sungevity, are thriving even as the other side of the industry -- solar module makers -- has been squeezed to the breaking point by fierce competition from Chinese manufacturers. In a case to be decided later this month, a coalition of solar manufacturers has asked the U.S. government to impose steep duties on the imports, arguing that the Chinese companies are violating international trade rules.

"You hear a lot of the gloom and doom about the industry and, you know, 'The manufacturers are losing jobs, they're shutting down,' but if you look at where the actual money is in these systems and where the jobs are, it's really in the installation," said Lynn Jurich, president of Sunrun.

Big corporations like Google, U.S. Bancorp, Morgan Stanley and Bank of America Merrill Lynch see the potential for steady profits in rooftop solar projects. These companies have been supplying the capital to help cover the upfront costs, which typically are $30,000 or more for a single-family home. The investors say they believe the returns, generally 7 to 13 percent, are relatively safe because the solar providers generally sign up only homeowners and businesses with solid credit. In addition, installers say that people tend to pay their electricity bills even when facing other financial problems.

SolarCity has raised more than $1.4 billion to finance its projects and is so confident about its future that it is planning an initial public offering. The company has declined to comment on the stock offering.

Industry executives even predict that solar leases could one day be bundled and sold as securities like mortgages.

Some analysts caution that despite all the activity, the sector still faces hurdles, like the high costs of bringing in new customers and getting financing.

Solar customers can finance their systems in a variety of ways. Businesses often purchase them outright so that they can reap the savings and take advantage of tax incentives and depreciation.

But homeowners are increasingly choosing to avoid upfront costs. In California, the largest solar market in the United States, more than 70 percent of residential customers installing solar this year have chosen to sign leases or power purchase agreements, with someone else owning the systems, according to PV Solar Report, a research provider. …

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