Solar energy: leasing cuts high cost of providing 'harness' for the sun

Billie Jolson likes to say that she leases the sun. What she actually leases is solar energy equipment. Miss Jolson heads Planned Energy International (PEI), one of the first firms in the country to lease such equipment for industrial use. Her company is on the cutting edge of an aspect of solar energy marketing -- long a province of federally subsidized programs -- that is the focus of growing interest in the private sector.

PEI conducts extensive energy audits, and then estimates the amount of money a potential client will save on utility bills each year under a lease agreement. Under a typical lease, PEI assumes all responsibility for purchasing, delivering , installing, and maintaining the solar equipment. Currently, Miss Jolson leases only "flat plate" technology for hot water, although she plans to lease more sophisticated technologies such a photovoltaics and parabolics when they become economically feasible.

The lease option "is a concept that people are really just beginning to look at," says Alan Casamajor, solar energy program leader at the Lawrence Livermore Laboratory. "If we are going to have any impact in the industrial sector, this is almost certainly the way we're going to have to go."

The potential impact from cracking the industrial market can be substantial. Industry, which according to the US Department of Energy (DOE) accounts for about 25 percent of the nation's annual energy consumption, doled out $110 billion for energy last year alone.

The DOE has taken an active interest in industrial solar energy, funding a variety of demonstration projects over the past several years. But the Reagan administration's budget cuts have scotched proposals for new demonstration projects.

According to Cyril Drafin, director of industrial marketing for the DOE, several firms have indicated an interest in solar leasing -- although PEI is the only company he knows of that has a signed lease in hand. As evidence of this growing interest, he cites an article on solar leasing in the current newsletter of the American Association of Equipment Lessors, a trade association representing leasing businesses.

"I think leasing offers advantages," says Mr. Drafin, "and if solar catches on [in the industrial market], leasing will play an important role in that.

But he sees early leasing deals more "as trial balloons to work through the arrangements and procedures, rather than catching on like wildfire."

Still, experts say that industrial usage -- with its heavy needs for steam and hot water -- is one of the best applications of solar technology.

Solar energy experts say growth in leasing firms depends on rising fuel prices and a drop in the cost of solar technology. But they add that Congress last year gave potential lessors a boost by passing the Business Energy Property Tax Credit.

An incentive for investment in alternative energy, the measure provides a 15 percent energy tax credit, on top of an already-existing 10 percent business investment tax credit -- and in addition to normal write-offs such as depreciation and interest.

For her first client, a laundromat in Temple City, Calif., Miss Jolson estimated that 52 solar panels leased under a seven-year contract will save her client $720 the first year and $165,000 by the end of the lease. Miss Jolson aims her pitch at small and medium commercial and industrial users and says PEI currently has three dozen bids out. Interested customers range from school districts and private hospitals to restaurants and bottling plants. And she plans to open an office in Hawaii, where natural gas prices currently are as much as thr ee times higher than prices on the mainland.