Solar power is not just for large manufacturers and other companies looking to save on energy costs.
Photovoltaic systems increasingly are turning up on rooftops of residential homes. It's a market on which Astrum Solar is betting.
Based in Annapolis Junction, the four-year-old, privately held company markets itself as a full-service provider of solar power focusing exclusively on homeowners. Astrum Solar operates in 10 states and the District of Columbia.
Installing a solar panel system can be expensive, but tax credits and other incentives and falling equipment prices are helping to drive down the costs.
Astrum Solar scored an endorsement from Baltimore's Constellation Energy Group last month in the form of a minority equity investment. The terms of the investment were not disclosed.
The Baltimore Sun spoke recently with Vadim Polikov, Astrum Solar's president, about the company, Constellation's investment and prospects for residential solar.
How does Astrum Solar distinguish itself from competitors?
We make it very easy for customers to go solar. We do all the paperwork … [we] go out [and] search for the best technologies out there, and we'll do the entire process from sales to pulling permits and project management to installation to solar monitoring.
How much has the company grown since 2007?
We started in 2007 with myself and two co-founders, and now we have about 125 employees. We are serving 10 different states and we have five operation centers, which are offices where we have staff members and warehouses and trucks and panels, and that's all across the eastern U.S. …
Last year we did about 500 installations. And we'll probably grow two to three times that much this year.
How will Constellation's equity investment help Astrum Solar?
It's combining the traditional resources of a large Fortune 500 energy company with the speed and understanding of the solar market that we have.
It allows us to further expand our reach. It allows us to serve customers better in the regions we're in. And there are synergies there with the combination of the two companies as well. Procurement synergies, and working with [Constellation's unregulated division] BGE Home to do solar installations. We'll be working together with financing options.
How did the partnership with Constellation start?
We had our connection with BGE Home before the equity partnership was announced. This has been in the works for a while. …
They … wanted to get involved in the residential solar space. They looked at the companies out there and they picked us. …
It shows that residential solar is something … [whose] time has come and it's ready for prime time.
If Constellation Energy is getting into residential solar, it means it's even more exciting and a growing industry — an industry that's ready to take off even further.
How do you sell solar power to consumers who are interested in being more green but worried about the costs and logistics of getting started?
First of all, solar is a pretty good financial deal. The return on investment is fairly high — higher than what you could get from a stock or bond. The return is 8 to 12 percent. … The difficulty is coming up with upfront money.
Typically, this has been taken care of in multiple ways. One of the ways that is popular is leasing. We are launching a leasing program probably in the next week or two, and leasing allows the customer to put up a lot less money, oftentimes very low to potentially even zero. And they put a little bit of money and pay a monthly payment that's usually less than [what they'd pay for] the electricity they're offsetting.
For those folks who can afford the larger amount down, they'll make a good return on investment.
What is the typical upfront cost if you don't take the leasing option?
Upfront costs would be in the region of $25,000 to $35,000, depending on how big of a system you're going to take. That will pay back usually in seven years or so.
There are a lot of incentives that cut back that cost, sometimes half [or] less than half of that.
What factors are making solar power more attractive for residential consumers?
The homeowner has a very high return even compared to commercial and very large industrial customers. And that's because the system that they could get is specifically tailored to their site, and it's something that they're going to have on their house for a long time. It also increases the property value of their home significantly. …
The incentives in Maryland include a grant from the state of Maryland and the renewable energy credits. Those are an additional way to make money from the solar electricity produced by the solar panels.
When you combine the grants from Maryland — and some counties in Maryland have property tax credits — the renewable energy credits, the electricity savings you get and the federal 30-percent-off tax credit, all those combined make solar a good financial investment.
We get a lot of business from referrals because it's such a new market. It does take somebody to try it out.
Once tax credits and other incentives are phased out, will solar remain viable?
Incentives are there for a temporary period of time. The point of the incentives is to allow the industry to take off while the costs are still coming down. So the incentives are doing a very good job of that. … When we started, the solar grants in Maryland were actually five times what [they are] today.
As the costs come down, the incentives come down as well. So hopefully, one day soon, the incentives won't be necessary any more, but for right now the incentives are making the financial picture very good.