rss icon

Sunday, 30 April 2017 15:23

After year of uncertainty, Michigan solar companies now share optimistic outlook

Written by 
Rate this item
(1 Vote)

Executives in Michigan’s solar energy industry spent most of 2016 dealing with anxiety and uncertainty over proposed legislative changes most believed would have stifled growth in the state’s nascent sector.

However, the outlook has changed and new industry figures show employment is growing steadily. Under widely praised legislation signed by Gov. Rick Snyder in December, rules for being reimbursed by utilities for the energy generated from solar panels and put back on the grid — known as net metering — will remain in place for at least another 18 months after attempts to dismantle the program failed. Existing net metering customers also will be grandfathered in the program for 10 years, according to Public Act 342.

The Michigan Public Service Commission (MPSC) will meet with stakeholders over the next year to determine the true cost of service for those utility customers who only rely on the grid part of the time.

All of this comes as the cost of going solar continues to decrease — thanks also to a 30-percent federal tax credit that was extended for five years in late 2015 — making the economics of installing panels more feasible.

“I’m not surprised the industry is continuing to grow,” said Connor Field, CEO of Helios Solar LLC, an installation company in Kalamazoo. “There was a lot of uncertainty in Michigan last year with the pending energy bills. The way it shook out is relatively neutral for the industry and we expect to see growth in the coming years.”

MiBiz spoke with officials at four Michigan-based companies involved in various parts of the sector. All shared a similar, optimistic sentiment as Field, who conceded it was “difficult to sell solar installations to someone last year — no one knew if the proverbial rug was going to be pulled out from net metering like other states.”

‘IT CERTAINLY IS DIFFERENT’

According to The Solar Foundation’s annual job census released in March, Michigan ranks 15th nationwide in the number of solar jobs (4,118) and 28th in the number of solar jobs per capita. The census found 1,339 new solar jobs were added in 2016, a 48-percent increase over the prior year. A little more than half of those jobs are in installation, followed by manufacturing and project development.

“It certainly is different,” said Liesl Eichler Clark, president of the Michigan Energy Innovation Business Council. “There was a real question about what the policy outlook was going to look like a year ago.”

Eichler Clark called policy changes “a huge influencer in Michigan” in terms of providing certainty to companies as well as to customers who are concerned about paying off their upfront investment, which can run several thousand dollars.

“With continuing declining cost trends, it makes it a really good time for someone interested in solar, either at commercial, residential or other categories,” she said. “It also makes it a really good time to be a developer because of those changes.”

Mike Linsea, founder of Solar Winds Power Systems LLC in Allegan County, says his company started 2017 with good momentum.

“I can’t help but think there’s an underlying urgency if you’ve been waiting, now seems to be the time to do it,” he said. “The minute I think I have things figured out with this business, it turns another angle. But it appears a little more steady than in the past. Right now, people are just ready.”

Allan O’Shea, president and director of sales for CBS Solar, a division of Contractors Building Supply Inc. based in Copemish south of Traverse City, said a driving factor is the public perception of solar. He has worked in the renewable energy sector for 40 years and is finally seeing the steady growth he anticipated would come at some point.

“I knew this was coming, I just didn’t know when,” O’Shea said. 

His company focuses on development in West Michigan, from the Traverse City area to Holland and South Haven. CBS also installed the solar panels last year at Brewery Vivant in Grand Rapids. Solar adoption appears to vary by regions in the state, he observed.

“You’ve got a huge sustainable consciousness (in West Michigan) on energy reduction, efficiency and renewable energy,” he said. “It’s a real great corridor of three, four, five million people.”

SOLAR SUBSIDIZATION?

Meanwhile, companies remain optimistic about the cost of service study the MPSC is conducting. Utilities have maintained that customers with solar panels do not fully pay the cost of operating the grid that other customers do. However, solar advocates say the generation put back on the grid — typically during peak times on summer afternoons — provides benefits to the grid at critical times. 

While the Legislature considered options that would have eliminated net metering or reimbursed customers at wholesale, rather than retail rates, the study is meant to weigh these costs and benefits and eventually answer the question about whether solar generators are being subsidized by the rest of utility customers.

“There really are a number of value components of distributed generation solar, and it seems like major utilities like to talk about the costs there but not the value,” Field said. “As the MPSC studies this, I would hope they weigh all of those concepts and come up with a value of solar that’s commensurate with what the actual cost is.”

O’Shea at CBS Solar said utilities — particularly DTE Energy and Consumers Energy — “can do all they want to do because I’m very confident that the current MPSC commissioners are going to realize this is a bunch of hoo-ha. In my opinion, it’s contrived.”

Formed in 2015, Detroit-based New Dawn Energy LLC acts as a financial consultant and project developer. Co-founder Jon Pedersen, a former bond salesman for major investment firms, said utilities are pushing their own large-scale projects as more efficient alternatives to individual or small-scale projects.

“The idea is that distributed generation is not an efficient way to develop solar,” he said. “I think that’s come under question in the last year or two.”

PRESSURE FROM SOUTHEAST ASIA

However, it’s not all positive news for the sector. Manufacturer Patriot Solar Group LLC of Albion filed for bankruptcy in March after a dispute over payments from a major national client, as MiBiz reported in March.

Georgia-based manufacturer Suniva Inc. announced it was scaling back operations at a plant in Saginaw, and on April 17 filed for Chapter 11 bankruptcy. 

In a March 29 statement, a Suniva spokesperson attributed the company’s struggles to “the continued growth of global manufacturing overcapacity, particularly in Asia, and the ongoing influx of foreign imports, which continue to drive down domestic prices.”

Field said Helios purchased modules from Suniva in the past. He didn’t speculate on the company’s situation, but he said tariffs put on Chinese-made solar modules a few years ago were meant to help U.S. manufacturers.

“What’s happened is folks manufacturing models in China basically shifted operations to other countries that are tariff-free,” Field said. “Modules are coming in from Singapore, Vietnam and other southeast Asian countries that have really driven the price down for modules sold in the U.S. That’s put an immense amount of pressure on domestic manufacturers.”

CBS Solar does some manufacturing, O’Shea said, and distributes to about 25 dealers in the state. It receives components from two companies, one based in India and the other in California. He also declined to speak on Suniva’s situation, but said, “To me, it sounds political.”

While manufacturers continue to face challenges, the outlook for installers, developers and customers remains optimistic.

“We’ve gotten to a point where the technology is coming together with the financing to really spur the market,” Eichler Clark said. “Because of the (net metering) grandfather provision and understanding what that policy environment looks like in the short term, (installers and customers) have a little more comfort about what they’re looking at.” 

Read 4041 times

Breaking News

December 2017
S M T W T F S
26 27 28 29 30 1 2
3 4 5 6 7 8 9
10 11 12 13 14 15 16
17 18 19 20 21 22 23
24 25 26 27 28 29 30
31 1 2 3 4 5 6

Follow MiBiz