Bill Shady says simple systems, federal tax credit will drive industry’s growth.

Bill Shady, P.E., CEO of Sustainable Design and Product Management. (Photo courtesy of Sustainable Design and Product Management.)

Last month,Plumbing & Mechanicalinterviewed solar thermal expertBill Shady, P.E., founder and CEO of Sustainable Design and Product Management, a mechanical engineering company that develops, assembles and factory-tests functional renewable and energy-efficient products. Shady also provides training to construction industry professionals in the areas of energy compliance, mechanical engineering and solar-assisted radiant floor heating, including courses offered through the Radiant Professionals Alliance.

PM: Can the U.S. solar thermal market survive without tax credits?

BS:No, I don’t believe it will because the cost of solar thermal is being compared to conventional fossil fuel that is heavily subsidized. Trying to compare solar thermal with artificially low energy prices is not a fair comparison. Look at the subsidies and tax breaks given to both domestic and multinational corporations. Do we think the oil and gas industries in the U.S. would be as profitable if the true cost of extraction, refinement, transportation, and distribution of space-heating fuel and electric power was factored into the unit cost per Kwh or Btu? Not likely.

The best thing for renewable energy investment is the rising cost at the pump and utility meter. If the U.S. government does not support the solar thermal and power industry with subsidies and tax credits for manufacturing, purchase and installation, the Chinese and Europeans will continue to dominate the market.

PM: How necessary are plumbing and heating contractors to the growth of the solar thermal market?

BS:The market will not expand without the installing contractors profiting on every project they undertake. Absolutely there’s a necessity for people other than just solar contractors to sell, install and maintain these systems. In certain states, you can be a solar contractor, but you can’t touch the domestic water or water heater. Plumbing and heating contractors have to add to their lines of products to sell.

PM: What advances in solar thermal technology can contractors expect to see in 2011?

BS:Most solar collector manufacturers have a package available that’s a “semi-plug-and-play” system with a collector array, pump, purge station with differential controller and a storage tank. Having a simple, entry-level system that does only domestic hot water is the best way to get into the business. This is an opportunity for contractors, and then they can do more complex, integrated systems.

You might even see simple systems offered to the do-it-yourself crowd at Home Depot and Lowe’s. I shudder at the thought of Homer pulling the collectors to the roof on a ladder with Marge at the bottom pushing. I think that would be a mistake and hope that the trades continue to put pressure on the government and building jurisdictions to require a licensed contractor install the systems to qualify for incentives.

PM: What’s the best way for contractors to educate themselves and their employees about solar thermal?

BS:Many of the manufacturers offer dealer network training; vocational schools have grants and other funding made available and offer training specific to renewable energy systems; and trade organizations like the Radiant Professionals Alliance offer specific courses that address the integration of solar thermal for domestic hot water and space heating. These same groups offer self-learning courses and webinars.

PM: What can contractors do to present solar thermal systems as a viable solution to their customers?

BS:People buy with emotion but the bottom line is always the finish line. If we do a better job of estimating the economic value, and provide validation and the ability for the installing contractor to ensure the long-term performance of the solar thermal systems, the herd will follow.

I have used simulation software for many years and have seen a widespread acceptance of the economic model outputs. The availability of simple-to-use software for contractors has been a great development in the last few years. This will help the industry get acceptance from the homeowners.

PM:What is driving building owners’ green choices today - saving money or the planet?

BS:The good news is they are doing both, saving money and feeling good about their environmental choices, and they know it. To some extent, though, it depends on the building type. If it’s a homeowner, you are more likely to see an early adopter or innovator who drives a hybrid vehicle make the choice to save the planet.

Owners of commercial buildings face competition in the marketplace for tenants, and many companies looking for buildings to lease are starting to understand the economic and social benefits of a building that is energy efficient due to good design, lighting, ventilation and comfort. A trend I see for commercial buildings is that developers are making them solar-ready and radiant-ready as tenant-improvement items.

PM: Where do you envision solar thermal’s greater growth - in residential or nonresidential applications?

BS:I see both growing as customers demand energy-efficient buildings, healthy and comfortable homes and work environments. Good tools, good products, good people and good training will drive the growth.

My company, Sustainable Design and Product Management, is committed to bringing a renewable integrated hydronic heating and cooling appliance to the market so that contractors can install a reasonably complex piece of mechanical equipment knowing that when it left the factory it worked as designed. The risk of custom design and fabrication in the field is eliminated in much the way that the forced-air industry does not have to build the furnace and air-conditioning condensing unit in the homeowner’s garage. Less risk means greater margins, fewer headaches and very happy customers.

The nonresidential market is starting to mature, but the occupancies of commercial office buildings do not consume large volumes of hot water for domestic use. Naturally, heating is a large component but unless there is a demand in the nonheating season, it limits the effective application of solar thermal arrays.

I see a huge opportunity in the multifamily housing, hospitality and manufacturing sectors; any building with a central plant and high hot-water use can’t go wrong with solar thermal. With continued incentives, these sectors will be a growing revenue stream for contractors targeting those areas.

Again, the manufacturers and integrators are wise to identify products and services in the marketplace that provide completely assembled and functional-tested systems to avoid the gap between what is designed and what actually works. That’s the change in the industry we’re seeing. All these developments will make it easier for contractors who don’t have a tremendous amount of experience.

PM: How can solar thermal systems be made more affordable?

BS:Mass production. Henry Ford revolutionized the automobile industry worldwide even if the only color you could get was black. That changed the way the industry looked at the market, and we believe that will happen with solar thermal systems as well.

At least 95 percent of solar thermal systems that go in are simple, domestic-water only, and that’s OK. The way to bring the cost down is to build the system the same way with the same features every time. If you want to go beyond that, you can add custom features that add costs. To a certain extent, affordability is a function of the complexity of the system and the experience of the contractor whose personnel is installing the system.

Financing also must be made available to qualified buyers for solar thermal energy systems. This will enable building owners to leverage the energy production of a validated system to pay for it over time.

PM: How big a role will geography play in solar thermal’s acceptance?

BS:I’ve heard musings that a sticker should be placed on all new solar collectors: “Place in sun to operate.” Obviously, the latitudes and microclimates with the most annual solar gain will be the most economically advanced.

 But I do not think geography will control the growth or acceptance of solar thermal as an integral part of U.S. plumbing and heating systems. What will control it are: good products that minimize installation error and ensure long-term reliability; good measurement and validation of system performance; continued incentives; and the realization that the legacy we leave our children is more important than the added cost of the upgrade for solar thermal, which costs as much as nice granite countertops.

Cheap, subsidized electricity in different areas will keep solar thermal from growing, but that can change too. Look at the Germans. They have more solar collectors installed per capita, and they are at the same latitude as the Canadians. When people realize that a simple solar thermal system will make money over the life of the system, they will be more likely to sign the contract.

PM: If you had only one message to give to plumbing and heating contractors, what would it be?

BS:Start with small solar thermal systems and market to the sector that you know will appreciate your commitment to quality and service. Integrate the solar thermal into radiant hydronic heating and learn good installation practices. Use good qualitative tools to sell the benefits and work with a good manufacturer that provides a complete solution and good engineering, not just a box of parts and the back of an envelope as your design notations.

Train, train and train some more so that your employees understand what they are doing and can see they have skills to be proud of. Oh, and don’t forget to appreciate them.