Alternative Energy: What You Need to Know

The future of custom installation is here and it has a decidedly "green" tinge. With all the talk about "going green" over the past five years, integrators have had difficulty earning "the other green" (aka cash) from these eco trends.

Consumers talked about it, but not many forked out the dough for control systems that monitor and manage their energy costs or for ecological power-generation products. Thus, few integration companies embraced the trend.

Today, there has been a general swelling in public acceptance due to the growing "greening of America" awareness and tax incentives brought to the forefront by President Obama and due to new green technologies that boost efficiency at more affordable prices.

The result is the ripening of the energy management/monitoring/creation market. For many integrators, alternative energy is on the tree, like a fat, juicy peach, ready to be picked.

For many CE pros, the maturation of the market couldn't be coming at a better time, as audio/video and control/automation continue to be commoditized by dramatically falling equipment prices. In different parts of the nation, dealers are already earning new revenues and profits from installing and managing alternative energy systems.

The business models are wide-ranging … some dealers are dropping A/V altogether to concentrate in the field. Others are partnering with electricians and energy specialists and focusing on niche products like wind turbines or solar panels only. Some are getting electrical contracting licenses and LEED (Leadership in Energy & Environmental Design) certification. Still others are moving into the field more cautiously, choosing to only monitor/manage energy with low-voltage "energy dashboards."

Whatever the tactic taken, dealers need to have a business plan, take the proper first steps to get fully educated or licensed, understand how to market these new services and develop their equipment margins and labor rates. Lastly, to sell the systems effectively, dealers need to fully understand the tax incentives from the state and federal governments, along with utility rebates, to do the paperwork and explain the ROI to customers.

Monitoring Energy is First Step

Just because alternative energy "might be the next big thing" does not necessarily mean you should drop your core business model. Gordon van Zuiden, president of CyberManor in Los Gatos, Calif., is working on his first LEED home and is using it as a learning process to establish his business model for alternative energy.

In the home, he is implementing a complete Control4 and Lifeware solution with a new product called The Energy Detective (TED) to control loads. The system will offer real-time feedback to the homeowner with the ability to alter usage through load shedding, global limits, off-peak scheduling, etc. CyberManor is creating the GUI screens for interaction with TED.

"I see energy management and energy monitoring as our first step," says van Zuiden, adding that he hopes to do even more energy management in 2010. He is working closely with several vendors, including APC and PS Audio, to investigate load shedding for the home.

"We can make an impact on the home's energy usage. It's a practical investment. It's better than adding solar panels to the home. A homeowner starts being energy conscious by saving. It's better to cut usage than add power-producing equipment like solar panels," van Zuiden says.

The next step for CyberManor will be to start installing solar panels, but not yet. "Energy monitoring — over electric gas and water usage — is the more affordable first step for my clients," van Zuiden says.

Focusing on LEED

J. Paul Hughes, owner of HomeBase Systems Inc. in Lincroft, N.J., is taking a similar direction. He is also in the midst of his first LEED home and is tying his energy management and monitoring system into the geothermal HVAC system in the home. The project has also led him to join the U.S. Green Building Council (USGBC) and pursue obtaining his LEED AP (Accredited Professional) designation.

"The knowledge and skills in terms of the ability to monitor and control energy usage that I bring to the table as an integrator are perfectly suited for LEED," Hughes says, adding that a good integrator already has a "ridiculous amount of knowledge on systems integration, but there is a general lack of appreciation of our skill level."

To obtain the credential, you need to be working in the field and have completed a LEED project. The training workshops are all-day events, and there is a two-part test. The new test is specific to LEED-H, so integrators don't have to bone-up on commercial construction anymore. (Click here for details) But is getting LEED certification overkill? No way, says Hughes.

"Without LEED AP certification, integrators will be relegated to a much more limited position in the overall construction of the home. We will be taking directions from the other contractors. I would rather have the HVAC contractor and the electrician sitting on the curb waiting to take instructions from me than vice versa. Knowledge of HVAC, geothermal, solar, etc., is going to be fundamental for integrators. It's where our business is moving forward to. You will miss a huge business opportunity if you don't pursue this," Hughes advises.


In Phoenix, (from left) One Way Electric’s Kevin Pozo, Tim Henderson and Hans Stullken say their average 10-kw residential solar panel job is $70,000 with a 20 percent margin.

One of the requirements of a LEED home is that, throughout the construction cycle, regular meetings must be held by the core group of contractors, along with the architect. Integrators are already involved very early in the build cycle, and they often link their systems with other contractors. So Hughes believes the situation is tailor-made for integrators to take the lead.

Meanwhile, Hughes is not yet pursuing power-creation services, such as solar. "We are not a licensed electrician. Our plate is already full with just the energy management part. I will eventually start subcontracting out solar panel installations under my umbrella if I need to, because the jury is still out as to whether energy management alone will drive the consumer market," Hughes says.

6 FAQs About Being an Energy Integrator

Some integrators have not been shy in terms of jumping into solar/PV installations. Indeed, dealers across the nation are involved to various degrees. CEDIA chairman Ken Erdmann of Erdmann Electric has been doing solar installations for 10 years.

Tim Griffin of Architechxtures has decided to finish off his five current large A/V projects and concentrate solely on alternative energy offerings. In Oakdale, Minn., Audio Video Planners (AVP) has added wind turbines to its mix.

"It is a fairly complex business and not for the faint of heart we are finding out," admits David Ault, AVP president.

One Way Electric in Phoenix is an integration company in an ideal location climate-wise for solar. The company has been in business for 14 years, but partners Kevin Pozo, Tim Henderson and Hans Stullken have only been installing solar panels for the past year-and-a-half. Keith Davis of Residential Technologies Inc. in Charlotte, N.C., has been in business for 30 years doing A/V and electrical work. Last year, he also took the plunge into PV.

Using these companies as test-cases, here are six important FAQs related specifically to solar installation with real-life examples of how dealers are creating business models for solar panel installations.

How do you get started? Pozo went to Solar Energy International, a non-profit training group that offers both online and hands-on basic and advanced PV installation education as preparation for certification from the North American Board of Certified Energy Practitioners (NABCEP).

Online and in-person training session costs range widely, but can be taken for as little as $250 or for as much as $6,000. The second part of the training involves an on-site installation project. In his case, it meant trekking to Costa Rica to install panels for a remote village. That's where he met Stullken, who had been installing panels for four years in Northern California.

Davis also is working toward his NABCEP certification. He took an intensive five-day class at North Carolina State University for about $800 — "money well spent," he says. The first-stage NABCEP test costs $65 and the advanced certification is an all-day test that costs $250.


Each 200-watt photovoltaic panel weighs about 40 pounds and must be affixed to the roof to withstand hurricane-force winds. Working with a roofer to check the structure before installation is a good idea.

How tough is the market for solar sales? "Sales are the easy part of PV," Stullken says. "Staying on top of the technology in the market is the hard part."

At Residential Technologies Inc., Davis says customers are seeking out his services. He also has a referral partnership with an energy auditing company that has worked out well. "There is still some sticker shock from homeowners," he warns.

According to Pozo, the housing market collapse has made PV sales a bit more difficult, or it would be "a self-driving business." The company conducts cold calls, holds educational meetings with builders and architects, and sends out direct mail. As an electrician, low-voltage installer and solar contractor, One Way is able to market itself as a one-stop shop.

"In new construction, builders, architects and homebuyers are thinking about ‘conservation before creation,'" says Pozo.

That mindset puts One Way Electric in a prime sales position to get the business, since the company can use its low-voltage expertise to reduce energy usage in the home (using Crestron, Lutron, Fat Spaniel and Sunny Webbox solar-only monitoring systems) by eliminating phantom power loads, for example, or tying HVAC systems to motion sensors.

"Peak shaving" is another sellable feature in which the central controller can program appliances and other electronics to run more frequently when electricity is cheaper and vice versa when power is more expensive. For example, Arizona Public Service (APS) power in Arizona costs 14 cents/kw-hour from 9 a.m. to 9 p.m., but only 3 cents/kw-hour from 9 p.m. to 9 a.m.

One Way's low-voltage offering, in turn, leads to more line-voltage electrical business for configuring circuits optimally to shed loads. Finally, the discussion leads to PV panel installations. Just like with low-voltage systems, Pozo says solar panels help him get involved "very early in the planning process with builders and architects."

How much can you charge? For homeowners, the sales process involves simply spelling out the return on investment, tax benefits and home-appraisal benefits. One Way Electric prices its fully installed systems at $7/watt. So for a typical 10-kw system for a larger home, the average installation is $70,000. Pozo says he may soon be offering smaller 3-kw to 5-kw systems for production builders. The utility rebates are a strong selling point. In Arizona, APS offers a $3/watt rebate of up to $75,000 or 50 percent of the installation cost.

Davis has varying price ranges. He charges up to $8.50/watt for small residential jobs and as low as $6/watt for large installations. For labor rates, Davis charges between $50 and $65 per hour for PV jobs, compared to $85 an hour for A/V work. It takes the company about one hour per panel for an installation and about 15 hours to install and program the inverter and run the connections. In all, a typical 10-kw project takes 70 to 75 hours.

"My margins are still strong," he says. "My goal is 30 points on the total installation."

Finally, there are maintenance fees to be had. Davis charges a $150 annual fee to clean and scrub the panels. He charges more for steep roofs.

How complex is solar technology to learn and install? It's not any more difficult than low-voltage systems, according to Stullken. Davis at Residential Technologies Inc. says the actual mounting of the panels to the roof may be the most difficult aspect to learn. Each 200-watt panel weighs about 40 pounds, along with about seven pounds of brackets. Depending on where you are located, the panels must conform to wind velocity standards. In the Piedmont area of North Carolina, for example, units must be affixed to the roof to withstand a 120 mph wind. That means placement of four 12-inch-long bolts every 32 inches. Moreover, the electrical code requires metal conduit for the connections.

Inverters, which convert the DC electricity to 120-volt AC power, can be placed on the roof, in a garage or near the meter, depending on the enclosure.

Where do you buy solar panels? Just like in CE, the products often come from distributors. OneWay buys Sharp solar panels and Sunny Boy inverters from DC Power Systems. A dealer can charge about $500 for a typical 200W panel. The cost of silicon is coming down, and so are the panel costs. A typical PV panel has a lifespan of 25 years. Inverters last for 15 years.

What's the key to success? Pozo says it is a must to offer turnkey solutions, including paperwork for rebates from utilities and tax credits from the state and feds.

"Be ready to deal with lower margins when it comes to solar installs in particular. It is very competitive and the margins are 20 percent at best. It is a great complementary service and you can cross-train employees very easily. I spoke with some of my peers at the CEDIA Management Conference and they were taken back when I mentioned the margins. It has gotten us in the door before builders have been selected in some cases, so you really need to weigh your options when you consider this as a service," says Pozo.

Davis advises, "If you are in a sunny climate, you'd be crazy not to look into the market. The farther north you are located, the harder it is, but I have a buddy in Vermont who is making a killing in solar," he says.


Smart Energy is one of 6 pillars of EHX Spring 2010, Orlando, Fla.