Soaring energy costs propel solar industry
By Daniel Wolowicz camarillo@theacorn.com

CAPTURING SUNLIGHT- Rebecca Lansang, an employee of SolarWorld AG, holds a solar cell.

Dressed in a white lab coat and wearing protective glasses, Sergio Vasquez stands in front of a 132 pound silicon ingot on display in a glass case mounted to the wall along a long, white hallway.

The display case lies at the heart of one of seven buildings that comprise the North American division of SolarWorld AG-the largest manufacturer of solar panels in the United States. And with the acquisition of the Camarillo facility from Shell Solar in July, Germany-based SolarWorld AG became one of the three largest makers of solar panels in the world. Terms of the deal were kept confidential between the two companies.

Vasquez, head of safety at SolarWorld AG, points to the dense, lead-like block and begins to describe the process that will transform it from one of Earth's most basic elements into a solar panel that'll turn sunlight into electricity. It's a state-of-the-art process that has made enormous leaps since the American inventor Charles Fritts designed the first solar cell in 1883.

Nowadays, a manufacturer like SolarWorld will process about a ton and a half of silicon a day to produce approximately 50,000 solar cells that will be used to make about 1,000 of the 2-footby-4-foot solar panels that are becoming more common on homes and businesses throughout California and across the U.S.

Although manufacturing solar panels is a high-tech process that is now being done in large part by a complex network of robots, Vasquez said the solar panel maker still needs a large staff of employees to keep production flowing.

"Because even though the robots are doing the heavy work, you still people to do the intelligent work," Vasquez said. "Automation has not meant a decrease in jobs. Automation, in fact, has increased the worth of our people because now they are educated in robotics and computers."

Vasquez said SolarWorld AG employs about 400 people, most of whom live in Ventura County. The company also has about 100 additional employees who work at the company's facility in Vancouver, Wash., where the silicon ingots are manufactured.

The emerging popularity of solar power is due in large part to the rising electrical bills many Americans-especially Californians-are seeing every month.

To be sure, Southern California Edison Co. has raised rates twice this year and another increase is still to come, an Edison spokesperson said. Rates were raised on Jan. 1 and Feb. 4, resulting in a 15 percent increase for the average Edison customer.

"The rate hikes are taking place for three main reasons," said Rudy Gonzales, regional manager for Edison. "The cost of fuel, primarily natural gas, is higher than expected, infrastructure improvement needs to take place, and Edison customers are being faced with higher bills because of a restructuring of the state power contract.

"Edison is delaying the rate hike in consideration of the customers that have been using higher than normal amounts of electricity because of the hot weather," Gonzales said. "If we didn't delay the hike, they would have taken a big hit on their bills."

Edison charges homes based on a tier system. For Edison customers, the first tier is around 450 kilowatt hours per home at about 12 cents per kilowatt. The numbers take a big jump when homes, which are typically the larger houses so plentiful throughout Ventura County, start using 200 percent more power than the baseline and end up paying around 32 cents per kilowatt hour.

In the next few months, however, Edison will introduce a fifth tier in pricing that's likely to mean a cost of around 56 cents per kilowatt for high-usage customers.

Greg Johanson, president of Solar Electrical Systems, said local Edison customers are frustrated by their electricity bills, which he said are the highest in the country. That frustration has meant sales at his Westlake Village-based company have continued to climb.

"We've had to stop our advertising because the influx is so great," Johanson said. "We were getting close to 10,000 hits a month on the Internet."

It's at that peak usage rate that solar power becomes so cost effective.

"Solar is the most effective in reducing the load when it bills out at the 32 cents a kilowatt hour," said Raju Yenamandra, SolarWorld's marketing and sales manager.

Yenamandra said that homeowners who use a lot of energy would start saving around $1,500 a year on their electrical costs with a system of solar panels. Those savings, along with government rebates and tax break incentives, make buying a typical solar panel system for around $24,000 financially attractive to a growing number of California homeowners.

Earlier this year, federal and state officials began offering some of the largest renewable energy rebate incentives in history to businesses and homeowners.

The California Public Utilities Commission recently voted to approve the California Solar Initiative, which will provide up to $2.9 billion in incentives between 2007 and 2017.

In addition, the California Energy Commission set aside $350 million to encourage residential developers to integrate renewable energy into homes being built in the next five years. There are about 15,000 homes in California that use solar power.

According to Yenamandra, that means the average homeowner will get back about $8,000 in state-funded rebates and then another $2,000 with a federal tax rebate. Yenamandra said the average solar system ends up costing around $14,000, and after about 10 years of reduced electrical bills, the solar panels pay for themselves.

Johanson said in that Ventura County where Edison's rising rates mean larger bills, a solar panel system can break even in cost in almost five years.

Even with the incentive programs, it will take quite a while before Americans catch up with countries such as Japan and Germany, the world's leaders in solar energy.

Because solar panels are essentially a portable technology- Yenamandra said about 25 percent of their solar panels are used in roadside emergency call boxes and recreational vehicles and boats-more Third World countries and the less developed areas of industrial nations are using solar energy for homes.

"There are 40,000 solar home systems in Mexico alone," Yenamandra said. "Most of it is supplied by us from this factory here. And it is one module, charging a battery, running a couple of lights for a remote home that has no chance of getting conventional electricity because it's too far off the grid."

The growth of solar panels worldwide has caused a shortage of silicon. To keep production going, SolarWorld AG signed a 10-year silicon supply agreement with Germany-based Wacker Polysilicon earlier this year. SolarWorld AG also partnered with other companies in Joint Solar Silicon to produce 800 tons per year of silicon, according to reports from the Department of Energy.

The shortage of silicon affects businesses like Solar Electrical Systems.

"Business is very good," Johanson said. "The problem is the raw materials are tough to get. And the product we can get has gone up 20 to 30 percent in price because of the shortage of the silicon."

Johanson said the problem is compounded by the fact that Hurricane Katrina affected many of the U.S. silicon suppliers based in Texas.

"You don't think about a hurricane affecting the semiconductor market worldwide, but it did," Johanson said.

According to industry reports, the real key to making solar energy viable will be increasing the efficiency of the solar panels.

Yenamandra said panels made at SolarWorld AG have an efficiency rate of about 16 percent, a little higher than the industry standard.