Solar + High-End Equipment = Opportunity
June 21, 2010
Offering solar energy systems to customers is a natural progression for HVAC contractors, said Greg Gill, president and CEO, Action Air Conditioning, Heating, and Solar, San Marcos, Calif. “Unlike a solar-only contractor who sells equipment based on existing demand, we’re able to take the whole-house approach. We can show customers how in- stalling a high-efficiency heating and cooling system can reduce demand, allowing us to downsize the solar equipment based on the new estimated load demand of the house.”
Combining high-end systems with solar equipment has been a winning proposition for Gill, who noted that customers have been very interested in these energy-saving solutions. And there definitely has never been a better time to buy, as customers installing solar energy systems before December 2016 are eligible for a no-limit, 30 percent tax credit from the federal government, as well as whatever rebates are available from local utilities.
This is a prime opportunity for HVAC contractors, as many residential customers are looking to take advantage of the $1,500 tax credit for high-efficiency heating and cooling systems, as well as the solar tax credit. Contractors who provide both services not only have an opportunity to increase their profits, they can also ensure their customers obtain the best possible levels of comfort and energy savings.
SHINING OPPORTUNITIESThe two types of solar energy systems that are used most frequently today are photovoltaic (PV) systems and solar thermal systems. PV systems are comprised of PV or solar cells, which use semiconducting materials to convert sunlight directly into electricity. PV cells can be connected together to form arrays, and in this way, PV systems can be built to meet almost any electric power need.
Solar thermal systems use solar collectors to absorb the sun’s light and change it into heat energy in order to provide hot water or space heating for a home. Most solar thermal systems use the sun to heat either water or a heat-transfer fluid in the collector. Heated water is then held in the storage tank ready for use with a conventional system providing additional heating as necessary.
The current local and federal incentives, combined with the ability to differentiate yourself from the competition, are good reasons to offer solar energy systems, said Lloyd Goodman, commercial sales and solar sales manager, Mediterranean Heating and Air Conditioning Inc., Canoga Park, Calif. “Air conditioning contractors are on every corner, which is why our president, Mike Gardner, decided many years ago that he wanted to do things differently. He started to focus on energy conservation and proper airflow, and solar energy systems were a natural product to offer.”
Mediterranean specifies PV systems for residential and commercial applications as part of a whole-building analysis. The company first analyzes a customer’s electricity bills from the previous year, then thoroughly examines the home’s HVAC systems before providing a recommendation for energy-efficient equipment, ductwork modifications (if needed), and solar energy systems.
Some customers choose to have all the work completed at once, while others may parcel it out over the years. “I have some customers who spread things out over 10 or 12 years. We’ll put in a high-efficiency air conditioner, then maybe a few years later we’ll take care of the ductwork, then a few years later, we’ll put in a PV system,” said Goodman. “Many of my clients who have older HVAC systems, though, ask for upgraded heating and cooling equipment at the time of solar installation. That works out well, because the high-efficiency HVAC equipment works in conjunction with the solar energy system, providing a total concept of energy conservation for the customer.”
A typical customer for Goodman may have a heating and cooling system that is 15-25 years old, with a 65-70 percent AFUE furnace and a 7 or 8 SEER air conditioner. Goodman will recommend a 95 percent AFUE furnace and a 16-21 SEER air conditioner, and in Los Angeles, the customer will likely receive a rebate from the utility companies, as well as the 30 percent federal tax credit up to $1,500. The ductwork is often replaced at the same time, to ensure that the customer receives the promised amount of energy savings and comfort. The high-efficiency equipment reduces the total electrical load, thus allowing the installation of a smaller PV system, which qualifies for the 30 percent federal tax credit.
Goodman noted that the poor economy has definitely affected the number of solar energy systems his company has sold lately, but he still believes they will install 50 to 75 systems this year. “In the last year, prices on solar have come down about 35 to 40 percent, which is encouraging people who have some expendable dollars to put that money into their houses. Right now, banks are paying 1 to 1.5 percent interest on a savings account, but by installing solar, people can get anywhere between a 12 and 15 percent return on investment. And after the typical 7- or 8-year payback, the electricity generated by the system is free forever.”
UNIQUE RECOMMENDATIONOffering something different than the competition is also the reason why David McIlwaine, president, HVAC Distributors Inc., Mount Joy, Pa., recently decided to stock solar thermal systems for his HVAC contractor customers. “We have lots of competitors who sell the regular heating and air conditioning equipment, but offering solar thermal systems gave us something different to talk about. Hopefully this will help us attract new customers.”
HVAC Distributors imports its solar thermal systems directly from the manufacturer in China, which allows the company to buy at the lowest possible cost. A low first cost is important because in Pennsylvania the return on investment on a solar thermal system is not as attractive as it may be in Southern portions of the United States.
That didn’t stop McIlwaine’s customers from wanting to learn more about solar thermal systems, as evidenced by the numerous contractors who turned out at the training seminars conducted at HVAC Distributors. “We had great turn-outs at our classes, and we certified hundreds of contractors on installing the solar thermal system. We don’t have hundreds of contractors buying it yet, unfortunately, but we definitely got a lot of exposure, and it piqued our customers’ interest.”
Solar thermal systems in Pennsylvania may be tough to sell - particularly in this economy - but there are many customers who like the idea of going green. Referring these customers to a solar-only installer is not an attractive option, because as McIlwaine noted, “Why would contractors want to let someone else sell a $5,000 or $7,000 solar thermal system to their customers? I can’t imagine that they’d want that to happen.”
Especially when learning how to install solar thermal systems is so simple, said McIlwaine. Contractors already have many of the skills necessary to install solar thermal systems, with only some training needed in orientation, mounting, piping, sizing, and the safety issues that are involved when working on the roof. “Commercial applications are a bit more complicated, but our application specialists are available to help out with those systems.”
Indeed, commercial buildings can be a perfect fit for solar thermal systems, as they often have flat roofs and/or easy access to places that can support panels. “Think about all those businesses out there that require large amounts of hot water - nursing homes, retirement communities, apartments - and I think solar is a great opportunity there. Plus, there are very lucrative tax incentives and grants available to the commercial market that really make solar attractive.”
As the economy improves - and the incentives continue - customers will likely become more interested in reducing their energy costs through the installation of solar energy systems. Contractors who have an eye on the bottom line may want to consider offering this service instead of giving that business to someone else.
Sidebar: Solar-Ready HVAC SystemIn 2008, Lennox introduced the SunSource® XPG20 heat pump, which integrated solar energy into a residential central heating and cooling system. The company is now getting ready to unveil the second generation SunSource Home Energy System, which will be capable of providing power directly to the entire outdoor unit and more.
“The new SunSource system is capable of using more than a single solar module,” said Victor Gonzalez-Maertens, director of product management, Lennox. “It can now use up to 15 solar modules per outdoor unit, and when the outdoor unit is not in use, the energy produced by the solar modules is no longer lost - it can now be used to satisfy other energy demands inside the home.”
If the SunSource system generates more energy than is required by the home, the energy can be supplied back to the utility company, thanks to the new utility-interactive micro-inverter technology used. The new SunSource system is also expandable, meaning that homeowners can start small with a few modules and add more modules as their needs change or finances permit. In addition, the SunSource system is now available as an upgrade for the entire line of Dave Lennox Signature Collection air conditioners and heat pumps.
With the new SunSource system, noted Gonzalez-Maertens, homeowners can reduce the energy consumption associated with air conditioning anywhere from 58 percent to over 100 percent, while also significantly cutting their overall utility bills. “In addition to these costs savings and the incentives offered by many local utility companies for using high-efficiency heating and cooling equipment, the new SunSource system makes homeowners eligible for federal, state, and local tax credits. In fact, in some areas of the country, these benefits, when combined, can cover a significant part of the cost of the solar modules, including installation.”
For dealers, the SunSource system provides an opportunity to set themselves apart from the competition, stated Gonzalez-Maertens, as it provides a unique value proposition to offer homeowners. It also allows dealers to transition from HVAC contractor to home energy contractor, as well as increase profits through the future sales of solar expansions.
Many HVAC contractors now see solar as an opportunity to grow their businesses in the future. “We are helping dealers understand the opportunity for a bundled high efficiency HVAC and solar solution for the homeowner,” said Gonzalez-Maertens.
Publication date: 06/21/2010