North Carolina doesn't give customers a choice for their electricity provider, but an Asheville company has figured out a way to offer customers an alternative source for the next best thing: hot water.
FLS Energy installs large solar thermal water-heating systems for businesses and commercial customers, some of them requiring as much hot water as entire residential neighborhoods.
Contrary to the standard practice in the solar water heating industry, FLS owns and operates the solar receptors on the customer's property and charges the customer only a monthly bill for the energy produced.
The benefit for the customer: No upfront costs, which can range from $100,000 to $10 million for a commercial-scale solar thermal water-heating system.
Additionally, FLS can heat water more cheaply than an electric utility or a natural gas utility because of generous state and federal incentives that pay for about two-thirds of the cost of the system.
"It's phenomenal," said Jon Varnell, vice president of administration at Guilford College in Greensboro, one of FLS' biggest customers. "I tell the board of trustees: We're going to spend less money, and we're going to have renewable energy."
Exorbitant costs have long kept solar energy from breaking into the mainstream, andadvocates have been predicting that one of two preconditions would make solar affordable for a mass market: the rise of conventional energy prices or the falling cost of crystalline silicon cells.
FLS has found a third route: creative financing. The company takes advantage of existing subsidies to make solar a cheaper alternative to conventional energy.
FLS was among about 150 exhibitors featuring their products and services in Raleigh last week at the annual ASES National Solar Conference. It was the first time in the conference's 40-year history that the American Solar Energy Society held the event in North Carolina.
The national solar organization came to Raleigh this year in recognition of the state's advances in solar power over the past few years. Solar power has benefited greatly from a 2007 state law requiring North Carolina to increase its reliance on renewable resources to meet the state's energy demand.
Most solar projects here and nationwide, called solar photovoltaic, generate electricity, creating mini-power plants on rooftops and vacant fields. During the four-day conference, visitors toured a giant exhibit hall at the Raleigh Convention Center that featured the latest offerings in racks, mounts, cables, connectors and solar panels for photovoltaic systems.
FLS was among the handful of companies at the conference that specialize in solar thermal energy - a subset of the solar universe that uses the sun's rays to heat water without generating electricity.
For customers who use solar thermal technology, solar water heating is as good as electricity or natural gas because it offsets the need to use those conventional energy sources to heat water.
FLS has 14 solar energy purchase agreements in the state that heat 101,124 gallons a day. It's also designing and building a half-dozen projects, including Hyatt Place in North Raleigh, that will add more than 165,000 gallons heated daily to the company's portfolio.
Typical customers are hotels, restaurants, food processors, resorts and other facilities that use large amounts of hot water for food preparation and cleaning. Projects include military housing at Camp Lejeune and the Kanuga Conference Center in Hendersonville.
FLS also builds solar thermal systems for residential homes, but the company does not own and operate these systems. Instead, the homeowner has to put up the $7,000 to $8,000 cost for equipment and installation, the more common method of financing.
Solar thermal energy qualifies for a 30 percent federal tax credit and a 35 percent state tax credit from North Carolina, defraying a chunk of the cost.
The incentives helped FLS expand from three employees to 75 in the past few years. Even with the subsidies, FLS needs about five years to break even on its investment, and the company's expansion is contingent on taking on more debt. Carrying solar debt for a half-decade is too great a financial burden for most businesses, and it's an impediment for FLS.
"Access to capital is our limiting factor," said FLS chief executive officer Michael Shore.
The FLS system at Guilford College heats water in nine buildings, heating 10,000 gallons a day, or about 80 percent of campus hot water needs.
Since solar power is not available round-the-clock, all FLS customers rely on their utility for backup water-heating energy on cloudy days and at night.
FLS typically signs 10-year contracts with a fixed rate for heat energy. That rate is designed to undercut the cost it would take a utility to heat water.
As a form of insurance, FLS requires in its contracts that its customers always default to FLS solar thermal heating and use their utility only as a backup.
"The solar is a hedge against the volatility of natural gas," Shore said. "They can predict what they'll be paying over time for this energy."
Additionally, Progress Energy and Duke Energy pay subsidies to FLS, which further helps FLS offset its costs and recoup its investment. The payments, known as Renewable Energy Certificates, help Progress and Duke meet their state mandates for renewable energy.
State law allows electric utilities to buy one renewable certificate for every 3,412,000 British Thermal Units, a standard measure of heat, that FLS solar thermal systems generate. The price per certificate is negotiated privately between FLS and the utilities that buy them.
