Economy Hurts Solar, But Good Ideas Remain

The solar industry is between a rock and a hard place. On one side, banks and other financiers are limited in their ability to give capital to the companies that sell and install panels. On the other, even those customers well enough off to buy new solar systems have begun to rank saving money over saving the environment.

One indicator of the trouble is a 24 percent drop in applications for new home and business solar systems in the first two months of the year, according to a Pacific Gas and Electric spokeswoman quoted in the San Jose Mercury last week. That's even more significant than it sounds, since the year-over-year growth was at similar levels before.

Solar panel makers are already seeing the impact, while installers have a brief reprieve, since they're still busy putting up the panels they sold last year. But contrary to President Obama's promise that green jobs will power us through the recession, it looks more likely that the economic malaise will keep most sectors of the renewable industry (with the exception of energy efficiency and grid projects) from growing quickly.

But government at all levels is already heavily invested in the promise of solar, so there may yet be some breakthroughs. The past few years have been a period of rapid innovation for installers, each of whom competed to find the cleverest way to lower, defer or spread out costs for their customers.

Bureaucrats are slower than private enterprise to think up new strategies, but the recession may provide the impetus they need to catch up. The Berkeley First program in Berkeley, California, is a good example. The city is piloting several dozen homeowners on a bond initiative that will allow them to install solar without upfront costs, shifting the payments to their property tax.

The consumer's risk is thus almost entirely removed, because the tax burden doesn't change their credit, shifts to the new owner on sale of the home, and is provided at a low rate because it's paid for by a city-issued bond. The program reportedly filled up in under 10 minutes when it was opened late last year.

Not every city in California can follow in their footsteps, due to their varying legal statuses. But other cities are busy figuring out their own ways to support renewables (also see my interview with San Jose's green officer). The only challenge is the same one that faces all government bodies -- moving fast enough. In the recession, it remains to be seen if they can.