U.S. businesses are increasingly generating their own power as a way to cut their utility bills and spare them from power outages.

The number of electricity generation units at commercial and industrial locations has quadrupled - from about 10,000 to 40,000 - since 2006, federal data shows.

Growth was driven originally by government subsidies that made solar power systems affordable, but in recent years falling system costs have offset diminishing government incentives.

The cost of solar panels - the biggest single part of a rooftop collection system - has dropped from a median of $4.12 per watt of electricity generated in 2008 to $0.59 per watt in 2013, according to a U.S. Department of Energy study published in July. A price of $0.54 per watt is forecast for this year.

Other system parts, such as inverters that modify and manage the power, also are cheaper, and total photovoltaic system costs for commercial installations have plunged from $5.04 per watt at the end of 2009 to $2.61 per watt at the start of 2013.

At the same time, businesses have become more concerned about utility power outages from storms after the experiences of Hurricane Sandy a year ago and the derecho windstorm in mid-2012.

A White House report released in August estimated that outages due to weather have cost the U.S. economy $18 billion to $54 billion a year from 2003 to 2012 in lost productivity alone.

With electricity prices in the South Jersey-Philadelphia region 16 percent higher than the U.S. average, area businesses have found generating their own power is a way to substantially reduce their costs.

The shining example is Art Handler's Appliance Center on the Black Horse Pike in Pleasantville, which covered its large, flat roof with 635 solar panels when government subsidies and solar energy credits were higher.

"We've done extremely well because we were in early on," said owner Scot Sacks, of Margate. The panels started producing energy in 2006, and tax credits and rebates then covered about 45 percent of the $1.2 million project cost.

In about two more years, the project will have paid for itself, and from then on the avoided monthly electric costs will be a gain for the business. He said the panels and system have been no problem, even in Hurricane Sandy.

"It took our electric bill from close to $4,000 down to a couple hundred dollars a month, and even that's mostly fees," Sacks said.

Besides generating enough energy for the store's needs, the project also earns the company Solar Renewable Energy Certificates, or SRECs, for 15 years. Utilities are required to buy a limited number of them in an open market, and their price has plunged as more solar projects have come on line in the state.

Sacks said he saw SREC prices as high as $640 and then as low as $50. The project made sense at $40 an SREC, so they're kind of a bonus return on investment.

"The largest check for six months was $67,000 for selling SRECs, and now it's down to about $6,700," he said.

Joe Canal's Discount Liquor Outlet on Fire Road in Egg Harbor Township turned on a large array of solar panels in 2011, when government subsidies already shrinking and the price of SRECs was starting to fall.

Nonetheless, the project continued to make sense financially, as well as environmentally and even from a customer convenience perspective – since many of the panels form a carport over the parking lot, shielding customers from rain and their cars from summer sun.

"At the beginning of the project, we expected the SRECs to be higher, but it was a good investment and we're saving money on energy and getting a reasonable return on investment," said Stuart Stromfeld, of Linwood, one of five owner partners.

He said the solar panels generate about 80 percent of the store's electricity and he anticipates a 10-year payback on the project and a rooftop solar installation at the company's store next to Lowe's and Chick-fil-A in Egg Harbor Township.

"Had SRECs been what they were, the payback would have been in two or three years, but I'm very happy with it and I'm not contributing to the carbon footprint," Stromfeld said.

Sea Isle Ice Co. covered the roof of its Woodbine plant with solar panels in 2010, but turning water into ice is so energy intensive that the system only provides about 20 percent of the power needed, said owner Joe Romano Jr.

"Our utilities usage is so high. Some months our bills are between $50,000 and $70,000 a month," said Romano, of Sea Isle City.

Even with just averting a fifth of the plant's electric bill, the solar energy system should pay for itself in another seven years, he said.

Romano said he has considered adding more panels, but the price of SRECs now means the payback on the initial investment would take longer. He also might convert his fleet of vehicles to run on cleaner natural gas.

There is plenty of room for solar to play a bigger role in powering business. On-site power generation of all kinds accounts for less than 5 percent of U.S. electricity production, according to the Edison Electric Institute, a trade association.

Companies that missed the early days of lavish government subsidies to install a solar energy system might reflect on whether they're letting the best be the enemy of the good - a good return that is trending toward not as good.

The 30 percent federal tax credit on the cost of such systems is scheduled to drop to 10 percent in 2017.

Contact Kevin Post:

609-272-7250

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