Dealer News Aug/Sept 2018July 12th, 2021 by Nathan Hobbs
Catching the Sun: Adding Solar as a Service Could be a Challenge
In May, California became the first state in the country to require solar panels to be installed on all new single-family homes and small apartment buildings beginning in 2020.
The change aims to ensure that new residential construction is net zero energy. Net zero means the building consumes only as much energy as can be generated by on-site renewable energy systems.
While the rule only mandates solar panels for new construction, could it be a good line of business for replacement door and window installers in California that offer other add-on services such as roofing or energy audits?
The jury is still out on that question.
While solar might not be every dealer’s cup of tea, there are financing programs avail-able that could help sway customers. Some examples:
Investment Tax Credit
According to EnergySage, an online marketplace for solar financing, the federal solar tax credit, also known as the investment tax credit (ITC), allows homeowners to deduct 30 percent of the cost of installing a solar energy system. There is no limit on its value.
PACE, which stands for Property Assessed Clean Energy, enables home-owners to make energy and efficiency improvements and to pay for them over time through an additional line item on their property taxes.
Scott Cramer, president of the Go Solar Group, a solar-installation company based in Utah, says California’s regulatory embrace of solar could have a ripple effect.
“Most companies working in the Sun Belt’s home-improvement niche are realizing they must either generalize their own products and services to meet surging demand for comprehensive home-improvement solutions or team up with affiliates, contributing a singular add-on product/service to the mix and establishing a specialized skill set and domain of expertise,” he says.
Many companies are already there.
For example, Sunergy Construction of Riverside, Calif., installs doors, windows, roofs, HVAC systems and solar panels, which are generally installed on roofs. That allows Sunergy to market itself as a one-stop provider of energy-efficiency solutions.
However, not everyone in the Golden State is excited about solar.
Scott Thurber is the vice president of Associated Building Supply in Auburn, Calif., which specializes in high-end residential construction. He doesn’t expect solar to become a significant part of his business.
“Who has the time to learn a new industry when the economy is stronger than it’s been in years?” he says. “We would rather invest in what we do best — windows and doors.”
Thurber says many homeowners will be disappointed by solar installs.
“The solar industry is dependent on installers who are scarce and in general not highly skilled,” he says. “Therefore, consumer satisfaction is at risk. Demand will be high and quality will be low.”
The bottom line: Associated Building Supply won’t be jumping on the solar bandwagon anytime soon.
California’s solar mandate has also met with skepticism from other experts in the fenestration and energy fields. They say emphasizing better windows, designing and locating homes so they capture more sunlight or large solar arrays run by public utilities would be much less costly than panels on top of every home.
“Given the cost of fenestration, I don’t see that adding the complexity of solar, in its current forms, makes much sense,” says Craig Patchin, the president of Window Design Center in Madison, Wis. “If there is new technology that is reasonably priced and effective that could be used in a kind of ‘switchable glass’ configuration (selective shading would also generate power), that would hold some promise and deliver more value for end users, as well as tie into new house control technologies.”
Kevin Seiling, Veka’s vice president of engineering and new product development, echoes that sentiment. While acknowledging that solar panels will help homes reach net zero energy in California, he says the cost isn’t worth it when high-performance fenestration could help achieve similar results at a much lower price.
“Solar panels, even in California with its abundant sunshine, have a 20-year return on investment,” he said. “California would have been much better off mandating Energy Star Most Efficient products.”
Seiling said the window industry needs to address this issue by clearly differentiating “net zero energy” homes from other, more stringent whole-house rating systems because of the expenses related to solar panels.
Report: Fenestration is Number One for PACE Financing
A popular Property Assessed Clean Energy (PACE) financing program has helped pay for more than 100,000 Energy Star-qualified improvements—and nearly half (about 46,700) are doors, windows and skylights.
Renovate America’s HERO PACE financing program helps property owners make improvements and then pay for them over time at a fixed rate through a line item on their property tax bill. According to the Department of Energy, PACE programs can spread repayment over many years and help some property owners deduct payments from their income tax liability.
“For tens of thousands of home-owners from California to Florida, HERO financing has enabled greater access to superior energy efficiency products,” said Renovate America CEO Roy Guthrie. “PACE financing programs like HERO are one of the most effective tools for upgrading our existing housing stock with Energy Star-certified products, helping homeowners save money and reduce emissions while increasing the overall efficiency of our communities and improving the reliability of our electric system.”
Since HERO launched in late 2011, more than 115,000 homeowners have used it to finance nearly $3 billion in efficiency upgrades to their homes. The Energy Star-certified improvements made with HERO are projected to save more than 8 billion kilo-watt-hours of energy over the life of the products installed. That could power about 750,000 American homes in a year, according to Renovate America. The improvements are also expected to reduce greenhouse-gas emissions by nearly 1.9 million tons over their lifetime.
What is PACE?
• PACE is a financing program that property owners can use to fund improvement projects such as window replacements with no upfront/out-of-pocket costs.
• Improvements are paid over time at a fixed rate through a line item on a homeowner’s property tax bill.
• Allows for secure financing of comprehensive projects over a longer term, making more projects cash-flow positive.
• Spreads repayment over many years and removes the requirement that the debt be paid at sale or refinance.
• Can lead to low interest rates because of the high security of loan repayments attached to the property tax bill.
• Helps some property owners deduct payments from their income tax liability.
• Allows municipalities to encourage energy efficiency and renewable energy without putting general funds at risk.
• Taps into large sources of private capital, such as the municipal bond markets.
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