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Prices drop, but solar system sales fall as aid expires

The cost is lower, but fewer Western Pennsylvanians are installing solar systems as government aid begins to slow.

In Allegheny County last year, 62 solar systems were installed on homes and businesses, compared with 10 this year, according to the Pennsylvania Solar Energy Industries Association.

It’s the first year that Pennsylvania residents cannot double-dip by tapping a $100 million state rebate incentive and a federal tax credit.

The state rebate and federal credit spurred sales from customers hoping to catch a deal, but as aid slowed, so has the pace of sales.

“There’s no sense of urgency (anymore),” said Joe Morinville, who owns Energy Independent Solutions in Pittsburgh in Robinson Township.

The price of a solar panel dropped by 64 percent since 2010, and overall installation costs fell 41 percent, according to the Solar Energy Industries Association. The cost of a 10-kilowatt solar system, enough to fully power a single family home in the Pittsburgh area, costs about $30,000 — half of what it cost five years ago, Morinville said.

Solar advocates and business owners say the economics alone should sell solar: Sun power is free and harnessing it saves customers money eventually.

But they acknowledge government help is crucial to the industry’s success, at least in the short term.

“If they removed all subsidies today, you’d see a dramatic slowdown,” Morinville said.

A 30 percent federal tax credit set to expire in 2016 is a key buoy for the industry. The credit has been essential in selling solar even with depressed prices nationwide, said Sharon Pillar, vice president of Smart Power, a national nonprofit that markets solar projects to communities.

Related: California fires up world’s largest solar farm (Video).

“It is a very nascent and new industry and still does need help,” she said.

Patrick Henderson, Gov. Tom Corbett’s energy executive, says government help was meant to be a shot in the arm for the industry to spur demand before it grows on its own.

“I think this will position the solar industry at large to be more self sufficient and sustainable,” he said. “Those individual companies who can do a better job of marketing their product … I think they’ll prevail and be stronger because of it.”

Pennsylvania businesses installing solar systems have dropped from about 300 when the state’s rebate took effect in 2009 to about 50 today, a year after the program ended, said Ron Celentano, president of the Pennsylvania Solar Energy Industries Association and owner of Celentano Energy Services in the Philadelphia area.

Over the past decade, cheap solar systems components from China sank wholesale costs and led to bankruptcies across the industry. Tariffs on Chinese manufacturers enacted in July helped prices rebound a bit, and since then they’ve continued to decrease at a slower rate, said Morinville.

Residential solar installation prices nationwide have fallen by at least 6 percent each year since 1998, according to the Department of Energy. In 1998, it cost $12 to install a watt of solar power; in 2013 it was $4.69.

Morinville’s company installs systems throughout Western Pennsylvania and the Midwest and has thrived despite market challenges.

“We’re busier than last year,” he said. “This probably has a lot to do with people dropping out of the market. We have more market share now.”

Solar installations have increased steadily nationwide, but solar still lags far behind natural gas, coal and crude oil in powering the grid. Solar accounted for 0.23 percent of energy production, compared with coal at 39 percent and natural gas at 27 percent in 2013, according to the Energy Information Administration.

Price matters, but ideology might matter more in the solar industry.

“Folks are doing it for reasons other than the pure economics,” said Celentano.

Solar owners Roger Galket and David Goerman agree.

Goerman’s work as a millwright repairing machines in coal plants steered him toward cleaner energy. He installed 44 solar panels on his home in Fair Oaks two years ago with help from the state rebate and federal tax credit. Goerman saves $100 a month on his electric bill, but economics weren’t a deciding factor, he said.

“You see how dirty supposedly clean coal is in a lot of these places and you look at it, and you come home and look at your house and it’s in the sun all day and it’s like free power,” he said.

Leasing solar systems has become a popular way to save money in other states, but has not taken root in Pennsylvania. Some installers such as Morinville offer financing for solar systems and customers often utilize home equity lines of credit to fund their projects.

The upfront cost is a barrier, despite financing options, said Galket, who bought a $29,184 18-panel solar system for his Harrison City home in 2010. After a $6,440 state rebate and a 30 percent tax credit, Galket paid $9,811 — still a hefty sum.

“You have to come up with that amount of money, it’s quite a turnoff to the majority of people” said Galket, a retired dentist.

The system cuts $50 a month from his electric bill and should pay for itself in about five years, he said.

“I don’t think I went into it really thinking about the money. I just wanted to be environmentally sound,” he said.

(c)2014 The Pittsburgh Tribune-Review (Greensburg, Pa.)