A boom is playing out in the solar power industry here.
In the past year or so hundreds of people have been hired locally by a maker of solar panels and at solar panel installers for homes and businesses.
Installation startups are getting into the market every month. Established companies are touting aggressive expansion plans.
For some idled construction workers—hit hard in the downturn here with 10,000 jobs lost in the past 12 months—jobs installing panels on rooftops is eagerly welcomed.
“We have been growing very rapidly when employment is tough out there, particularly for the construction trade,” said Ken Button, president of Verengo Solar Plus of Orange.
The solar industry has a sense of a gold rush playing out, like, dare we say, the homebuilding boom of a few years ago.
For now, solar power is a small, niche industry catering to businesses and well-to-do or environmentally conscious homeowners. Like any good boom, it’s being fueled by rebates and other incentives from governments and utilities.
Whether the boom proves sustainable is another question. High costs of $20,000 or more and payback times of five years or more put solar out of reach for many homeowners and businesses.
Installers prefer to see the glass half full. With only a fraction of Southern California homes and businesses equipped with solar, there’s plenty of room for growth, they say.
Verengo expects to add nearly 200 workers in the next 12 months as homeowners look to save money on energy bills and finance installations, according to Button.
Seal Beach-based solar panel maker Amonix Inc. has hired more than 200 people locally in the last 12 months and is planning to build a $20 million factory in Nevada where it’s set to employ about 280 people.
Earlier this month, Northern California’s Solar City, which designs and installs solar panel systems for homes, businesses and government buildings, doubled its Santa Ana office to 40 employees.
Growth Mode
The companies are among dozens in growth mode here.
This year, Verengo expects to see $30 million in revenue, double what it did in 2009. It also plans to boost its workers from 175 to 350 within the year.
The company is installing 70 to 80 systems a month for homeowners, from environmentalists to older folks on fixed incomes.
About half of the systems, which convert sunlight to clean electricity, are in Orange and Los Angeles counties.
The company has added 75 workers since January, mostly former construction workers. Additional hires are expected to fill installation positions, as well as marketing and field operations jobs.
A former corporate lawyer, Button and longtime friend Randy Bishop have grown Verengo to one of the largest solar installers in the county. Buttons and Bishop, Verengo’s chief executive, started the company in 2008.
Electricity prices, which are rising faster than inflation, are driving people to install solar panels, according to Button.
The company also leases solar power systems, which accounts for more than half of its business.
Under an 18-year lease, customers pay $100 a month for a total cost of about $22,000. They can save as much as $15,000 to $20,000 on energy bills over the life of a lease, according to Button.
“Would you pay $1,000 today to lock in gas prices over the next 20 years?” he said.
Buying a solar power system isn’t cheap. Verengo’s sell for $40,000 before subsidies. Rebates from Southern California Edison and federal tax credits can knock off more than half the cost.
Getting a return on a purchased system takes five to seven years, according to Verengo’s Bishop.
That’s likely a hard sell for some everyday homeowners and probably a deal breaker for those whose home values have fallen below what they owe on their mortgages.
“Solar only makes sense if the financials line up for the customer,” Bishop said.
Orange County is one of the best places for the widespread adoption of solar power, according to Lynn Jurich, owner of San Francisco-based SunRun Inc., which finances solar power systems for Verengo customers.
Others agree.
“OC is one of the best places to install solar in the U.S., with consistent sunshine and an informed population that wants to reduce its energy costs and improve air quality,” said SolarCity Chief Executive Lyndon Rive.
SolarCity has more than 500 customers in OC and expects to continue its growth here, he said.
The solar boom may not be as sustainable as some think, according to Esmael Adibi, an economist with Chapman University in Orange.
“None of these alternative sources are economically viable by themselves,” said Adibi, director of the Anderson Center for Economic Research at Chapman. “They need some government subsidy or tax credit to make it viable.”
Businesses could be a big prize for solar installers.
At the end of January, SA Recycling completed a large solar installation project at its headquarters in Anaheim. The company’s $2.5 million solar system, the largest that the city has seen so far, is projected to save it more than $60,000 a year on utility costs.
That money will be donated to Anaheim charities “so the system is not benefiting the bottom line at all,” said Jeff Farano, special projects director for SA Recycling.
“However, it has had a much greater impact by reducing our carbon footprint and further establishes our commitment to the environment,” he said.
Solar panel maker Amonix is seeing business from companies and governments. Last month, Charlotte, N.C.-based power company Cogentrix Energy LLC said it would use Amonix panels for a 30,000-kilowatt project with Public Service Co. of Colorado.
The company, which designs and makes giant solar panels to generate energy in sunny, dry climates, has added 231 jobs here in the last 12 months. Many of these were research and development, engineering and supply chain positions.
Amonix is one of OC’s most well-funded companies.
In April, the company raised $129 million in a second funding round led by Menlo Park-based Kleiner, Perkins, Caufield & Byers, which is known for alternative energy investments and counts former Vice President Al Gore as a partner.
In all, Amonix has raised nearly $200 million from private and government sources.
Solar advocates contend subsidies and technology will drive solar costs down over time. Amonix, which wouldn’t disclose pricing, said it has developed cost-effective panels to compete financially against fossil fuels on large-scale projects.
But Amonix’s Robertson doesn’t envision the same evolution for home installers.
“I don’t think residential will get that cheap just because of the installation cost. Houses come in too many shapes, sizes and varieties,” he said. “Retrofit will always be kind of expensive.”
