Meanwhile, the 40-employee company is already looking beyond North Carolina, having opened offices on the West Coast in a bid to break into solar markets in California and Hawaii. Strata Solar’s domination in the state results from aggressively courting investors for major solar projects, leaving other developers to focus on smaller residential and rooftop projects.
The reigning sun king of this photovoltaic empire is Markus Wilhelm, 54, a former publishing executive who honed his business acumen in direct marketing and book club promotions. A German transplant to Chapel Hill, Wilhelm doesn’t display the apostolic fervor of longtime solar enthusiasts; rather, he’s fixated on bottom lines.
“He’s not a hippy trying to run a business, he’s a businessman trying to run a business,” said Stephen Kalland, executive director of the N.C. Solar Center in Raleigh. “And it shows in the way that Strata Solar works.”
Strata Solar is powering a solar boom that has resulted in 584 megawatts of electricity developed or proposed – about half the size of a nuclear power plant – since the state legislature passed a green energy mandate in 2007.
The rapid expansion comes at a time that the cost of solar panels is plummeting to historic lows and reducing the economic barrier to building solar farms. A fifth of the state’s solar projects were proposed just in the past seven weeks, mostly by Strata Solar.
Wilhelm says that falling solar costs eventually could render this country’s generous solar incentives obsolete, even though today more than half of the cost of a solar farm in North Carolina is subsidized with federal and state tax credits.
The cost of solar panels, including installation, has fallen from about $9 a watt to $3 a watt this year, and could fall to $1 a watt in several years, Wilhelm said.
“If we keep the current trend going, we are not going to be dependent on major subsidies by 2016,” Wilhelm said.
To meet state clean energy mandates, North Carolina requires Duke Energy, Progress Energy and other power suppliers to pay a premium – called a renewable energy certificate – for solar power bought from Solar Strata and other independent producers.
Just a few years ago, electric utilities paid more than 16 cents a kilowatt hour for solar energy, premium included. Today they’re paying less than 9 cents, Wilhelm said. The precipitous decline reflects the shrinking premium payment that solar developers have had to charge to make a profit. If that premium disappeared altogether, solar energy would cost about 7 cents a kilowatt hour.
“The price Duke Energy is paying for solar energy today is competitive with other renewable resources,” Duke Energy spokesman Jason Walls said. “With this drop in price, the company believes that solar will play an increasingly important role in meeting the state’s renewable energy portfolio standard.”
Wilhelm is plenty keen on the ideal of sustainability, but he is not inclined to mix business and personal causes unless there’s money in it. Wilhelm’s quarter-century of publishing experience includes stints with Bertelsmann AG, Bookspan and Doubleday Direct, and chairing the Direct Marketing Association.
“When an industry matures, the marketing people take over,” he said. “At the end of the day, it’s a business more than anything else.”
After leaving publishing, Wilhelm moved from New York to Chapel Hill, picking this area based on favorable news reports and its sophisticated vibe. He invested in green home construction but latched onto solar as the surest financial return.
Starting off small
In its first year, Strata Solar developed small solar projects for homes and small businesses. In its second year, the company expanded to larger, ground-mounted projects. Now it’s scaling up to huge solar farms.
The company has about 10 megawatts in operation and expects to be close to 100 megawatts by the end of this year. Because solar power is intermittent, working only when the sun shines, solar megawatts are not equivalent to round-the-clock power plants that use uranium, coal or natural gas as energy sources.
Strata Solar designs, develops and builds solar farms with financing from banks and other institutional investors. Strata Solar typically sells the projects to the investors and operates them. The investors make money on electricity sales to utilities that buy green energy to meet state targets. Strata Solar makes its money by selling the solar farms and operating them. The investors are the ones that take advantage of the 35 percent state tax credit and 30 percent federal tax credit.
Strata Solar’s site now under construction in Chatham County is on the smaller end of Strata’s solar scale, totaling 1 megawatt, a size unheard-of in this state just a few years ago. It’s designed to withstand 90-mph sustained winds and will take less than three months to build.
1 gigawatt foreseen
On a recent visit, a crew of several dozen supervisors and contractors were at work, moving metal sections into place, as others power-drilled solar panels at 25-degree angles to maximize sun exposure.
The project is in various stages of construction: metal beams rammed 8 feet deep into the piedmont loam, aluminum support racks erected, photovoltaic panels attached, and electric conduits connecting the setup to the power grid.
Company executives now talk about closing in on 1 gigawatt of solar power, the equivalent of a 1,000-megawatt nuclear plant.
“By 2013 we can build at least 100 megawatts a year,” said John Morrison, Strata Solar’s chief operating officer. “In the course of a decade, we should be able to build 1 gigawatt of solar. Do you know how long it takes to build a nuclear plant? About 10 years.”