There seems to be two conflicting certainties about the photovoltaic (PV) or solar module installation market: It is a rapidly expanding and lucrative opportunity, and curiously, not that many electrical contractors are aware of it or have chosen to explore its potential.

What is at issue is a market that some industry sources have compared to the Internet as an analogous source of power rather than information.

“Given the need for distributed generation throughout the country right now, this is an ideal alternative energy source,” said Dr. Thomas E. Glavinich, associate professor of civil, environmental and architectural engineering at the University of Kansas. “And it’s the right time for it because of rising energy costs and problems with power delivery from the grid, and also, the costs of many PV modules are coming down.”

He advises contractors who may be interested to do some basic research, including learning what the relevant regulatory issues are in their locale, the policies of the utility company, and what types of PV equipment are available and who supplies them.

“Many electrical contractors are not aware of this opportunity,” said Jim Willson, manager of the Los Angeles County National Electrical Contractors Association (NECA) Chapter. “This is a market they have to get involved in, otherwise somebody else will. And if they are interested, they have to understand all facets of this industry—it’s about engineering, product supply, roofing, utility rates and rebates.”

He notes that in his area, solar has evolved from a residential cottage industry focused on water heaters to a market attracting commercial mega-players like Wal-Mart and Target who want to install PV in their big-box outlets. The L.A. NECA Chapter has already put 1,000 people through hands-on solar training courses, he said, and there are ongoing strategic planning sessions.

Understanding the market

There is a wide spectrum of awareness of solar market potential, according to Bernie Kotlier, director of consulting firm Green Building Solutions, which works with the Labor Management Cooperation Committee (LMCC) in the greater Los Angeles area.

“California has one of the most aggressive solar programs in the nation,” he said. “But, it’s a mistake for an electrical contractor someplace else to think that this is just a Sun Belt opportunity. The New England and Mid-Atlantic states are involved, and so are Minnesota and Wisconsin. And, if you look overseas, the top PV power generation country in the world is Germany, doing 10 times as much work in this alternative energy discipline than we are nationally, and they only get about as much sun as the northern tier of the U.S.”

Here in the United States, it’s critical that the contractor familiarize himself with both state and federal tax incentives for solar installations. In California, for example, on a typical commercial project, if one factors in both incentives, the cost of a PV system installation can be cut in half.

The federal Energy Policy Act of 2005 alone provides for a 30 percent investment tax credit on commercial projects and an accelerated depreciation schedule of approximately five years.

Commercial versus residential

Contractors interested in exploring PV market potential have two distinct sectors to consider: residential and commercial.

The commercial area has so far attracted the majority of contractors because of the greater value of solar panel installation jobs at either major retail outlets, industrial plants, housing projects and apartment developments, or municipal and other public building complexes. There is also a greater amount of incentive funding available for such work.

But residential installation is also seen as a strong growth market, due to the widening public interest in “green” solutions. In this sector, the contractor has to be aware that the homeowner will most probably have done his own homework and will ask pointed questions about locally available tax credits and the time frame of cost recovery.

And, as always in residential work, word of mouth is the best publicity for the electrical contractor. So, with a relatively innovative technology like solar paneling, clearly visible to the neighborhood, the installation has to prove to both function and pay for itself as promised.

Two case histories

Electrical contractors who have entered the PV field with the necessary planning and investigation agree that it is one of the fastest growing segments of their business.

“I first heard about the solar opportunity at an industry meeting a few years ago,” said Leon Baptiste, president of LB Electric Co. LLC, Newark, N.J. “Then I learned that a PV project was coming up for bid at the New Jersey Institute of Technology, and I also knew the electrical distributor with whom we had been working for some time had a special unit devoted to the solar market. We put in our bid together, and the first time out we secured the contract for a $550,000 project.”

After just three years, solar installation work now represents 30 percent of LB Electric’s business, and Baptiste expects this to grow incrementally.

He said that the critical terms in the solar equation are training, careful job planning and partnering with a firm that has expertise in project financing, utility rates and government incentives.

In this case, the partner involved was Turtle & Hughes Inc., Linden, N.J., a full-line electrical distributor that has expanded aggressively into integrated supply and, most recently, into the PV marketplace.

In 2005, the company formed its TurtlEnergy division, which is essentially a systems integrator, interacting with contractors, leading suppliers of PV components and coordinating efforts in the installation process.

“Since our parent company has a customer base of some 3,000 contractors and long-standing relations with the major manufacturers in the field, we are in a position to coordinate the capabilities and strategies of both to the maximum advantage of the end-user,” said John Millard, who heads the TurtlEnergy division.

The company handles project support including J-I-T delivery of tools, components and power systems to the project site—all from a single source.

Another company that has worked with TurtlEnergy is Triangle Electrical Systems Inc., Plattsburgh, N.Y.

“This is not just electrical contracting anymore,” said Greg Brienza, president of the company. “The solar market is there, so if we’re poised to take advantage of it, we can make profitable progress. TurtlEnergy has taken a holistic approach to this market with regard to both their customers and the products they distribute. They deal with the larger, grid-type PV systems, which is what we’re interested in.”

Triangle has made a serious commitment to working with PV technology, obtaining certification from the North American Board of Certified Energy Practitioners (NABCEP), an independent organization based in Malta, N.Y. After four years of work in this market, roughly 30 percent of the company’s business is in PV installation, and Brienza anticipates it will move into the 50 percent range relatively soon.

In his opinion, there is one major obstacle to overcome, which subsequently will provide significant opportunities.

“PV cuts across a lot of trades, and the unions haven’t figured out yet how to define who does what,” Brienza said. “We’ve seen situations where glaziers, roofers and electricians get into conflict on the job site. Putting together a composite crew beforehand can alleviate this.”

Looking ahead, Brienza believes that equipment component prices will come down due to increased competition, and the biggest market boom of the near future will be building integrated photovoltaics (BIPV)—provided someone can figure out how these buildings can be configured and fitted out.

“PV incorporation into existing electrical grids can radically change the traditional models for distributed generation and is being looked at closely by utilities and the government, and electrical contractors should be focused on it as well,” he said. EC

QUINN reports on a broad range of business and industry issues for journals in the United States and Europe. He can be reached by phone at 203.323.9850 or by e-mail at [email protected].