ARUNDEL – On the lawn behind the Solar Market offices here, 144 solar-electric panels are mounted across a 100-foot-long run of wooden racks. No surprise, really, to see a photovoltaic system outside a company that sells the hardware.

But this set-up is way larger than needed to run lights and appliances. And therein lies the surprise: These solar panels generated enough power last winter to supply nearly 70 percent of the building’s warmth — with electric heat.

The falling price of photovoltaic panels, along with the advent of special heat pumps and super insulation, is creating an opportunity in Maine that energy experts could hardly imagine a few years ago. Now some of the state’s leading solar installers, including Solar Market, have begun installing so-called PV panels on homes and businesses to harvest sunshine for baseboard heaters.

The new economics of PV panels also has some companies moving away from promoting solar-thermal collectors designed to heat water, a mainstay of the business in Maine for 30 years.

“We stopped selling solar hot water three years ago,” said Naoto Inoue, who owns Solar Market and has hot-water panels on his house. “I would never do it again. I would put up all PV.”

What’s starting to happen in Maine reflects an era of dizzying change taking place in the global solar industry.

PV module prices are down 50 percent in the past three years; they’ve fallen by roughly one-third in the past 12 months. Manufacturing growth in China, among other factors, has led to overcapacity and financial losses. Trade publications predict that competition will continue to drive down prices next year, as the industry struggles to consolidate and match supply with demand.

Maine solar installers are taking advantage of this environment, as well as state and federal laws that encourage the use of renewable energy. A visit to Solar Market’s 3,500-square-foot office shows one way to do it.

Out back, the oversized solar system has a capacity of 50 kilowatts. In the summer, it can produce up to 300 percent more power than the business needs. The system is tied into the power grid, and Maine’s net-metering law requires utilities to buy renewable power and credit any surplus to the customer’s account. That allows Solar Market to bank much of its surplus for winter, when days are short and the office needs heat.

Typical electric resistance heaters would eat up too much energy, however. In the basement, Inoue has a high-efficiency, air-source heat pump. This device uses a relatively small amount of electricity to extract the marginal heat in cold, outside air. The heat is transferred to water, which is stored in an insulated tank and circulated through baseboards.

This approach wouldn’t work if the building was drafty and poorly insulated. Inoue gutted the walls of the old farmhouse and barn to create an 18-inch- thick cavity of foam block and cellulose. The walls now have an R-value of 40, twice that of a typical home. The roof is R-60. The building’s tight enough now to be warmed with only 17 feet of baseboards, a radiant floor loop and a couple of infrared, electric space heaters.

Critical to this equation is a 30 percent federal tax credit that cuts the cost of the PV system to $105,000. That’s still not cheap. But Inoue figures he’s getting electricity at under 10 cents a kilowatt hour for the 25-year life of the system. That’s already less than today’s utility rates.

Homeowners thinking about this approach typically undertake new construction, but not always. In Sanford, Cliff Babkirk has been able to get 40 percent of the space heat at an existing house from PV panels. Babkirk heavily insulated and air-sealed the home, installed a heat pump and is careful with electric use. He also kept his oil boiler to heat water, using 100 gallons a year.

Babkirk’s system costs $17,600 after tax credits and a state rebate. He’s happy enough with the performance that he plans to add more panels and pull another 20 percent of his heat from the sun. Earlier this month, he hosted an open house that was part of a national tour of solar and energy-efficient homes.

“We wanted to let people see a regular house,” he said.

The project was installed by ReVision Energy in Portland. The company has done more than a dozen PV-heat systems over the past year.

Most are in new construction, where heavy insulation can be installed from scratch. The company also favors newly developed air-source heat pumps that work well in Maine’s cold climate, and cost roughly $4,000.

“It has opened the door to these opportunities, which seemed remote in 2008,” said Fortunat Mueller, a partner.

Homeowners looking to heat with solar electricity need a frugal refrigerator, washing machine and lights. If they can cut their power demand to around 265 kilowatt hours a month, they can do a lot of the job with a 3.5 kilowatt PV system. That would cost roughly $14,000 after tax credits and rebates, Mueller estimated, plus the cost of one of two heat pumps.

“For that you are essentially prepaying your entire electric and fuel bill for the life of the home,” he said. “It is pretty amazing.”

Solar hot water, heated with thermal collectors, is a different story.

Hot water panels remain cheaper than solar electric. But in Maine, the panels produce more hot water in the summer than most homes need, and not enough in winter. Hot water can’t be stored indefinitely, and there’s no way to bank the energy in the form of utility credits.

These factors have tipped the balance away from solar hot water in Maine, in Inoue’s view. Mueller, however, isn’t ready to make that break.

“I don’t think we’re at a point yet where solar thermal stops making sense,” he said.

But another variable for hot water has entered the picture in recent years: Hybrid water heaters. Available now at home improvement stores, they look like conventional water heaters, but use heat-pump technology to warm water for a fraction of the cost. That’s making solar-electric panels an option for heating water, too, Mueller said.

Staff Writer Tux Turkel can be contacted at 791-6462 or

[email protected]