Energy from Above

October 2, 2005
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EDEN — At first glance from outside, the new headquarters of In Hot Water Heat & Power looks like it could be from the late 1800s, with its inlaid river-rock exterior walls and barn-style architecture.

Upon closer inspection, large panels on the roof and south end of the building quietly and persistently harness the sun’s energy, dispelling any illusions of a 19th century scene.

Walk inside, and the technology on display makes it more evident this is quite the opposite of a historical site. It sits on the cutting edge of solar energy technology, which company owners Rod and Janelle Hyatt believe may be the wave of the future in Utah and the rest of the country.

In Hot Water is the largest renewable energy company based in Utah. With the opening of its new facility, it is also the only completely independently powered commercial enterprise in the state, Rod Hyatt said.

Founded in 1990 as a small, home-based enterprise, the company now has nine employees and annual sales of about $1 million.

Hyatt said solar power holds two major benefits he believes will attract customers to In Hot Water and similar companies in droves as utility costs increase steadily.

“First, you have the obvious environmental benefits of not burning fossil fuels,” said Hyatt, whose home operates on a combination of solar and conventional electric power, “but there’s also the advantage of not being attached on an umbilical cord to the utility companies. People want to be prepared in case the grid goes down.”

Demographics may help In Hot Water and similar businesses see explosive growth in the coming years and decades. As more people seek second homes in remote areas that often don’t have access to the electrical grid, the Hyatts see a big potential market for their products, which include solar water heating kits, radiant floor heating systems, and solar electricity gathering and conversion systems.

“Solar power has thus far failed to enter the mainstream in Utah, partially due to the state’s relatively low utility costs,” said Orrin Farnsworth, director of U.S. sales for Victoria, British Columbia-based SPS Energy Solutions, Canada’s largest solar power company.

“The growth is slower here, but momentum is starting to build,” said Farnsworth. “More and more people are exploring alternative sources, and solar is the most widely available of those.”

Despite cost and other obstacles, he estimates solar power business has an annual growth potential of 20 to 25 percent in Utah. With a nearly unprecedented spike in fossil fuel prices this year, he said solar power cost could compare favorably with conventional power sources in as little as 10 years.

SPS recently acquired Farnsworth’s Salt Lake City-based company, Intermountain Solar Technologies, the largest and longest-running solar equipment dealer in Utah at the time, and folded it into SPS. Operations remain based south of the city in Riverton.

“Utah’s high desert geo-graphy and clear skies make it an ideal environment for solar generation,” Farnsworth said.

A lack of education has allowed the perception to persist that solar power requires a lot of extra work on the part of the user, Janelle Hyatt said.

“The technology has advanced to where the solar lifestyle is not that much different from living on the grid,” she said.

In Hot Water will be hosting how-to seminars and other educational events at its new facility to dispel myths about solar technology and help people prepare for their own systems, she said.

Another benefit of solar-power use comes in the form of state and federal tax breaks. Utah’s individual state income tax credit for renewable energy systems on residential buildings, including solar systems, applies to 25 percent of the cost of installation of a system, up to a maximum credit of $2,000.

Use of the tax credit has varied since 1995, when 27 residential credits were given statewide, according to data from the Utah State Energy Program. The number of credits awarded peaked at 71 in 2000.

So far in 2005, 27 credits have been issued, compared to 36 for all of 2004.

“Since 1981, the state has awarded $2.6 million in credits on $28 million in renewable energy equipment and installation costs. That’s small potatoes compared to states like California, where renewable energy is a $500 million industry,” Farnsworth said.

“But utility costs there are two to three times what we pay here,” he said.

Eligible technologies for state credits include active and passive solar systems, wind, biomass, and hydroenergy.

There is also a corporate tax credit that covers up to 10 percent of installation costs for businesses, with a maximum credit of $50,000. Federal credits worth roughly the same amounts are available in addition to state credits.

While the benefits of cleanliness and independence from the grid are becoming increasingly more tempting, Hyatt admits, and even stresses, that solar systems are not for everyone.

First, the costs remain prohibitive for many. Hyatt said a 2-kilowatt “grid-tied” system, enough to power an efficient 3,000-square-foot home with conventional electricity as a backup, typically ranges from about $16,000 to $20,000.

Solar hot water systems, which cost between $5,000 and $6,000 on average, usually take between five and eight years to pay for themselves in utility bill savings, Hyatt said. On average, such systems reduce hot water utility bills by about 80 percent annually.

People looking to reduce their utility bills should look at increasing their home’s energy efficiency before considering solar power, he said.

“We tell callers that solar is not the first place to look for cost savings,” he said. “First, you should look at replacing that old refrigerator, drafty windows, poor insulation — anything that might be wasting energy.”