Sailing home on the Queen Mary after 15 years in Europe, John Donoghue fell into deep contemplation in his deck chair.

Approaching middle-age following time at the Sorbonne, The American University of Paris and doing international business development for Forged Metals Inc., an aerospace firm, “I was sort of worn out,” he recalled.

Peering into the sun each evening, Donoghue finally saw the light. 

“I need to look into this solar business,” he remembered thinking. So, once resettled in Wilmington, he chartered a helicopter to assess whether starting a solar installation company made sense.

“I just thought I’d fly around and look down at roofs. … I didn’t know what to expect,” Donoghue explained during a recent conversation at his Martin Street offices. “I really didn’t find anything.”

So in 2007, working out of his living room, Cape Fear Solar Systems was born.

Over its nearly one decade in business, the company has experienced “slow but stable growth” according to Linda Hanykova, vice president of operations, who was recruited by Donoghue after working with him at Forged Metals.

The firm has benefited from ever-declining solar-panel costs, increasingly efficient technology, favorable legislation and growing environmental awareness. But it has also had to contend with a change in state policy and some consumer resistance.  

Sunrise

By the time Donoghue founded his company, solar costs had already become more attractive. According to the National Renewable Energy Laboratories, the cost of solar photovoltaic systems fell an average 6-7 percent annually from 1998 to 2013, with costs continuing to drop.

“To put it simply, renewables are getting cheaper all the time” despite a recent freefall in oil prices, said a 2015 analysis by McKinsey & Company. Solar power will be competitive with conventional fuels in most states by 2020, the report said.

That competitive pricing – along with a 30-percent federal tax credit and a previously available 35-percent state credit– is why Sam Gray and his family had Donoghue install three solar arrays on their 62-acre property in Boiling Spring Lakes last year.

Gray, a Realtor and former energy trader for refineries, is busy clearing his site to make way for a commercial campground for which solar can support lighting, pumps and a retail store.

For now, each of the family’s existing solar arrays – flanked by a barn and a herd of goats – provides up to 4.5 kilowatts for residential use.

But Gray, an Appalachian Trail hiker, is no myopic tree-hugger. The family will continue to use solar “as long as we can see that there is a break-even,” he said. “It must have a compelling economic argument … there are substitutes.”

Gray noted that he chose Cape Fear Solar Systems because it installs solar products made by SunPower, a Silicon Valley alternative to equipment manufactured by struggling Chinese firms with shaky warranties.

The Grays have achieved 100 percent of their household needs with solar and, like other customers, enjoy a variety of financing options including zero-percent down for one year, bank loan programs and the ability to roll solar costs into a mortgage in which the cost per month is less than the savings produced, Donoghue said.

Residential users derive a total return on investment within 10 to 12 years, he added.

By the end of last year, Cape Fear Solar Systems had installed hundreds of roof- and earth-based panels in an area stretching from Emerald Isle to the South Carolina border. This April, the firm crossed the border to become the only out-of-state trade ally for Santee Cooper, the Grand Strand’s electric utility, which offers solar as part of an energy-efficiency initiative. 

“It’s a very bright spot in terms of growth,” Donoghue believes.

Even so, he said, installations within the company’s footprint represent “less than 1 percent” of the available residential market, a sign that acceptance of solar remains a work in progress.

Sunset  

While Cape Fear Solar Systems continued to work with Gray and other prospects, a decision by North Carolina legislators to sunset the state’s 35-percent credit at the end of last year proved challenging.

Donoghue had viewed the tax regime as a mixed blessing. 

“It was incredibly complicated, and it didn’t apply to everyone,” he said. But consumers who qualified loved it.

Advance notice gave the company time to mitigate the repeal’s effects. Donoghue, Hanykova and other employees looked inward, creating greater operating efficiencies that could also provide some value to suppliers and buyers.

Rather than trucking everything out to each worksite, crews began cutting and pre-assembling some components, creating an installation kit that reduced the time spent at customers’ homes from a maximum four days to two days at most.

Abandoning its just-in-time approach to fulfillment, the company also dropped daily deliveries from suppliers and began buying in bulk, paring transportation, warehousing and labor costs.

And earlier this year, the company made a decision to pursue commercial business more aggressively. With about one dozen assisted living, office and other commercial installations completed, Donoghue hired a sales representative to begin visiting hotels, medical offices, restaurants and other businesses to interest them in solar. 

“The business is there,” Donoghue said, with average return on investment for commercial installations taking between five and nine years.

Meantime, the federal tax credit for both residential and commercial installations has been renewed, providing customers with a degree of fiscal comfort through 2022.

Tradition 

The way Donoghue sees it, utility industry traditions will be shattered by increasing acceptance of solar and by an ever-weakening reliance on the grid.

He likens solar to the arrival of microwaves, popularized by technical breakthroughs and falling costs and now a ubiquitous feature in about 90 percent of U.S. households. “They don’t build a house without a microwave,” Donoghue noted.

According to the Solar Energy Industries Association, the solar market has grown an average 65 percent each year since 2006, with nationwide installations hitting the one-million mark this year – clear growth, but still only 0.008 percent of all domestic households. While costs have dropped dramatically, “perceptions haven’t caught up,” Donoghue said.

But with batteries being commercialized that store solar power, distribute it for a variety of uses and which can still be integrated with the grid, the time-of-day and demand-related pricing of electric utilities may eventually go the way of the dinosaur.

“Storage is getting better and cheaper and investment in the area is rising,” the McKinsey report stated.
Cape Fear Solar Systems’ founder believes that acceptance of solar technology will achieve critical mass in the next three to five years.

With a staff of 19, a fleet of nine sales and installation vehicles and an expanded physical plant, Donoghue is betting that the sky will be the limit.