Solar's bright promise: some corporate second thoughts

The rising price of oil may be a black cloud with a solar lining. At least the solar industry hopes that is the case. As the bottom line on the fuel oil bill gets uglier, the high initial cost of installing solar equipment looks better and better all the time.

"Decontrol of oil was one of the best things that could happen to the solar and renewable-energy industries," Paul Cronin, president of the Solar Energy Industries Association, says.

According to one industry observer, the average solar hot water heater now costs about $3,000 to install. The price of electricity from photovoltaic cells has been shaved down to $8 a peak watt.

The cost is still too high for consumers to realize an instant saving by switching from oil to solar heating. Estimates of the payback time vary. An industry executive claims a solar hot water heater pays for itself in five years through fuel savings. An analyst who watches the industry from the outside claims it takes 15 to 20 years.

"My guess is that probably [petroleum prices] would have to be twice their current level for solar to be competitive in a true commercial sense," says another analyst, Adam Sieminski, of the Washington Analysis Corporation.

This gap will narrow in the coming years. In the case of photovoltaic electricity, the Energy Department has set a goal of 70 cents a watt by 1986.

"Photovoltaics are very attractive in the long run," says Roger Copland, a vice-president at the Washington Analysis group.

But most experts agree the shock value of decontrol is worth its weight in order forms to the solar industry.

"I think, on the whole, that deregulation of natural gas would be more effective, though," says Luana Moore, executive director of the Solar Energy Institute of America. She claims the effect of a 10-cent-a-gallon petroleum price increase is piddling compared with the seismic waves a quadrupling of natural gas prices would cause.

Richard Munson, coordinator of the Solar Lobby, says clarification of the 40 percent tax credit law to include passive solar systems would also help.

But as David Stockman goes marching through the federal budget like General Sherman heading for the sea, the fate of government aid for solar is, to put it mildly, undertain.

"Carter gave us an 8 percent increase" in federal aid to solar energy, one solar lobbyist says with a sigh, already waxing nostalgic about those "good old" Democratic days. "Even that was a loss in real terms."

A working paper in the Office of Management and Budget proposed nibbling $79 million off the Department of Energy's solar budget for 1981, leaving $510 million to spend. And in 1982 the document proposes chomping off more than half of former President Carter's budget outlay figure, cutting the solar program down to $224 million.

Recent statements by the new secretary of Housing and Urban Development, Samuel Pierce, about abolishing HUD's solar bank have also worried many solar boosters. The solar conservation bank provides a subsidy that helps lower the interest rate on loans to homeowners to buy solar equipment.

Mr. Pierce estimates that dimming the lights on the solar bank would save $ 125 million. Other people say it's a mistake.

"To terminate the bank would be a breach of faith with those . . . citizens who recognize that conservation is one of our primary weapons in the fight for energy independence," wrote William Bergman, vice-president of the Solar Energy Industries Association, in a letter to Pierce.

One executive who is aware of the administration's attitudes, William Heidrich, a vice-president of Revere Solar, says the industry is just taking its lumps along with everybody else.

"They're not unfriendly to solar," he says, "and they may add a more businesslike approach to the whole thing."