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Monday, May 27, 2024

Rays of Light

Whether by sun, wind or biofuel, area companies are working to make the Valley greener. The diverse industry, which includes just about any technology that lowers carbon emissions in the atmosphere, is robust in the area – and growing. Camarillo startup Cool Planet Energy Systems Inc. is hard at work on novel biofuels. Pioneer PV Solutions Inc., a spinoff of long-time Chatsworth solar R&D firm International Solar Electric Technology Inc., is working on small-scale solar panels that can power anything from an iPhone to a refrigerator. Camarillo company Sauer Energy Inc. is gearing up for mass production of residential wind turbines. (See articles on the following pages.) And in a region that sees sun an average of 330 days a year, companies promising lower electric bills by harnessing solar power are flourishing. “We have deployed more megawatts in 2012 than in our first five years of existence,” said Ben Higgins, director of government affairs for REC Solar Inc., a North Hollywood solar installation company that more than doubled its workforce this year. “Even as other states have been more challenging, California has been continuing to increase solar installations.” Yet the industry’s growth has not been even. Haphazard import, rebate and municipal guidelines that often contradict each other have had an impact on development. Large-scale solar manufacturer Solar World USA continued downsizing this year at its Camarillo location, now employing around 60 people in a location that previously provided work to more than 200. This year the company was part of a successful lobby that convinced the U.S. International Trade Commission to place import tariffs on Chinese solar cell manufacturers. The less-expensive Chinese panels have been undercutting domestic manufactured panels, causing a contraction of the industry. “Most of those impacted have been the manufacturers,” Higgins said. “The price drop has really made solar more available to us and consumers, I don’t think we need industry analysts to see that.” Already Chinese solar cell manufacturers are finding ways to get around duties of 24 to 36 percent by moving their production to Taiwan, South Korea or other Asian countries. “There is so much supply all over the world and that inventory is selling at a very low price,” said Junko Movellan, a senior analyst at New York research firm Solarbuzz NPD. “I don’t see a significant impact of this tariff at this point. Maybe in the future, but not now.” Mixed model Shiny Future?: eSolar Inc.’s 5 megawatt solar installation in Lancaster. The company that tops the Business Journal’s directory of alternative energy companies is not some new solar company, however. It is the 14-year-old Chatsworth company called Capstone Turbine Industries Inc. that makes small turbines that can run on natural gas, diesel or biogas, among other fuels. They are not primarily for the residential market, mostly running at oil and gas production facilities. The Chatsworth firm manufactures micro-turbines that also have been installed in hybrid car engines, offices, government buildings, medical centers, colleges, and hotels. “There are really two points – there’s emission reduction and there is carbon reduction,” said Jim Crouse, executive vice president of sales and marketing at Capstone. “Our emissions are lower than standard grid emissions in most applications.” Only 4 percent of the company’s business is currently in the renewable energy sector, while 33 percent of its work is done in increasing efficiency of existing buildings, such as office towers and hotels. The largest portion, 61 percent, is done within the oil and gas industry. Still, the company has struggled to become profitable since it was founded in 1988. While it is traded publicly on the Nasdaq, its shares hover around $1. Woodland Hills firm Catersolar Inc., No. 4 on the alternative energy company directory, has also embraced multiple platforms of energy generation. The company works to install solar, thermal systems and wind power in residential homes. Burbank company eSolar Inc. unveiled a 5 megawatt solar project in Lancaster in 2009, which is connected to Southern California Edison and supplies power to its grid. Last year, it announced that it had received a $40 million investment from GE Energy. The biggest challenge for the industry is the uncertain status of government rebates and incentives that solar, wind and other alternative energy manufacturers have relied upon since the industry’s inception. Much of the initial funding is expected to run this decade, and with governments at all levels stretched for funds, the money may simply run out. Some companies have begun to get creative about how to finance standard roof-top residential installations, which can run upward of $8,000. SolarCity Corp. , a San Mateo firm, recently had a $141 million initial public offering after investors decided the company’s leasing model was a viable way to rapidly expand residential and office installations. “That may change the way things are done,” said Movello, the analyst. “By charging a monthly usage fee, which is lower than a monthly utility bill, that makes it affordable.” Capstone also offers financing options for its installations, as does REC Solar. Phillipe Hartley, chief executive of La Cresenta-Montrose installation company PHAT Energy Inc., says this option has been a boon for the residential market in particular. “The most important thing in solar is the expansion of the concept of leasing,” he said. “The big problem with the contraction was panicked sales and excess inventory, which was absorbed by dealers.” Indeed, while manufacturers continue to struggle with sales in a market awash in excess panels, installers have been able to widen profit margins as cheaper panels become available at wholesale. Just like car leases, solar panel leases come in a variety of time durations from a variety of lenders. Solar manufacturers, installers or third-party finance companies may put up the money, but the end goal is to make solar conversion financially accessible to consumers. Hartley notes that while his company arranges financing, he carefully vets the manufacturers and other companies he works with because they ultimately fund the leases. “Business is brisk, but there are also increasingly unscrupulous companies,” he said. The profit gap between manufacturers and installers isn’t likely to narrow in the near future, and many think the next few years will be tumultuous for the industry. “Many businesses are closing, many are consolidating. The market is continuing to expand, and some of these companies are going to start restructuring at this point,” Movellan said.

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