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Solar firms thriving with public projects

JOHN Fitzpatrick is in a buoyant niche of construction. Building subsidized homes for disadvantaged people, with solar-panelled roofs for environment-friendly power, he is funded by the government.

A British scheme to halve the cost of installing solar panels on schools and social housing is aiding a solar power industry hit by the housing slump.

It's tiny compared with US President Barack Obama's multi-billion-dollar plans to invest in cutting carbon emissions from government facilities. But as a slowdown threatens many renewable energy projects, such schemes offer hope for jobs.

"We were set up four years ago to do the predominantly social housing. We're not seeing any tail-off," said Fitzpatrick, site manager for the public housing arm of developers Croudace Homes.

New orders in the construction industry fell 14 percent in the 12 months to November 2008, according to the Office for National Statistics. In the third quarter of 2008 orders for private homes fell by one third, while those for public housing were steady.

Pitting bailout funds against climate change to boost "green growth" has been a mantra among business and political leaders including those meeting in Davos last week. Obama has promised to spend US$150 billion on clean energy to create five million jobs.

Outside Fitzpatrick's office sprouts a clutch of half-built homes, each sporting glinting blue silicon solar panels, intended for people on low incomes in Guildford, a prosperous town 50 kilometers southwest of London.

Britain will spend about 80 million pounds (US$114.5 million) through 2010 subsidizing low-carbon energy generation on buildings, much of that on public housing. This has offset declining interest from homeowners.

For private homeowners it costs up to 15,000 pounds to install solar panels to meet half their electricity needs, not including grants, says privately-owned Solar Century, which is supplying solar panels to the Guildford site.

That is a significant cost in a recession, especially when mortgage lenders are cautiously eyeing falling house prices. Solar Century says the cost will fall 10 percent in the second half of 2009.

"New-build is probably at least 25-30 percent down, year on year," said Derry Newman, Solar Century's chief executive, referring to installations on new private homes.

"So we've redirected our efforts. We do a lot of work with schools, public buildings and government agencies. That's obviously a sector where revenue isn't falling. If anything government is trying to push forward purchasing."

Britain says it plans to bring forward to this year and next spending of 3 billion pounds on houses and roads, to stimulate the economy. Prime Minister Gordon Brown has voiced support for measures to ease social housing construction to house 4.5 million people.


Under an economic stimulus plan which may cost up to US$900 billion, President Obama plans to spend tens of billions to cut carbon emissions from federal facilities.

The details are not yet clear but the plan being rushed through US Congress is expected to include about US$15 billion in grants and loan guarantees for local renewable energy generation and efficiency improvements.

"That will be enough to keep every renewable energy developer busy," said entrepreneur Jigar Shah, founder of America's biggest operator of solar panels, SunEdison, a company he recently left to pursue fresh start-ups.

Tens of billions of dollars of clean energy tax breaks may also be included under the stimulus plans. The solar sector has the advantage of being zero-carbon emitting, but needs public subsidy because it is still more costly than rivals such as coal-fired power plants.

The British approach of supplying grants for residential home energy generation - also called "microgeneration" - differs from that in Germany, the world leader in solar power generation whose model the United Kingdom aims to emulate.

Germany guarantees prices for "green" electricity for 20 years, encouraging homeowners to feed their solar-generated electricity back into the national grid using a so-called feed-in tariff.

According to Citigroup analysts, German residential installations were proceeding "flat out" at the end of last year, reinforcing the success of the model.

Britain is to launch a feed-in tariff for microgeneration from 2010.

Home installations are a slice of a bigger, global solar power market which includes large, centralized clusters of panels in solar parks.

Banks repairing their balance sheets are now reluctant to lend to such projects, so project developers say they are trying to "educate" alternative investors for support.


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