The State of the Solar HVAC Market
Solar HVAC is going through massive changes as demand continues to flourish
The solar HVAC market is in a critical state of flux.
On one hand, by the end of the decade, solar photovoltaic (PV) is “projected to be cost-competitive with retail electricity prices in a significant portion of the world as module prices and installation costs continue to decline,” per Navigant Research. In fact, according to a new report from the research firm, global annual revenue from solar PV installations is expected to surpass $151.6 billion by 2024.
However, as demand and support for the energy-efficiency, long-term cost reductions, and other benefits provided by solar installations grow, so does concern over how solar will look after current federal tax credits expire at the end of 2016 (for more on the future of the tax credit, see our additional coverage in today's issue).
Currently, the Residential Renewable Energy Tax Credit allows for a 30 percent tax credit on residential energy property applied to solar-electric systems, solar-water heating systems, and fuel cells, as well as small wind-energy systems and geothermal heat pumps.
This credit has helped drive tremendous interest in different pockets of the country, but the entire concept of solar energy is gaining traction across the U.S.
According to the Obama administration, the U.S. brought online as much solar energy every three weeks last year as it did in all of 2008, and the solar industry added jobs 10 times faster than the rest of the economy. Since the beginning of 2010, the average cost of a solar electric system has decreased 50 percent.
The administration also set a goal of training 75,000 workers to enter the solar industry by 2020, and the Solar Ready Vets program is designed to train transitioning military personnel for careers in the solar industry at 10 military installations.
Having a solar-ready workforce nationwide is only going to become more important in the coming years, because those within the industry say several different markets have demand for solar.
“California, New Jersey, and Florida are currently the biggest solar markets for us,” said Derek Phillips, electrical engineer, Lennox Intl. Inc. “However, demand for solar really is spreading. A large number of companies are now getting involved in Texas, as well.”
Lennox produces the SunSource Home Energy System for residential applications and also the SunSource Commercial Energy System. These systems provide electricity to a home or building through the use of solar modules, which are wired to the Lennox outdoor a/c unit.
“Maine, where I am based, is a smaller market, but the Northeast, as a whole, is large and growing strong,” said Vaughan Woodruff, owner, Insource Renewables, Pittsfield, Maine. “Vermont and New York are particularly great. Vermont has the highest per capita solar job rates in the country. The solar heating side is a pretty flat market in Maine, but we don’t have the same data to look at as we used to through the U.S. Department of Energy (DOE). The PV side is seeing enormous growth in a lot of places.”
“Obviously, the South in general has a ton of demand for efficient products, including solar, and we’ve seen an overwhelming demand in Florida,” said Josh Teekell, CEO and cofounder, Mistbox, a solar-powered system that mists air before it enters an a/c unit. “When you’re in Texas, you think you’re about as far south as you can go in the U.S., but southern Florida is even farther south, and they run air conditioning 12 months a year.”
CONSUMER AND CONTRACTOR AWARENESS
One of the most important aspects of growing the solar HVAC market is ensuring customers and contractors fully understand the advantages, disadvantages, and realities of solar installations.
“In HVAC, technicians are generally slow to adapt to changing technologies, which has been a barrier to solar expansion in this market,” said Teekell.” Some technicians have been in the field 40-50 years, and new technologies, especially solar, are overlooked, not viewed as necessities, or expected not to work. Like in every industry, new products come out, and, eventually, we wonder how we ever lived without them.”
“We have to bring these things like solar to the consumer, and let them know these optioins exist,” said Phillips. “Any HVAC installer can suggest solar offerings and stress how great of an option they are. Once you have customers at the table, you inform them of increases in energy efficiency and how it will help them.”
“We also have solar in many of our brochures, which helps raise market awareness,” said Anubhav Ranjan, director, product management, Lennox. “Customers aren’t necessarily always looking for solar as a solution initially, but our dealers are great about engaging customers and informing them about its benefits.”
Raising awareness of solar options can come from multiple sources, and Woodruff said the old adage about “keeping up with the Joneses” rings true in regard to solar.
“Neighbors see solar on their neighbor’s property and start asking questions. That serves as a trigger to purchase solar themselves,” he said. “I’ve heard solar is the next granite countertop. There is influence there that we don’t see in boilers and other technologies. Solar water heating is more cost-effective than solar electricity sometimes, but it isn’t as buzzworthy. There was actually a study done that said the biggest impact for folks going solar is knowing other folks who’ve gone solar.”
Plenty of the folks Woodruff mentioned are switching to solar at an accelerated rate. With more than 195,000 installations in 2014, nearly 645,000 U.S. homes and businesses have now gone solar, and a new solar project was installed every 2.5 minutes, per the Solar Energy Industries Association (SEIA).
The main reasons for adopting the technology are varied.
“The reason customers seek out solar products is truly a combination of everything,” said Teekell. “Different customers have different drivers. Savings are obviously essential, and, with our product, that is the number one driver of interest. In California, people care about different things than they do in Texas.”
“We see this core clientele of folks who are either facing retirement in the future or have recently retired, and one of the major variable costs they have is energy costs,” said Woodruff. This gives them predictability. Oil spikes and electricity spikes don’t affect them with solar. We also see this myth that only the richest among us use solar, but, really, there are a lot of teachers and working-class families who use it. There can be upfront costs and financial stress, but the long-term gains are real and substantial.”
Publication date: 8/31/2015