Sunrise industry

Sky's the limit for union electrician-cum-solar power entrepreneur
Steve Ginsberg  

Hoping to move solar power beyond a cottage industry, Dan Thompson is hooking up health clubs, police stations and sewage treatment plants with his San Rafael-based Sun Power & Geothermal Energy Co., Inc. (SPG) and Geothermal Energy.

Commercial applications for solar power have been around for two decades, but its customers have typically been environmentally-conscious home and business owners wanting to do what they felt was the right thing.

The blackouts of 2000 changed that. California's power grid lost its aura of reliability. Electricity bills soared and decision makers in both business and government suddenly were more receptive to energy alternatives.

For Thompson, going solar had nothing to do with green consciousness. He was wedded to the power grid for 20 years as a union electrician and worked on large projects such as 101 California St., the Schwab Building on Fremont St. and San Francisco's City Hall renovation. As a $45-an-hour foreman for Cupertino Electrical, Thompson was working on the Williams Communications' server farm in San Francisco in 2000 when he saw the light.

"We were installing these polluting diesel generators the size of rail cars as a back-up power source and I started asking why. They told me, 'We don't trust the power in California.' This got me thinking about solar: Did it work and how efficient was it?"

Doing his research, Thompson found a rebate program offered by the California Energy Commission. Just 12 applications were made for the residential rebate program and there were no commercial applications in 1998. "It was either I was barking up the wrong tree or I was truly at the beginning of something," he said.

Thompson took the plunge, investing his own money and $50,000 from his mother, Muriel. She came out of retirement after a career in residential real estate brokering and is now the company's CFO.

Thompson's first project, in March 2001, was a 10-kilowatt solar system for his mother's rental property in San Anselmo (yes, the neighbors complained). But the 34-employee company is now working on the fifth largest solar installation in the U.S., a wastewater treatment facility in Oroville. Thompson projects annual revenue to hit $15 million this year, compared with $1.1 million his first year.

The 520-kilowatt solar system in Oroville works by blanketing 3 1/2 acres with solar panels. It will go online in November and will be the first solar wastewater treatment plant in the U.S. The $3.5 million project is Thompson's largest so far and he is looking to leverage it with more big projects locally and regionally.

Not easy being green

"The challenge for us as a growing small company is we are self-financed and don't have the resources to do construction on all the jobs that are coming our way. For our Mt. Tam Racquet Club project alone we needed $100,000 to prepare and buy the materials," Thompson said of a job at a large Marin County health club. "We need a pipeline of cash and an arrangement with the panel manufacturers."

The $700 panels are a byproduct of the microchip industry and produced by offshoots of conglomerates such as British Petroleum and Japan's Kyocera.

Kyocera is among the largest solar panel manufacturers in the world. Thompson was invited by the company to go to Japan this month to try and line up a deal. Thompson hopes to come home with Kyocera as a steady supplier — and on terms that would help him reduce the up-front costs.

Thompson saw his business grow 14-fold in its second year of operation, but all the profits have been plowed back into buying equipment, hiring people and building projects.

Thompson is thinking big. No U.S. company has been able to break through the clouds shrouding solar to build a large business. Berkeley's PowerLight has been the biggest Bay Area success, a pioneer that generated more than $50 million in revenue since 1991.

Thompson aims for SPG to be a $100 million company within five years.

He faces a number of hurdles to get there, including the possible elimination of the rebate program that got Thompson into the business in the first place.

Assembly Bill 58, backed by PG&E, would drastically reduce rebates, which now state that for every kilowatt hour solar homes and businesses put back onto the grid, they receive an equal amount in rebates from the local utility that meters their usage and generation. That sweetener makes solar power look a lot better for users.

Looking on the bright side

Thompson's business became a blend of residential, business and government contracts. The company is installing 10 residential systems monthly.

Among the businesses that have gone solar are auto dealerships and wineries, who can cut their power bills by 80 percent, short-term. SPG is also installing a 31-kilowatt system for Vallejo's police department. Meanwhile, Thompson remains convinced the long term forecast for solar power is sunny.

"We are moving aggressively because you need to strike while the iron is hot. Waiting to see what happens with rebates or waiting for other things is what everyone else has done," he said.

Steve Ginsberg covers retail and real estate for the San Francisco Business Times.

© 2002 American City Business Journals Inc.