Denver, CO, September 30, 2008…During the three years since Colorado’s Amendment 37 passed, mandating power company rebates on solar electric systems, the local solar industry has taken off.  There are now over 150 companies installing systems in Colorado– most very small operations.  A couple of locally owned companies have become major players, while some national companies have moved into this ripe market.

One of the leading local companies is Vibrant Solar, Inc.  Vibrant Solar started business in the second quarter 2006, and had two employees and some contractors at end of that year.  Today they have 38 employees, numerous contractors, a statewide operation, strategic partnerships, annual sales approaching $6 million, and plans to double revenue again next year.  

Mark Simmons, Marketing and Sales Director for Vibrant Solar, said that the primary reason for such growth is Xcel Energy.  “Xcel launched and built one of the best rebate programs in the country,” explained Simmons.  Xcel’s Solar Rewards program is available to their 1.3 million Colorado electricity customers.  The program pays out the $2 per watt rebate that Amendment 37 mandates, plus pre-purchases the Renewable Energy Credits (RECs) produced by a solar electric system for its first 20 years of operation at $2.50 per watt.  “Xcel sends the rebate and REC payment about 60 days after installation,” Simmons continued.  “Vibrant Solar, as well as most local installers, carry the rebate, allowing the homeowner to pay only the after-rebate price.  This means an average home system, which costs roughly $40,000, only costs the homeowner $14,000 out of pocket.”  

Simmons continued to explain that, as of May, 2008, all power companies in Colorado must install a “net meter” when a homeowner or business installs a solar system.  “The net meter can accept the electricity produced, running the meter backward. The power companies must purchase electricity produced by a solar electric system for retail, the price they charge per kilowatt hour.  The right-sized system can therefore zero out the electricity bill, aside from a couple of flat fees.”

“So, at least for Xcel’s Colorado territory,”  Simmons continued, ”with the right system and only about 40% of the total price tag a homeowner can zero out their bill and most of their carbon emissions.”

 The Governor’s Energy Office also works with smaller power companies to help them offer rebates, though none comes near the Xcel Energy rebate… which is one of the best in the country.

In addition to the Colorado State government’s support and the Xcel rebate, Congress may initiate the true boom of solar within the next week or two.  Both the House and Senate have passed extensions of the federal tax credit program, one increasing the residential cap from $2,000 to $4,000, the other removing the cap entirely, making the residential credit the same as commercial, and 30% of total cost.  “The program would be extended six years or eight years,” Simmons explained,  “long enough for serious investment in the booming industry.  Either bill would cause residential solar electric systems to be very affordable, while commercial would have the chance to grow.”

Simmons then said that there are also negative forces at work in this boom industry.  “Manufacturing capacity is growing, but in late summer each year a shortage of panels hits,” he explained.  “This is due to summer being the busy installation season. This was exacerbated in 2008 by Europe’s, and particularly Spain’s high demand for solar photovoltaic panels.  The US dollar was weak, and massive government programs covered most of the cost.  European installers bought most of the worldwide supply this year.”

“Otherwise, as NPR reported last Thursday,” Simmons continued, “the industry is strapped for investment capital– most solar installation companies are undercapitalized.   They are growing faster than their original capitalization can tolerate.  Some consolidation is already happening, while some smaller companies are simply going out of business having not survived their startup, even in this booming industry.”

“Meanwhile, the federal tax credit program expires at end of 2008.  Commercial system sales have already dropped off, as the installers are past the point where they can write a new contract and guaranty the system would be online to take the text credit by year’s end,” Simmons said.  “Hopefully, Congress will come to agreement on the new bill and get it in place by year end.”

This is the state of the industry today.  Strong in some ways, shaky in others.  And all too temporary.
Then the challenges for solar companies will be maintaining supply, and handling meteoric growth.  It will be an exhilarating and dangerous time for this young industry.

Mark Simmons

Marketing & Sales Director

Vibrant Solar, Inc.