By Barbara Kessler
Green Right Now
From the floor of the recent Solar Power International show in Dallas, it’s easy to see why solar power awes and mystifies the general public. Giant robotic arms dart and spin with the precision of diamond cutters, parading the fine tuning required to stamp out photovoltaic (PV) panels.
Installers demo rooftop racks engineered to resist rust, defy gravity and hold tight for 30 years, come hail or high winds. Sales execs hawk the intricate micro-inverters that mysteriously transfer solar energy from the silicon wafer/glass PV panel onto the household AC/DC system, claiming to have the most reliable, efficient and failsafe versions.
This is an industry that has danced on the razor’s edge for years, for decades, as it pierced technological obstacles, recalibrated equipment and relentlessly drove manufacturing costs downward while pushing capabilities upward. It created solar mirrors, blankets, tubing, glass panels and thin films, taking breathers only to remind the outside world that solar is worth investing in and waiting for, assuring onlookers that power drawn from the sun will someday steal the spotlight – clean, renewable and finally, affordable.
And the news out of the SPI show this week: We…are….almost there!
Solar power has already reached “grid parity” in certain situations, mainly in California, where for a time homeowners installing solar panels in certain cities enjoyed a triple dip of federal, state and local incentives. That’s no longer the case, but new leasing models for solar panels are taking up the slack.
“Grid parity” — meaning a price that competitive with or below other sources of energy – has been achieved by solar in other selected scenarios. In North Carolina, professors announced in 2010 that new solar power would be less costly than proposed new nuclear power. They called their report “Solar and Nuclear Costs: The Historic Crossover” to describe the graph showing nuclear costs rising and solar costs crossing that line on their way downward.
Grid parity is important to the industry because it wipes away longstanding arguments that solar costs too much for too little return and will remain a boutique energy source, as it is today, comprising a mere .5 percent of the U.S. energy market.
Solar parity also is within grasp of some major commercial solar installations, according to some SPI speakers, and not just those who are bullish on their own projects. This is happening mainly in the sunny Southwest, where giant projects can produce solar power at lower rates than rooftop panels can manage, and are edging toward grid parity with electricity produced by coal, natural gas and nuclear power plants.
Given enough land for those projects, and continued favorable state and utility policies, parity is coming, and soon.
It’s happening, according to one presenter, because two things are certain: 1) Electricity costs will rise and 2) So will the sun.
If one factors in carbon emissions to the formula – essentially handicapping the equation in favor of non-polluting energy sources and assigning a figurative toll to the carbon emissions of traditional energy – then large scale solar projects already offer more for the money, if not a straight cross-comparison lower costs, say some developers.
In some states, utilities must take renewables seriously because strong Renewable Portfolio Standards (RPS) require that renewables account for a certain percentage of power by a certain date. California has passed the strongest RPS in the nation, aiming for 33 percent clean energy by 2020. That’s a clear driver of commercial solar projects in the Southwest, where the desert provides the land and California cities will easily consume the energy.
“If your goal is to reduce carbon emission and you have a dollar to invest, the best bang for your buck will come from utility scale (solar),” says Ted Meyer, vice president for corporate communications for Tempe, AZ-based First Solar, which manufactures panels for large solar farms.
First Solar produced the 290 Megawatt Agua Caliente Solar project in Yuma, AZ, projected to power some 100,000 homes annually and save 220,000 tons of carbon emissions (equivalent to taking 40,000 cars off the road). Pacific Gas and Electric (PG&E) has contracted to buy power from the project for 25 years.
Framing the costs of solar this way, by including its ability to mitigate carbon pollution, might seem self-serving. But many advanced nations view clean energy in this way, essentially crediting renewables for their better environmental profile by reserving space for them on the grid or through other incentives. (Though executives are still seeking, and foresee, straight price parity.)
The solar industry’s bright U.S. future also is predicated on government investment incentives. There are many views about the right formula for those incentives. But there’s no denying that coal, natural gas and nuclear power, the mainstay sources of grid energy in the U.S. today, have enjoyed subsidies of their own for decades.* That bodes well for some continued support for solar power, although the current cost-cutting fervor in Congress could mean the industry will have to settle for less than it considers fair.
While the Congressional and overall economic pullback has clouded solar’s prospects, other factors are breaking in favor of the industry.
The price of PV panels has dropped by about 30 percent in the last 18 months, an unprecedented tumble that’s luring homeowners from the sidelines, and propelling commercial PV projects around the globe.
The US, which has comprised only 5-7 percent of the global solar market in recent years, is poised to take off and could over the next five years become the largest or second-largest solar market in the world (depending on the speed with which China continues its robust solar development), experts predict.
The reasons U.S. solar is headed skyward are many and sometimes complex, according to several authorities interviewed at the SPI show this week:
- PV prices, as noted above, are down, making panels more affordable to consumers, but at a price point where companies can still maneuver and profit.
- Electricity costs continue to rise in most markets, creating an incentive for individuals and investors to jump into solar, which like wind power, offers electricity at a contracted price that can remain fixed over many years. Only renewables offer this long-term transparency, unlike commodity fuels like natural gas, with their history of fluctuations.
- Consumers strongly support clean energy like solar and wind, and see a downside in continued reliance on burning fossil fuels; regardless of what stores of oil and gas remain accessible, this public perception adds a layer of risk to traditional energy.
- The federal Investment Tax Credit (ITC), which Congress extended through 2016, remains a viable way to recoup the costs of either a small residential or business rooftop installation or a large commercial solar farm.
- Other leading solar markets, such as world leader Germany, are becoming saturated, pushing suppliers to look for development opportunities in the U.S..
- U.S. solar companies, despite the recent high-profile bankruptcy of government-backed Solyndra, are maturing and adopting promising business models. Manufacturers and developers are signing deals with utilities and investors that have dozens of projects in the pipeline set for completion over the next few years.
Solar executives recognize that they’re a niche market in the U.S., but they say that’s about to change dramatically.
“Right now in the US this year we’ll install about 1,800 MW of solar, our goal, and we think it’s easily within reach, is to install 10,000 MW of solar by 2015,” says Tom Kimbis, a former DOE program manager who’s now the vice president for strategy and external affairs for the Solar Energy Industries Association (SEIA).
Planned solar projects that already have agreements to sell their power to utilities total about 10,200 Megawatts. The pipeline is further pre-loaded with another 21,000 Megawatts of commercial projects that have been announced. If most of those are completed, U.S. solar power on the commercial side will explode, increasing its capacity more than ten-fold.
“The U.S. market will look very different, very soon,” explains Shayle Kann, managing director of Solar GTM Research in Boston, which tracks solar trends and came up with those projections.
Projects have come onboard faster than ever over the past two years with the help of the ITC and a Treasury grant program known as the 1603. Along the way, the American solar industry added thousands to its workforce, hitting its zenith of about 100,000 employees today, according to SEIA.
SEIA believes that having both a cash grant program payable upon completion and the ITC , gave developers and project owners an important choice of incentives during a time in which the investment markets were wobbly.
Hurdles remain, however. Experts say the market could suffer a significant hit, though not a fatal blow, if Congress fails to renew the 1603 program, which expires this fall. The ITC would remain in place, covering investors for the farthest out projects.
But the loss of the 1603 would mean solar growth would stall and the industry would lose a projected 37,000 jobs that would be created in 2012 if the 1603 were extended, according to SEIA.
The lack of a unified national policy on solar remains a problem unique to the U.S. among wealthy nations. It stands in stark contrast to Germany, Italy and China, where strong federal leadership has pushed the solar market to grow quickly. There’s been no push from Washington , which could set a target for renewables, known as a Renewable Electricity Standard (RES), which would set as a goal that a certain percentage – say 20 or 25 percent – of the nation’s power come from renewable sources.
Aside from the faint federal support the U.S. remains problematic, with each of the states have its own rules about permitting, grid access and varying competing lobbies for existing power producers.
“The fundamental problem we have in the US is that it doesn’t exist. Not as one single entity. We have 50 states in the US and every state has an entirely different market from the state next to it,” says Kann.
There are too many moving parts, and that has complicated issues for companies trying to go national with rooftop PV sales, solar leasing programs and commercial projects, as well. For each state, sales people and installers must learn the rules and large scale solar developers must find their way onto a grid that’s controlled by a patch work of state and utility authorities.
The good news, say Kimbis, Kann and others, is that many states are making a special effort to pave the way for solar, seeing it as a hedge against rising electricity prices based on finite fuels, or simply a way to diversify. Last year, New Jersey exceeded California for new installations because of a special program making development more attractive.
Newcomers to solar that will be the next big growth states, include Massachusetts and New York.
(More to come about what states are doing to diversify their energy portfolios and boost their solar power.)
* Editor’s note: Here is where I could have linked to sources showing the 80 years of subsidies to the oil and gas industry dwarfs the money sliced off today for renewables. Charts show that. But how do you fairly compare several decades of subsidies involving 1930s dollars to two decades of recent subsidies? How do you account for land use by fossil fuel interests, or for that matter, foreign interventions? Many charts and reports comparing energy subsidies are highly politicized, with conservatives claiming that their pet entrenched fossil fuels produce more Btu’s per dollar of subsidy – almost certainly true; these are mature industries. Renewable advocates slice it another way, claiming higher value related to environmental preservation. That’s persuasive. But what’s the dollar value? Finally, you’ve got the flat-liners, who want no subsidies for all, to level the playing field and save the taxpayer dollars, a potentially great idea for a public that’s feeling squeezed and likely to happen as soon as hell freezes over.
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