Amid the housing slump, banking crisis, wild swings of the stock market, and a generally gray economic outlook, there is a glimmer of virtually untapped opportunity in the electrical industry. Perforating the clouds of economic uncertainty are endless rays of solar power — and they are shining squarely on the shoulders of electrical contractors. The timing for alternative energy is now, putting electricians in a great position to capitalize on this booming business.
Solar electricity has come a long way since 1954 when scientists at Bell Labs ushered in the first practical applications for the photovoltaic (PV) effect. But after passing through a wave of popularity in response to the oil crises of the '70s, solar electricity settled into an off-grid alternative more associated with hippies than with the hard realities of energy economics. Today, however, the Prometheus Institute for Sustainable Development, based in Cambridge, Mass., estimates the installed base of solar electricity in the United States at 259 megawatts and projects it to grow to 1,590 megawatts by the end of 2010. Perhaps most important to electrical professionals is that this market is expected to require an additional 40,000 skilled employees within the next 10 years, according to findings from the Los Angeles chapter of NECA and IBEW Local 11, presented at the American Solar Energy Society conference in Cleveland in July of 2007.
No group is better positioned to take advantage of this growth than electrical contractors, giving them an undeniable inside advantage in this niche. After all, solar electricity is electricity, and who understands electricity better than an electrical contractor? For starters, a contractor's existing customer base is the ideal place to begin a dialogue about alternative power sources. Because these clients typically already have a relationship with an electrician, they are less likely to allow an “outsider” (who is not familiar with their building) handling a mission-critical function. Therefore, the electrician or electrical contractor gets the first shot.
A bright future
According to Rob DeLong, an independent clean energy consultant in Mill Valley, Calif., the signs of long-term economic viability are there for renewable energy alternatives. “It is the brightest spot in the economy today,” he says. “These days, almost every company in every sector has a green shade to it. We see this as much more than a passing trend. Reducing, recycling, reusing, and renewing will be integral to every business moving forward.”
Confirming this trend, investment in renewable energy technologies is also increasing. In fact, according to the United Nations, more than $100 billion was invested in renewable energy in 2006. Although the industry remains volatile, environmental worries will sustain this pace well into the future, says DeLong.
Political leaders of every stripe are also beginning to recognize and internalize the spectrum of benefits offered by renewable energy. It is no longer about excoriating big oil, but about putting food on the table. Renewable energy is a growth area for the economy and with growth comes jobs, consumer consumption, and the seeds of a revitalized economy.
National security also plays a supporting role in solar's bright future. “Eliminating our country's dependence on foreign sources of energy, principally oil and natural gas, is fundamental to U.S. national security both from an economic and political military point of view,” said Diarmuid O'Connell, a government-relations expert and former aide to Colin Powell, in an interview earlier this year. “The best way to address this imperative is to develop diverse — and in the best case renewable — domestic sources of energy generation. In this regard, commercial installation of solar generating capacity is an ideal solution.”
From just about any perspective, whether it be economical, environmental, or political, the future for renewable energy looks bright. How can electrical contractors take advantage of this opportunity? It's important for them to understand the process involved in solar installations, not to mention the obstacles they must overcome in order to have success in this sector.
The value chain
Three primary areas comprise the value chain for an installed system. The largest, representing 45% of the installed cost, are the modules themselves. While silicon shortages are causing supply issues and high prices, this is only a temporary constraint, as manufacturing capacity is coming online rapidly. Japan and Europe are the major suppliers along with China, which has expanded its offerings considerably over the last two years.
Representing 25% of installed cost, labor is an area ripe for efficiency gains and improved margins. Some estimates put the average margin for a solar installation at nearly eight times that of a traditional electrical contracting job. With the skills electrical contractors already possess, they will be able to quickly reap the rewards offered in this sector. “Our analysis shows that thousands of dollars can be saved on wiring alone using existing best practices in wiring,” says John Mead, chief electrical engineer, SunLink Corp., San Rafael, Calif.
Although there are some obvious challenges facing an electrical contractor's entry into the business, they will be readily aided by vendors in the field aiming to expand their customer base. The solar industry needs more customers and is encouraging electrical contractors to enter the business with advanced products, support, education, training, and service.
A solar array design and configuration can be simple or complex (see Solar Electric Market Segments). Vendors offer products to meet both situations. For the straightforward design, many suppliers offer off-the-rack components. When the site requires more sophisticated engineering, such as a seismic or high wind zone, a few vendors offer an array design and engineering support as part of the package.
When reviewing an array's interface with the site (in most cases a rooftop), two issues emerge. One is the structural integrity of the roof — for this, contractors will need the involvement of a structural engineer. Secondly, depending on the attachment method, the array can impact the operation of the roof in terms of access, drainage, and wear and tear. Contractors should discuss these issues with a mounting supplier and a skilled roofer.
Perhaps the biggest challenge faced is in the area of securing the system to the site. The ideal mounting system safely secures the array by meeting the code requirements demanded by the location, but at the same time does not adversely impact the roof. Contractors can be caught in between competing interests of the permitting authority who wants a supremely secured array and the building owner who doesn't what his roof compromised. Electrical contractors will find that engineering issues of wind loads, exposure class, and seismic activity require surprisingly sophisticated solutions to keep the array in place without punching holes in their client's roof.
Grounding, string layout, and wire management can add some additional nuances to the installation. A PV system can involve thousands of module-to-module connections, making the installation look more like a production process than a custom installation.
By educating themselves and learning the business inside and out, savvy electrical contractors can have great success in solar installations. So don your shades, call on customers, and get ahead of the curve of this rapidly expanding industry now.
Pile is an independent management consultant with Mike Pile Partners, a consulting firm that helps electrical contractors enter the photovoltaic (PV) field. He can be reached at email@example.com.
Sidebar: Solar Electric Market Segments
A working knowledge of photovoltaic (PV) applications is essential in evaluating the optimal point of entry for electrical contractors. SolarBuzz, an international solar energy research and consulting company based in San Francisco, parses the space into several segments based on surface application:
Commercial flat roof — Commercial flat roof applications represent the lion's share of megawatts installed and possibly the biggest opportunity for contractors to expand their businesses. Warehouses and big box retailers have sizable roofs and significant energy bills.
Sloped roof — Sloped roofs (generally residential) account for most of the installations; however, they represent a significantly smaller portion of power generated. This may be a good entry point for many contractors to cut their teeth, but keep in mind that competition from established solar integrators is fierce.
Carport and shade structures — One of the newer applications appearing across the sunbelt are shade structures for parking lots. Business can offer staff and visitors a shaded space while generating power. This end of the business is primarily an engineering and design challenge; therefore, contractors may best be served by forming a relationship with firms in those fields.
Ground mount fixed or tracker — Agricultural applications, brown fields, empty lots, and otherwise underutilized land represent almost endless opportunities for PV installations. The engineering requirements are generally less onerous with a ground application, but transmission of generated power becomes somewhat more involved.
Building integrated — Building integrated solar represents the latest in technology as manufacturers are developing alternatives to silicon-based solar cells. Although prices are generally less, these technologies have some concerns: They are not as efficient as silicon-based PV, and their durability is still unproven.