Solar Panel Demand Exceeds Supply
Many American states are offering incentives to business houses and residents if they are willing to install solar panels for their use. But sadly these incentives are set to expire on 31 December 2008. The solar tax credit offers 30 percent of a system’s cost, but it will go down to 10 percent from January 1 if Congress doesn’t take steps after it returns Monday. Now manufacturers and installers are experiencing a rush for panels before federal incentives can expire. Many solar manufacturers and installers say they can’t take on more orders for 2008 because they’re either out of panels or out of time.
Arizona currently provides a one-time 25 percent income tax credit accessible to residences and a one-time 10 percent income-tax credit for businesses that set up solar panels. Along comes the federal investment tax credit, set at 30 percent, which is important both financially and symbolically, industry people say. Regardless of state-credits, solar systems for houses and businesses are too expensive without the federal credit.
Solar panels have been in short supply since 2005 because silicon, a key constituent of photovoltaic solar panels usually installed in homes and businesses, was limited. Now tax incentives haven’t done much to improve the situation. “From the manufacturing perspective, we’re sold out,” said Tom Mueller, a spokesman for BP Solar in Houston. The probability of taking on a new order right now is low, said Tom Dyer, senior vice president of marketing and government affairs at Scottsdale-based Kyocera Solar Inc. Now the present situation is if one has not placed orders months ago, few solar installers or wholesalers will have the time or the panels in stock to accept more jobs this year.
“It’s almost a man-made shortage because everyone is scurrying around to get their jobs done before the tax credits expire,” said Ron Kenedi, vice president of Solar Energy Solutions Group for Sharp Electronics Corp., the largest maker of solar panels. Tucson-based Technicians for Sustainability buys solar panels from Schott Solar Inc. and SunPower Corp. Both manufacturers have informed company President Kevin Koch that they will be unable to supply more solar panels this year. If a business asked Koch to set up a 30-kilowatt system, characteristic size for a commercial job, Koch said he could not take on the project this year. This shortage is hitting the business installations seriously.
Dave Haycock, of All West Energy Inc. of Fountain Hills, stated that his company will take on projects one at a time. “We have inadequate supply,” Haycock said of solar panels. But with the increase in demand before the solar credit expires, the company said it cannot take any more orders for 2008.
Phoenix’s Perfect Power would not have problem taking orders before the year end, but it is not taking any more commercial projects for 2008, said John Balfour, the company president.
Solar installers generally consider panel orders about four or five months in advance, said Mike Richter, a sales consultant for SolarCity, an installer with offices in California and Phoenix. Therefore one has to take into account this fact for uninterrupted supply line.
“(Solar installers) don’t want to go beyond the December 31st deadline, so everybody’s trying to jam-pack their orders in before the end of the year,” said Kenedi of Sharp Electronics, the largest U.S. producer of solar panels. The threat of the expiring credit has led Arizona Public Service Co. and Abengoa Solar to put the 280-megawatt Solana Solar Plant near Gila Bend on hold.
What would happen if the credit incentives would not be renewed in the coming years? Japan and European countries like Germany, Spain and Italy provide generous state-sponsored solar tax credits. As the U.S. dollar continues to depreciate, and with demand increasing in foreign countries, solar corporations could find market more lucrative abroad.