A Sunnier Forecast for Solar Energy

One of Sun Edison's first customers was a Whole Foods Market in Edgewater, N.J. With backing from Goldman Sachs & Co., Shah bought solar panels and installed them on the store's roof. Sun Edison retained a small stake in the system while Goldman Sachs owns the rest. Whole Foods got a contract for energy that rises a modest 2 percent or so a year for more than a decade.

By making Goldman Sachs a partner, Shah got not only financing but also credibility. He also made sure that the 30 percent federal tax credit for solar panels weren't wasted on Sun Edison, whose profit wasn't big enough to make use of them all.

When the panels were installed in January 2004, Whole Foods was paying about 1 percent less than utility rates for electricity. But rates have since soared and now the store's power costs about 20 percent less than the electricity sold by the local utility, a bonus for its effort to promote an environmentalist image.

If utilities start charging customers more for electricity during peak-usage periods -- around midday and early afternoon, when solar power is most available, the solar business could get another boost.

While Shah started his company in the District and put its headquarters in Baltimore, most of Sun Edison's business has been in such states as California, New Jersey and Arizona, where government incentives for solar power are best.

Shah said he might move the company because of obstacles that make this area one of the toughest for solar installations. He complained that area utilities demand interconnection studies and require expensive safety equipment that is not required elsewhere.

Pepco executive Stephen Sunderhauf said there are safety issues, such as protecting people who are repairing downed lines, and technical limitations.

Shah also lamented that Maryland's budget for renewable energy is tiny compared with New Jersey's or California's.

"It's a real shame to me that BP Solar is building all this manufacturing capacity in Maryland and virtually none of that product will stay in Maryland to help citizens get over the rate increase," Shah said.

But BP is thinking about more than Maryland. It acquired a half-interest in the Frederick plant when it bought Amoco Corp. in 1999; it bought the rest from Enron Corp. Now it has about 15 percent of the U.S. solar market, BP's Edwards said last week.

As he spoke in the plant's control room, silicon wafers in another part of the plant were being cleaned, polished, stamped with silver wires, backed with aluminum, hooked together and placed under protective glass. To check their durability, some panels were tested in machines that simulate harsh weather -- extreme cold or heat, high humidity and one-inch hailstones traveling at 52 mph.

If they last as long as planned, solar panels might become competitive without government subsidies. Edwards said that every time industry capacity doubles, the cost of panels falls about 20 percent.

Capacity has doubled over the past three years, but costs haven't dropped as much as expected because of a silicon shortage. Eventually, though, Edwards said that "if we can keep driving costs lower, we will reach a point where solar is the same price as grid power."