Fun -- and profit -- in the sun

If customers who get great deals at Capitol Honda in San Jose, Calif., glance skyward, put their hands together and mouth the words "thank you," they are aiming their gratitude in the right direction.

Divine intervention in the form of sunshine is allowing the dealership a bit more flexibility in its pricing than its competitors.

The 45,000-square-foot store is one of the nation's first to install electricity-producing solar panels on its roof. The money saved each month from the dealership's power bill will be passed on to the buyers, says General Manager Bob Kinney.

"If it reduces our expenses, it allows us to be more competitive in the marketplace. That benefits the customer," he says. Cutting fixed operating expenses, such as the power bill, means the dealership won't have to "grind out a higher gross profit per vehicle" to make the same amount of money, Kinney says.

Because a typical car dealership guzzles electricity 24 hours a day, it just may be the prototype business for the growing solar roof panel industry.

A dealership needs plenty of electricity during the day for heating, air conditioning and computer systems and for the service department and body shop. But after employees go home for the day, energy consumption is still higher than at most other businesses. Dealerships have huge banks of lights that help provide security on the lot at night.

Just like manufacturers and suppliers, dealerships are looking for ways to save money on operating expenses so that they can beef up advertising or have more flexibility in negotiating prices.

"A well-run dealership is doing everything it can to reduce expenses," says Paul Taylor, chief economist for the National Automobile Dealers Association. He predicts more dealerships will add solar panels to their roofs.

"It's going to be large in states where conditions are favorable," he says. "Utilities are a big factor in your life. With utility bills up by double digits recently, you will find more dealers looking at (solar electricity) as we go forward."

States that have the ideal climate or that have enacted tax incentives for solar panels are California, Arizona, Florida, New Jersey and New York.

NADA did not have an estimate on the number of dealerships around the country with solar panels. Taylor estimates that around 100 dealers nationwide have invested in some type of solar energy system.

Kinney believes that installing the solar panels on the roof, at a cost of $1.2 million, makes good business sense. He cites four reasons:

1. Cost. California pays about half the total cost of the system.

2. Tax credits. California offers a 7.5 percent tax credit; the federal government allows a 10 percent credit.

3. Depreciation. Capitol can write down its cost for the system 50 percent the first year and 10 percent over the next five years.

4. Monthly savings. Electricity produced by the solar panels is expected to cut the dealership's monthly $15,000 power bill to $10,000 or less.

Kinney says the dealership should recoup all its out-of-pocket expenses within five years. The solar panels are warranted for 25 years and are expected to last 30 years with just a small potential drop-off in efficiency.

As long as the sun shines on the solar panels, the electricity produced will be used on-site at the dealership, says Paul Moreno, a spokesman for Pacific Gas and Electric, the utility that serves the San Jose area.

The amount of time the solar panels produce electricity at peak efficiency varies throughout the year. It's about six hours a day in the spring and summer and four hours a day in the winter. The solar cells are not as efficient - and costly - as the ones NASA uses to power satellites in space. Most roof systems convert about 14 percent of the sun's energy into electricity, while NASA's cells are about twice as efficient.

But car dealerships have an advantage NASA doesn't: space, as in square footage. Because a dealership's roof is so large, more cells can be installed to make up for the low efficiency.

Should the cells produce more power than the dealership needs, the excess electricity is routed back into the power grid and the store's meter runs backward, explains Kyle Brocker, a project manager with Atlas-Pellizzari Electric Inc., the company that designed and installed Capitol Honda's system.

The cost of maintaining the system is extremely low. The panels just need to be washed twice a year to remove film and other debris, which can reduce the amount of light that reaches the cells.

Brocker says adding the panels is a complex job. First, the building has to be examined to ensure that the roof is strong enough for the special frames that hold the cells. The weight of the system adds about 4 pounds per square foot. The panels have to be connected securely so that they can withstand high winds and other weather extremes. And then the system has to be wired.

"Not every building is suitable for this sort of setup," Brocker says. "Capitol Honda had a roof that we could design to."

Capitol was the first dealership for which Atlas-Pellizzari created a solar system, Brocker says. The company is working on a system for a nearby Acura store and plans to market its services to dealers.

"Ten years from now, this is going to be a prevalent thing out here," Brocker says. "People used to look at this with suspicion. But now we are in a situation where something has to be done. Renewable energy has to be considered."

Standing in the street and looking up, you don't notice that there is anything special about the roof, and Kinney says Capitol isn't trying to attract the attention of environmentalists. But one man did notice, Kinney says, and bought a Civic Hybrid because he was impressed that the store is trying to do its part to conserve resources.

Says Kinney: "We don't make a big deal about it. We didn't do it to use as a promotion. We did it because it has some advantages in reducing our expenses and because it is environmentally responsible. Honda, as you know, is one of the front-runners in hybrid vehicles. This kind of fits in with that."

You may e-mail Richard Truett at