Warming up to solar power
By Deborah Adamson
Advertiser Staff Writer
Supermarket owner Russell Ruderman is an avowed environmentalist. By this fall, his passion for preserving nature will be apparent to all — deep blue solar panels will line the roof of his Hilo store.
Kevin Dayton • The Honolulu Advertiser
"I'm doing it to influence other people and to help the environment," said the owner of Island Naturals Market & Deli. "I think it will be a good statement for us as a business."
Russell Ruderman, owner of Island Naturals Market & Deli, can expect to see his electricity bill drop by 10 percent after solar panels are installed at his Hilo store.
It's also good for his pocketbook. Ruderman spends about $5,000 a month on electricity to power his 6,000-square-foot grocery. When the solar panels are installed, they should shave 10 percent off his electric bill.
Higher energy costs from rising oil prices have resulted in a renewed focus on the use of alternatives such as solar energy. Imported oil supplies 90 percent of the state's energy needs, according to the state Department of Business, Economic Development and Tourism.
Unlike the Mainland, Hawai'i can't turn to adjacent states for help in an energy shortage. But it is blessed with an abundance of natural energy sources, including sun, wind, water and geothermal heat from volcanic areas.
Earlier this month, Gov. Linda Lingle signed into law a bill that requires utility companies — such as Hawaiian Electric Co. — to have 20 percent of its sales come from renewable sources by 2020. Currently, about 7 percent of the state's energy needs come from renewables.
The governor also signed a bill that extends solar energy tax credits to families and businesses by another five years, to January 2008.
Hawai'i is the solar water heating capital of the country, with half of the nation's homes with these systems in the Islands. In December, HECO's solar water heating program received an outstanding achievement award from the U.S. Environmental Protection Agency, the second such recognition in a row.
But beyond heating water, the use of solar energy to generate electricity remains limited. One of the biggest hurdles is the cost, which runs from about $5,000 to power a small home to millions of dollars for large businesses.
It's not unusual for the price tag to reach several hundred thousand dollars to power a business, said John Crouch, Pacific Region director of PowerLight Corp., the largest designer and integrator of commercial solar electric systems in the country.
A Hilo-based company has a system to make solar energy affordable by shifting the capital requirements onto investors.
ProVision Technologies, one of a handful of solar energy companies in Hawai'i, recently launched its investor program with C&H Solar Power in California. Under the program, business customers would get the solar modules for free and pay a negotiated rate for electricity.
President Marco Mangelsdorf said the rate is lower than what HECO or its subsidiaries would charge, saving companies 10 percent to 50 percent off their electricity bill. The customer has to sign a 10-, 15- or 25-year contract that locks in the rates.
C&H would gather a group of investors to put up the capital and buy the solar module. They would profit from the electricity rate paid by the customer as well as significant tax breaks provided under federal and state law, said David Fradin, managing partner of C&H.
The program is only for business customers because the investment wouldn't make sense without the tax breaks, which favor commercial users.
Hawai'i gives a 35 percent tax credit on solar energy systems with a $250,000 cap and the systems can be depreciated over five years on state and federal tax forms.
About a dozen states have done what Hawai'i just mandated — they require a portion of their utilities' revenue to come from renewable energy. Some utilities that can't meet the requirement have resorted to buying them from users of solar energy, Fradin said.
That means a power company could buy part of the energy generated by solar power at an auto dealership. The purchase would be credited toward the utility's revenue and meet state regulations.
The practice of matching investors with users has been around for about three years nationally, Maycock said. Because of steep tax breaks and low interest rates on loans, investors can get a rate of return of 15 to 20 percent a year, he said.
Island Naturals has signed a 10-year contract with ProVision to join this program. So did Stephen and Marjorie Chase, hardware store owners in Pahoa on the Big Island.
The Chases, who are moving their Pahoa Hardware store to an 8,000-square-foot location in August, said their solar panels will shave 20 to 25 percent off their electricity bill. They are currently paying $300 a month for their existing 3,000-square-foot store.
"It wasn't a huge amount of savings," she said. But "we really want to promote that kind of technology."
Reach Deborah Adamson at dadamson@honoluluadvertiser.com or 525-8088.
