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Remember solar power? Economic climate seems right for new growth

By David F. SalisburyStaff correspondent of The Christian Science Monitor / July 15, 1983



San Francisco

With signs of economic recovery in the air, the nation's strongest solar companies appear poised for a period of explosive growth. This is the conclusion of a recent survey of the nation's solar manufacturers conducted by Energy Investment Research Inc. (EIRI). The Greenwich, Conn., firm has been tracking solar companies for a number of years now. Its upbeat prognosis for the nation's youngest energy industry is based on past performance plus an analysis of current economic trends that appear favorable to solar energy.

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Like other industries tightly tied to construction, the last two years have been extremely rough for solar manufacturers and installers. There has been considerable belt-tightening and many bankruptcies. Despite this severe economic adversity, however, a number of ''well positioned'' solar firms have thrived and grown, the report points out. Last year solar stocks scored some of the largest gains on Wall Street, ranging from around 300 to almost 1900 percent. And many leading companies managed to sustain sales and profit growth of 10 to 20 percent last year, despite the adverse conditions.

Despite the much publicized ''oil glut,'' the cost of energy to consumers has not dropped substantially, the analysis stresses. Lower oil prices have not translated into reduced home-heating fuel costs, and natural gas prices have jumped an average of 21 percent last year. This represents a major opportunity for solar firms, as businesses and individuals begin initiating long-deferred energy-saving plans, the study concludes.

Many people have money to spend: Disposable income is up and installment debt down relative to previous years. Consumer attitudes toward solar energy are also favorable, according to recent surveys. And the economic barrier of high initial costs for solar equipment are being attacked by third-party financing, where the equipment is sold to investors, who get tax benefits and revenues from the sale of the energy to consumers.

''I'm not ready to say that things are as good as (this study) concludes, but they are definitely better than last year, comments Allan L. Frank, editor of the Solar Energy Intelligence Report, an industry newsletter. ''A number of companies are reporting significant improvements in revenues, but I'm not yet sure how this will translate into profits.''

Of course, the EIRI survey also points out uncertainties in solar's future: high federal deficits, which could push up interest rates; and the Reagan administration's repeated attempts to pare down federal solar programs.

Another threat to the industry is the approaching 1985 cut-off of federal solar tax credits. These have been a major prop to solar heating, and no one is sure how the industry would fare if they are removed. Solar backers are already pushing for an extension.