Solar Slump Extends Even to San Diego

The solar energy industry has stalled even in sunny San Diego County.

“San Diego probably was the strongest solar market in country a couple of years ago,” said Bill Kratz, president of Southwest Energy, the parent company of Solarsmith, one of the county’s largest solar energy companies.

Oddly enough, San Diego didn’t share in a year-end solar system sales rush that occurred as consumers elsewhere in the country installed systems before federal tax credits expired on Dec. 31.

Kratz suggested that the San Diego market, “which hasn’t been as strong as other markets during the past few years,” had reached a “certain level of saturation.”

Although consumers continue to install systems that heat swimming pools, the market for residential hot water heating systems has dried up, Kratz said.

“The economics of the swimming pool systems continue to be good,” Kratz said. “But the hot water systems received quite a blow” when federal credits expired.

However, Kratz said manufacturers and installers who acted quickly to survive in the absence of federal tax credits likely will stay in business.

“We did a lot of conscious planning to adjust to the market in San Diego,” Kratz said. “We increased our emphasis on the swimming pool business and diversified into the conventional heating and cooling business.”

Kratz said stronger companies will also pick up service business from customers of weaker companies that don’t survive a shakeout.

Companies that failed to diversify and stuck solely to solar water heating systems are “going to face a real washout period,” said Skip Fralick, an engineer in San Diego Gas & Electric’s electric marketing division. “However, the strong companies will stay in the business and the fly-by-nighters will fly away.”

Fralick predicted that consumers probably will enjoy lower prices because solar companies will drop expensive marketing programs that were aimed at broadening the industry’s customer base.

SDG&E; became involved in solar projects during the early 1980s because of a state Public Utilities Commission program that encouraged solar water heating installations. SDG&E; paid rebates to 10,000 homeowners and 17,000 apartment unit owners who installed solar units.