DANVILLE — The sun shines bright on our Kentucky homes, and Alternative Energies Kentucky LLC thinks that could become a great business opportunity.
Last year, Alternative Energies became Kentucky's only manufacturer of photovoltaic panels, which convert sunlight into electricity to power homes and businesses.
The company has rented office and manufacturing space in the old ATR Wire & Cable plant on Danville's bypass, trained 10 employees and set up a side business in security systems to cushion its startup.
"It has been slow starting," said Dan Tolson, one of three partners in the company. Solar power is a novelty in Kentucky, he said, "but we think the potential here is huge. It just makes sense."
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Photovoltaic-panel prices worldwide have fallen more than 30 percent in the past year, making solar power an increasingly viable supplement to conventional power supplies. "The more we use this technology, the cheaper it gets," AEK partner Troy Lay said.
But on the industry side, the competition is fierce. Chinese companies now have two-thirds of the $39 billion global market for solar panels, thanks to huge subsidies from their government.
Also, Lay said, the industry has been hurt by the bankruptcy of Solyndra, a California company that made a different kind of solar panel that had received $528 million in federal loan guarantees. Solyndra's failure gave politicians beholden to the fossil-fuel industries a convenient target for attacking the whole idea of investing in alternative energy.
"This is well-proven technology we're using," said Lay, adding that the kind of panels AEK makes have been used successfully in Europe for more than three decades. "But we're still fighting a lot of the same questions."
Lay said he also faces questions about whether Kentucky has enough sunshine for solar power to be viable. He said Kentucky has far more sunshine than Germany, which gets more of its energy from solar than any other country.
"The idea that we don't have enough sunshine is crazy," he said. "I don't know why that keeps coming up."
AEK buys silicon wafer cells from Taiwan, solders them together and uses an Italian machine to laminate them with tempered glass to form a tough but flexible and airtight panel that is framed in aluminum.
Completed panels are installed on a building's roof. The power they produce can be stored in batteries, but most systems are tied into the normal utility grid to supplement and offset power that otherwise would be used.
AEK sells a complete 1.1 kilowatt system — which includes five 31/2-by-5-foot panels, installation and all of the equipment to use and monitor the system's performance — for $6,999. However, federal and state incentives lower the final cost to $4,400 for homeowners or $3,900 for businesses.
Systems can be expanded by adding panels, an option that will become more attractive if panel costs keep falling. Payback times vary widely, depending on how much electricity is used, a utility's power rates and how fast those rates rise in the future. Lay estimates that most customers pay for their systems in about 10 years.
One of AEK's first customers last year was The Animal House, a pet-grooming and boarding business in Versailles. Owner Sharon Hughes said she added six panels to the initial installation and figures she is saving about 30 percent on electricity costs.
"I like having the ability to save energy and use the natural energy out there," she said.
AEK's solar panels have an expected useful life of about 50 years, Lay said. They come with a 25-year guarantee, but that depends on the company surviving that long.
So far, AEK has received about $6,000 in state economic incentives for employee training, marketing director John Cotten said. However, state tax breaks could eventually total $1.125 million if the company creates the approximately 30 jobs it hopes to over 15 years.
AEK partner Mike Carpenter said the company would like to become big enough to focus on manufacturing and leave installation to other contractors, and that would create more Kentucky jobs.
"We're not here to take over the coal business, but solar can be a great asset," Lay said. "It may not be the complete answer, but it's going to get better and cheaper."