A Solar Revolution May Be Coming to Your Town

This winter, as Congress was scrambling to pass the stimulus package, the bottom fell out of the renewable energy sector -- the very industry that lawmakers have held out as our best hope of salvaging the economy. Trade groups like the American Wind Energy Association, which as recently as December was forecasting "another record-shattering year of growth," began predicting that new installations would plunge by 30 to 50 percent. Solar panel manufacturers that had been blazing a trail of growth announced a wave of layoffs. Some have since cut their workforces in half, as stock prices tumble and plans for new green energy projects stall.

But there is one place where capital is still flowing: Gainesville, Florida. Even as solar panels are stacking up in warehouses around the country, this city of 120,000 is gearing up for a solar power boom, fueled by homegrown businesses and scrappy investors who have descended on the community and are hiring local contractors to install photovoltaic panels on rooftops around town.

One of those investors is Tim Morgan, a tall fiftysomething man with slicked-back hair and ostrich-skin boots who owns a chain of electrical contracting companies. His industry has been hit hard by the downturn, but he has a plan to salvage his business, which he explained over a drink at the Ballyhoo Grill, a gritty Gainesville bar with rusty license plates nailed to the wall and Jimmy Buffett blaring on the jukebox. Morgan intends to rent roof space from eighty Gainesville businesses and install twenty-five-kilowatt solar generating systems on each of them, for a total of two megawatts -- a project that would nearly double Florida’s solar-generating capacity. He estimates the venture will cost between $16 million and $20 million and bring in $1.4 million a year. Already, he has lined up financing, found local contractors to do the installation, and staked claims to the rooftops of at least fifty businesses. "And we’re just one tiny player," he told me. "Look around. You can see how fast this thing is going to move."

Indeed, around Gainesville similar projects abound. Paradigm Properties, a residential real estate company, plans to install photovoltaic arrays on fifty local apartment buildings and its downtown headquarters. Achira Wood, a custom carpentry outlet, is plastering the roof of its workshop -- roughly 50,000 square feet of galvanized steel -- with solar panels. Interstate Mini Storage is doing the same with its sprawling flat-roofed compound. Tom Lane, who owns ECS Solar Energy Systems, a local solar contractor, told me he’s planning to expand his staff from eleven to at least fifty. "The activity we’ve seen is just explosive," he said. "I’ve been in the business thirty years and I’ve never seen anything like it."

Why is the renewable energy market in Gainesville booming while it’s collapsing elsewhere in the country? The answer boils down to policy. In early February, the city became the first in the nation to adopt a "feed-in tariff" -- a clunky and un-descriptive name for a bold incentive to foster renewable energy. Under this system, the local power company is required to buy renewable energy from independent producers, no matter how small, at rates slightly higher than the average cost of production. This means anyone with a cluster of solar cells on their roof can sell the power they produce at a profit. The costs of the program are passed on to ratepayers, who see a small rise in their electric bills (in Gainesville the annual increase is capped at 1 percent). While rate hikes are seldom popular, the community has rallied behind this policy, because unlike big power plant construction -- the costs of which are also passed on to the public -- everyone has the opportunity to profit, either by investing themselves or by tapping into the groundswell of economic activity the incentive creates.

Though Gainesville is the first to take the leap, other U.S. cities are also moving toward adopting feed-in tariffs. Hawaii plans to enact one this summer, and at least ten other states are considering following suit. Among them is hard-hit Michigan, where Governor Jennifer Granholm has promised that the policy will help salvage the state’s economy and create thousands of jobs by allowing "every homeowner, every business" to become "a renewable energy entrepreneur." There is also a bill for a federal feed-in tariff before Congress.