Solar panels are popping up on Prineville City Hall, the sheriff’s office and other government buildings in Crook County, where leaders look to save money on energy costs.

Panels installed atop Mt. Bachelor ski area’s Bend office create the amount of electricity needed to power the mountain’s beginner ski lift. And in Bend, the city hopes for up to $3,000 in annual savings from a 33-kilowatt solar array on the Centennial Parking Plaza downtown.

The past year has been busy for Central Oregon’s solar energy industry. Companies like E2 Solar and Sunlight Solar Energy have built and installed thousands of solar energy panels across the state.

Nationwide, employment in the solar energy industry doubled between 2009 and 2011, according to figures from the Solar Energy Industries Association. In the third quarter of 2011, the market for solar energy grew 140 percent from the same quarter of 2010. And installations of solar panels grew 109 percent over the prior year.

But challenges litter the path to a truly self-sustaining solar industry, in Oregon and around the world.

It’s still more expensive to produce electricity from solar energy than from more traditional sources like coal and natural gas. How much more can depend on where in the world the solar energy is produced.

But as recently as 2008, maintaining solar panels, and converting their energy into electricity for use in homes and offices, was as much as 75 percent more expensive than doing the same with a traditional source, according to a 2011 report of the National Renewable Energy Laboratory.

The environmental factor

Still, some industry officials, including Kelli Hewitt, president of E2 Solar, point out that solar has lower long-term costs and fewer environmental impacts than fossil fuel.

Looking at the dollar cost of each power source “doesn’t get at what’s being done on an environmental level,” Hewitt said.

The push to usher in renewable energies, after all, has been in response to rising concern over the pollution impacts of traditional fossil-fuel sources, and the price — through environmental clean-up and other costs — of repairing the damage they cause.

“If we’re not considering the (environmental) impacts, we’re not really considering the true cost of energy,” she said.

Financial assistance for the fledgeling solar industry is another concern.

A federal tax incentive program, the Section 1603 Treasury Program, widely credited with pushing solar energy generation to record highs last year, expired Dec. 31. That could slow growth in the solar industry.

“The hardest part of the solar industry is that we’re competing against utility rates that are at a very low level, in Oregon specifically,” Hewitt said.

Finding solutions

For three years starting in 2008, Bend-based PV Powered, now known as Advanced Energy Industries, worked with a New Mexico engineering and science laboratory to try to develop new technology, in the hope of lowering the costs of solar power.

That work included developing a prototype to detect and isolate weak points in a given solar array. Other work included streamlining solar energy data in an effort to lower research and manufacturing costs.

Researchers issued a report outlining the project’s progress last month. But the report also detailed some challenges the industry faces to gain acceptance on a wider scale, and some of the steps it must take to compete with other sources of energy.

“There are a number of small innovations that solar needs in order to be a better citizen to the electric utility grid,” said Michael Mills-Price, co-author of the report and electrical engineer for Advanced Energy, which bought PV Powered in 2010 and made it the company’s solar energy headquarters.

Simply put, the grid is the network through which utility companies deliver power, in its many original sources, to customers, as electricity.

The innovations needed to improve solar include enabling the technology to deliver electricity consistently when the sky is cloudy, and preventing energy from saturating the electricity grid when it’s sunny, Mills-Price said.

There is “intermittency associated with cloud cover. You have output now, and maybe five minutes from now output is reduced 40 percent,” he said.

Perception challenges

But beyond the technological barriers, proponents of increased solar production could be facing challenges of perception: Solar is still new. The technology to manufacture solar panels wasn’t introduced to the United States until 1954, whereas coal and natural gas production were already booming by the turn of the 20th century.

While advancements in technology have lowered costs considerably in the past few years, “There is a hesitancy on the part of utilities to embrace” solar and other renewable power sources, Mills-Price said. For utility companies, “their job is to make sure the light switch is on. They’re used to the traditional technologies” like gas and coal that generate electricity consistently.

Pacific Power, one of the largest utility companies in the state, provides electricityto 50,000 customers in Deschutes County, 9,000 customers in Jefferson County and 8,000 in Crook County.

Company spokesman Tom Gauntt said there are some challenges for utility companies, which are trying to bring solar power into their energy portfolios.

Much of Pacific Power’s renewable energy progress has come from wind power. Wind capacity makes up about 3.6 percent of Pacific Power’s total portfolio, while solar accounts for roughly 1 percent, according to company data. Coal leads the way, at 63 percent, followed by natural gas, at about 14.7 percent.

Like any power source, solar energy needs to be converted into electricity before it can be used to power homes and offices. To do that, solar panels absorb the sun’s rays, a process that charges electrons and creates an electric current. An inverter, the devices Advanced Energy makes in Bend, takes that energy and converts it into utility-grade electricity. Then it’s delivered to the grid for personal use.

Right now, solar costs more to convert to electricity and deliver to customers than other sources. Solar panels also need to be maintained, which carries additional costs.

“The reluctance, if any is sensed out there, is to say, ‘Well, it still has to fit on a larger scale,’” Gauntt said of solar.

Government mandates

The state of Oregon is banking on the type of advancements Mills-Price outlined as part of its plan to diversify the state’s electric portfolio and promote green energy production.

The Legislature in 2007 authorized a renewable portfolio standard, requiring the biggest utility companies, like Pacific Power and Portland General Electric, to ensure that 25 percent of their electricity sales come from renewable sources by the year 2025.

A separate solar capacity standard is in place to push companies to bring more solar power to their portfolios.

Gauntt agreed with Mills-Price that the main objective of a utility company is to provide the cheapest power possible to customers.

“We’re embracing solar as (the technology) comes along,” Gauntt said, adding that the company is taking part in a number of solar incentive programs, including those that are bringing solar panels to many Crook County buildings.

For Hewitt, president of E2 Solar, incentives highlight the uncertain path her industry is on. Last year was a strong one for her company, she said. E2 Solar installed nearly 800 solar panels on apartment complexes in Bend and Madras. Hewitt added four new employees, bringing her workforce to 11.

The solar projects in Bend and Madras were spearheaded by remaining American Recovery and Reinvestment Act funds, first authorized in 2009.

Finding work that doesn’t incorporate federal or state funds, grants or tax breaks continues to be a challenge.

“Most states that are successful with solar have some sort of subsidy program,” Hewitt said, and those programs “are always changing. It’s very difficult from our perspective. You have one incentive going down here, one expiring here — it makes you wonder how the industry will propel itself, when it’s partially dependent on subsidies and those kinds of funds.”