Commercial solar brightens balance sheets

A combination of tax incentives, grants and plain old market demand is turning solar power into a good business investment and offering another opportunity to “buy local.” Although purchase and installation of photovoltaic panels is still too expensive for most businesses to swallow, Xcel Energy has been offering a rebate, Minnesota has offered a tax credit, municipalities offer their own incentives, and at least one local solar-installation company says in come circumstances it will trade services for advertising.

As the city of St. Paul rolls out demonstration projects in the next few months, one St. Anthony Park business has already decked its roofs with photovoltaic panels and begun reaping the savings on utility bills.           

Wellington Management has installed the panels on four commercial buildings, including its offices on Energy Park Drive just west of Snelling Avenue and recently bought a largely solar-powered building, the Green Institute’s former headquarters in Minneapolis.

While the new equipment hasn’t taken them off the electrical grid, Wellington has seen savings on utility bills in the year since installation, said project manager Dave Bergstrom.

Those savings would take a long time to cover the cost of installation if it weren’t for state and federal tax incentives, which reduce the payback period from perhaps 20 years down to “five to eight years,” Bergstrom said.

The incentives—many of them still relying on federal economic-stimulus funds—are designed to bring demand to the point where solar power becomes a sensible investment, according to Anne Hunt, St. Paul mayor’s office environmental policy director. She thinks that time is near.

“The price of solar is coming down,” Hunt said.

The city’s emerging solar program includes a heating system at the new Como pool, which will open in 2012, and a roof panel soon to be installed at South St. Anthony Recreation Center.

The new electric car–charging station to be installed in the south parking lot at Como Lakeside Pavilion will also be solar-powered.

“We’re trying to demonstrate on our public buildings the great potential of solar,” Hunt said.

The South St. Anthony Recreation Center project will be paid for by federal stimulus funds allocated by the state to develop the Central Corridor area, Hunt said, and Xcel’s $2.25-per-watt rebate covered almost half of the $35,000 cost.

The St. Paul Planning Commission has been reviewing the city’s zoning specifications for their effect on solar installations and will likely recommend changes to the City Council within months. “The solar industry is still in its teenage years,” Hunt said. “We just haven’t had a lot of projects.”

City staff members are also being trained to streamline the permitting process, she said.

Although Minnesota has strong solar potential (St. Paul compares favorably with Houston, Tex., Hunt said), Xcel won’t lose its customer base to photovoltaic panels.

On a sunny summer Sunday, with no one in the building, the Wellington panels generate excess power and pump it back into the grid, Bergstrom said. But most of the time, the buildings are still drawing power from the lines—just a lot less of it.

Jon Kramer of Sundial Solar in Minneapolis, which installed equipment on three of Wellington’s buildings, said he’s outfitted everything from small homes to acres of industrial roofing.

The company has national clientele, he said, “but we’ve been lately doing most of our work here in Minnesota.”

His latest project is outfitting Will Steger’s environmental education center near Ely to replace gas and propane generators with solar power.

Minnesota currently has “the best incentives in the country,” Kramer said, but noted, “it isn’t going to last long.” Those incentives depend on a complex mix of decisions at various levels of government as well as in private industry.

The downside of incentives is the appearance of “carpetbaggers” trying to get in on the business, Kramer said. He’d like to see local and state government adopt licensing requirements, including certification by the North American Board of Certified Energy Practitioners, he said.

Kramer noted that the equipment he installed for Wellington was made just a few miles away, by tenKsolar in Bloomington. And he’s not just buying local for ideological reasons, he said. “It’s the best system on the market.”

The shifting array of incentives has required Kramer to become a finance expert.

“We’ve managed to create incentives, too,” he said, citing a farm in southern Minnesota where the local electrical cooperative didn’t have an incentive program when Kramer and the farmer started the project.

Kramer offered an “incentive” of his own, forgiving part of the installation cost in return for permission to put a prominent sign on the property.

The utility found out about the project and expressed interest in getting on board. It offered an “education” grant, turning the project into a regional model and helping Kramer cover his costs.            

Not every site, however, is appropriate for solar, Kramer said, and he’s not willing to cut down trees in order to reduce shade. Property owners interested in solar can call an installer for help figuring out whether it’s viable, he said.

Bergstrom praised Sundial and the other company they’ve used, Solarflow Energy, also of Minneapolis.

“With both these groups, it’s relatively simple,” Bergstrom said. “You can find out what it’s going to cost you.”

Wellington Management owner Steve Wellington said he’s green-minded and happy to save on utility bills, but there’s also a market incentive. As a property manager, he pays attention to what prospective tenants want.

“There’s a sense that there are an increasing number of tenants that want as green a building as possible,” he said.

Bergstrom said anyone interested in solar power should start with an energy audit of their home or business. “Utility companies offer really good energy analysis,” he said. “That’s a great first step.”

Anne Holzman is a freelance writer who lives in St. Anthony Park.