Can Solar Energy Pay Off Without Subsidies?

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Because of a combination of government subsidies and a flood of cheaper solar panels on the market, more businesses are finding it possible to power their buildings by the sun. But critics say all of those subsidies mean solar power isn't so competitive. Tina Antolini reports for member station WFCR in Massachusetts.

RENEE MONTAGNE, host:

More and more businesses are turning to solar energy to power their buildings. They can do it, thanks to a flood of cheaper solar panels on the market and government subsidies. Those subsidies are why skeptics say solar energy still isn't competitive.

Tina Antolini of member station WFCR in Massachusetts has this report.

Ms. TINA ANTOLINI: From the ground, the two-story brick building contractor Dave Marley owns in Amherst, Massachusetts looks like a typical office building, but on the roof it's a different story. Solar panels take up just about every available square inch. Marley gets a little bit giddy just looking at the panels when he's up on the roof.

Mr. DAVE MARLEY (Building Contractor): There are 420 of them.

ANTOLINI: They're about the size of like a refrigerator door or so.

Mr. MARLEY: Yeah, about that. I mean if you touch this you can feel that it's warm. It is not hot...

ANTOLINI: Marley's been building things like supermarkets and apartment complexes in western Massachusetts for 30-plus years. If someone had suggested making renewable energy part of his plan for this building when he bought it several years ago, he says he might not have jumped at the idea.

(Soundbite of laughter)

Mr. MARLEY: I probably would've said why, might would've been my first question. And second question would be, as anything else would be, how much money are we going to make out of it?

ANTOLINI: Money is usually the hurdle to making a solar installation of this size a reality. It cost roughly a million dollars. But Marley's one of a growing number of business people who recently found a new financial argument for installing solar panels. While a spike in his utility bills was a motivator, the key to taking the plunge on this investment was government subsidies.

Mr. MARLEY: Without the grants, without any type of help at all, this type of project has, oh gosh, 35 to a 45 year payback period, which is horrible. We are trying to achieve a five to five and a half year payback period.

ANTOLINI: To do that, Marley's getting a dizzying mix of rebates, tax credits and federal grants, including one for boosting this building's energy efficiency. All of them add up to more than $600,000, though Marley likens it to a game of Where's Waldo, looking for the right grants.

Still, he's not alone in going after them. Chris Whitman is the president of Connecticut-based US Solar Finance. He says more and more companies across the country are finding that solar makes sense as a part of their business plan.

Mr. CHRIS WHITMAN (President, US Solar Finance): We're at the point right now with the state incentives and the federal investment tax credit or the federal incentives that the actual cost of the electricity generated can be below the cost of power you're taking from the grid.

ANTOLINI: What's also contributed to that is a drop in the cost of the solar panels themselves. Whitman says a panel is about a third cheaper now than it was in January. That's because of a surge in solar panel production in China and fewer orders for them in European countries due to the recession.

But even with cheaper panels, independent energy consultant Joel Gordis(ph) says it's only that pile of government incentives that's making solar competitive right now.

Mr. JOEL GORDIS (Independent Energy Consultant): We hope that over time, and in fact it may not be as long as some people think, the industry will be able to wean itself off of those subsidies and become much more market oriented in that way.

ANTOLINI: Gordis says many industries - the auto industry, the steel industry, and agriculture - to this day were babysat by government subsidies until they were able to stand on their own two feet, and solar is slowly heading in that direction. With demand rising, Massachusetts, California and other states have cut the amount of rebates they give for commercial solar installations. It's a sign getting energy from the sun could soon pay off all on its own.

For NPR News, I'm Tina Antolini.

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