The nation's fledgling solar energy industry is in such a tailspin that it announced the formation of a "solar lobby" yesterday to break loose the solar tax credits locked up for the past year in the stalled national energy act.
"Everybody in the business agrees that business is bad because the solar tax credits haven't been passed by Congress," said Sheldon Butt, President of the Solar Energy Industries Association. "If we have to wait for legislation until the next Congress we will lose a great majority of the smaller, independent companies to bankruptcy."
In an internal survey made to see how its subsidy program for solar energy was working, the Department of Energy found that of the 186 solar collector manufacturers it was partly subsidizing, 22 had gone out of business or disconnected their telephones and 20 more had stopped making solar collectors.
A spot survey by DOE of the metropolitan New York area showed that sales of solar heating units had fallen in the first half of this year to 16 from 400 in the same period a year ago. A check of the Daystar Co., the solar subsidiary of energy giant Exxon, found that its business was off 90 percent in May, June and July of this year.
"It was a dramatic drop," said Daystar's Lou Shrier in his New York office. "We thought we'd taking orders for about 1,000 solar collectors and we ended up getting orders for 100."
Shrier lays part of the blame for the solar slump on Congress, which has not passed an energy bill that would give homeowners a tax break of between 25 and 30 percent for purchasing solar heating units. He says that consumers who were thinking of installing solar heaters in their homes have not done so because the tax credits are not law.
But Shrier also lays a part of the blame on what he calls "very unrealistic cost projections." A year ago, he said, a solar hot water system to provide half the hot water for a family of four was priced at $1,000 to $1,500 installed. That price has doubled, partly because material costs shot up and partly because madatory warranties added new costs to the installation price.
"The difference between what people expected and what they found," Shrier said, "has had a devasting effect on consumer demand for solar energy."
Not all the manufacturers of solar energy equipment are suffering a slump. Solar makers in Hawaii, Arizona and New Mexico are all benefiting from state-passed tax credit legislation. The 97 registered solar manufacturers in California find business is booming because the state legislature passed a liberal tax credit bill for solar water heaters.
"The firms in the four states with tax credits," said Butt, "are what's keeping us from catastrophe."
Of the 800 companies that are members of Butt's trade association, the biggest stand the best chance of riding out the slump. One reason is they have the money behind them to endure a slump. Another is that they're filling some big industrial orders which came in regardless of whether or not tax credit legislation is passed.
For example, Exxon's Daystar has backlogged orders for almost 1,000 solar collectors to be installed in a post office in Houston and an airport in Gainesville, Fla. Revere Solar & Architectural Products (a subsidiary of Revere Copper & Brass) is at work on the largest single solar job in the world: installing 50,000 square feet of solar collectors in an industrial complex being built in Saudi Arabia.
"But that job is misleading," said Revere Solar President William Heidrich. "Like everybody else, we've noticed a big downturn in the domestic solar hot water business and I think the main reason for that is Congress not enacting the tax credit package. They must think the energy crisis is over."