Rooftop solar starting to gain traction

WNY market for the sun’s energy is in its infancy, but the demand has been growing, especially in Erie County

By David Robinson | News Business Reporter

on October 19, 2015 – 8:04 PM

Updated October 19, 2015 at 10:58 PM

The following article appeared in The Buffalo News

Jack Rogers is a big fan of solar energy.

Over the last five years, Rogers, an executive vice president at Sovran Self Storage, has overseen the installation of rooftop solar energy systems on 16 self-storage locations in the Buffalo, Rochester and Syracuse markets, as well as a handful of sites in other markets.

It has been a big investment for Sovran, costing the company upward of $4.7 million. Rogers said the solar arrays are worth it.

The 21 solar arrays that Sovran has installed can generate as much as 1.6 megawatts of electricity, and Rogers said the company likes its systems to produce enough power to offset about 80 percent of what each store consumes during the course of a year.

With lucrative tax credits available, solar energy makes a lot of sense, Rogers said. The systems, which have a 25-year warranty, can pay for themselves within four to six years.

Besides, Rogers said, solar energy and Sovran were a natural fit. With acres of flat, unshaded rooftops at its stores, Sovran had ample space for solar panels.

“It’s just a grand slam,” Rogers said. “There are upfront costs to get into it, but we’re here for the long run.”

But Sovran’s headfirst dive into solar energy is unusual. While solar energy is growing like gangbusters in states such as California, North Carolina and Nevada, it’s just a tiny part of the power-generating market in the Buffalo Niagara region.

The combined generating capacity of the solar energy systems installed or approved for installation in Buffalo Niagara through October totaled 243 megawatts, according to data compiled by the New York State Energy Research and Development Authority, or NYSERDA. That’s enough to meet the electricity needs of about 39,000 homes. While local solar installations have more than tripled since 2011, it’s still barely a blip compared with the 6,200 megawatts of solar energy generating capacity that was installed nationwide by the end of last year.

13% of capacity in N.Y.

The demand for solar energy is strongest in Erie County, where the 1,162 solar energy systems that have been installed or approved for installation amount to almost three of every five solar energy systems in Western New York. The 212 megawatts from those systems account for about 60 percent of all the solar capacity already installed or on the verge of being installed in Western New York.

Most of the systems are small installations for residential use. Those rooftop systems account for more than 55 percent of all solar energy systems that have been installed in Western New York over the last 12 years. But because they are small – averaging only about 8 kilowatts of generating capacity – they account for less than half of the overall generating capacity of the region’s solar installations. In all, the nearly 1,300 residential systems installed or permitted for installation across Western New York have a generating capacity of 120 megawatts.

But with solar energy, there’s a big difference between the overall capacity of a system and how much electricity it actually produces. Solar energy systems don’t produce electricity at night or when the weather is cloudy, so U.S. Energy Department researchers estimate that solar installations in New York actually produce electricity at only about 13 percent of their stated capacity.

The 124 gigawatt-hours of electricity that New York’s residential solar energy systems generated in the last 12 months is less than one-tenth of 1 percent of the electricity New Yorkers consumed last year, according to the NYSERDA data.

Still, interest is growing. Solar Liberty, an Amherst solar energy company, is on pace for its busiest year ever.

Record growth spurt

What’s behind the rising interest?

Some of it is economic: Costs of solar energy systems are dropping as panels become more efficient and the associated equipment and support expenses also decline as the industry grows. Residential system costs have dropped by an average of 6 percent over the last year and are expected to continue to decline modestly, according to a recent report by GTM Research and the Solar Energy Industries Association.

And there are environmental reasons, too, with greenhouse gas emissions falling as more electricity is generated from renewable sources, such as wind and solar.

“The economics are important to anyone making the investment,” said Adam Rizzo, Solar Liberty’s president. “But I think it’s also a general desire of individuals and businesses to gain control of their energy and its usage. It’s energy independence to take control and produce your electricity as its needed.”

Nationwide, the solar energy industry is on a record growth spurt.

The total generating capacity of solar energy systems installed across the country surpassed the 20-gigawatt mark during the second quarter. The industry is on pace to install 7.7 gigawatts of new solar generating capacity this year – 24 percent more than last year.

Between now and the end of 2016, when a 30 percent federal tax credit for new solar installations is set to expire, an additional 18 gigawatts of solar-generating capacity is expected to be installed. That’s more solar capacity than the industry had installed during its entire history, through the first half of last year, GTM Research predicts.

“The demand for solar energy is now higher than ever,” said Rhone Resch, the solar industry trade group’s president and CEO.

During the first half of this year, 40 percent of all new electric generating capacity that came on line in the United States was fueled by solar energy. Residential installations jumped by 70 percent over the last year, with 473 megawatts of residential solar generating capacity being added. Over the last four years, the cost of residential solar energy systems have dropped by 40 percent, said Patrick Jobin, a Credit Suisse analyst.

Solar energy accounts for less than 1 percent of the nation’s electricity generation, compared with 27 percent for natural gas, according to the U.S. Energy Information Administration. Looking at the cost of solar energy systems and the price of the power produce by local utilities, Jobin estimates that solar power is economically viable in 32 of the 50 states.

While more than 700,000 Americans have installed solar energy systems on their homes, that’s just 7 percent of the potential solar energy customers in today’s market, said Shayle Kann, senior vice president of research at GTM Research.

In all, Kann estimates that more than 9 million homes could benefit from solar energy, based on their location in a state with higher-cost electricity, a sufficiently high credit score to qualify for financing and a roof that faces either to the south or the west, without obstruction.

Impact on electric bill

The low price of natural gas continues to be a challenge to the development of renewable power sources such as wind and solar energy, reducing the cost of conventional electricity supplies and putting additional pressure on solar energy suppliers to reduce their costs to remain competitive.

The drop in natural gas prices as shale gas drilling has increased in recent years has a muted impact. That’s because the cost of generating the electricity is only one portion of a homeowner’s electric bill, with the expense of getting the electricity from the power plant to a consumer’s home accounting for a significant – and fixed – part of a consumer’s monthly cost, said Stephen Byrd, a Morgan Stanley analyst.

Byrd said that a 20 percent drop in the price of natural gas would trim residential utility bills by only about 2 percent in states with higher-cost electricity.