A perfect fit

Rhone Resch of the Solar Energy Industries Association explains how solar fits into the energy puzzle.

“We cannot wait ten years before we start to address climate change, the permitting of these new transmission lines is critical”
-Rhone Resch

Long before the arrival of the American Recovery and Reinvestment Act, Rhone Resch and the Solar Energy Industries Association was working behind the scenes to highlight solar as a viable solution to America’s energy worries. With some of the world’s best solar, the US is well placed to create energy from the sun and has the opportunity to leverage solar to play a pivotal role within the country’s energy mix.

However, Resch does admit that solar currently has some shortcomings. "Although solar isn't more cost effective at the moment, it certainly has the potential to be much more cost effective than traditional sources of fossil fuels," he says. "In large part it's because you manufacture solar. You don't mine it or drill for it, and because of that you're able to scale up the manufacturing and drive down costs per unit; and as we do, so you will see the price of solar continue to go lower and lower while the traditional forms of energy continue to go higher."

New jobs

Solar's emergence as a viable alternative energy source is already beginning to show across the US. Attempting to kill two birds with one stone, President Obama's tactic of deploying further jobs into the solar industry will hopefully meet the need of America's rising unemployment rate. Obama has pledged to invest $150 billion into creating five million new 'green collar' jobs - solar manufacturing and installation forming an important part of that number.

Resch notes that those states that have been hardest hit by the recession - Ohio, Michigan, Indiana and Illinois - are those that are now creating and filling solar employment positions. Workers made unemployed in the automotive or other manufacturing sectors are now turning to solar; tradesmen are being employed to install solar.

"When you install solar you're using the tradesmen, the backbone of our economy," says Resch. "We're re-employing those who have been let go by industries that can no longer survive in the United States; and we're giving new opportunities in an industry that is sustainable, that provides good quality jobs, and well-paying jobs for the future."

Despite this, integrating solar as a vital part of the country's energy mix is no easy task. In the second quarter of 2009, the SEIA spent $54 thousand lobbying the government on solar power, whereas Chevron spent $6 million to further its own interests. The capital funds of fossil fuel corporations are much greater and have traditionally held the lobbying power in Congress. Key to overcoming this is presence, explains Resch. He notes that every quarter the association is increasing its presence and educating Congress on the value of solar energy. "It's important, not necessarily to just look at the numbers of dollars spent, but to look at some of the accomplishments that we've achieved over the last year and to see the return on the investment of those dollars.

"For example, in the bailout bill in October of last year we got a long-term extension and expansion of the tax credits for solar energy in the United States, and that's a 30 percent tax credit for businesses. It was expanded to be a 30 percent tax credit for homeowners as well, which is an eight-year extension, so that's a huge victory providing stability for our industry to grow in the United States."

He also points to the 19 provisions in the stimulus bill for solar energy companies, significantly more than the oil and gas industry. The SEIA has been very strategic in working with Congress to ensure its policies and incentives are heard, and the market is likely to expand quickly. "What's critical is that we're getting the industry engaged and to appreciate the role that Washington can play in the energy sector," says Resch.

"That means inviting their congressmen out to ribbon cuttings or openings of new factories. To invite senators to briefings on energy. To visit them when they come to Washington and tell them about the new employees that they're hiring and the new technologies that they're developing. Combined, what this creates is a grassroots capability that has the potential to be second to none, and the grassroots is absolutely critical if we are going to be successful in Washington."

Since the American Recovery and Reinvestment Act was announced, the DOE has systematically been providing awards and funding for solar, for R&D projects or university partnerships to addresses the technology barriers that create the high cost of solar usage. The number of solar awardees for the funds is high, but Resch explains that the technologies aren't commercial yet. "We certainly can expect the R&D investment to result in new products in the next several years," he says.

He notes the success of the provisions of the stimulus bill for the solar industry, which are now starting to pay dividends, such as making the investment tax credit refundable. By turning it into a grant, applicants can now receive a check from the federal government for 30 percent of the cost of the system, rather than a 30 percent tax credit. As well as this, the stimulus bill also created an expanded loan guarantee program and a new tax credit for manufacturing.

"All of these are critical to address some of the challenges we face in a recession economy. Specifically, that those companies who used to invest in solar projects last year may not this year, because either they're not loaning money on the debt financing or they don't have the tax equity on the tax side, and subsequently we found at this time last year that investment dollars were drying up for the solar industry. We were able to address both of those issues in the stimulus bill and we're starting to see in the third quarter the demand for solar increase significantly due to these new programs," he says.

Solar transmission

One of the worries surrounding a big change in America's fuel mix is how the various types of renewable sources will fit into the grid, given that the transmission structure was built for the traditionally dominant fossil fuel resources. Resch explains that solar fits in many ways; one being distributed generation capacity. "Solar generates electricity at the point of consumption. By putting solar on your roof, you're putting a small power plant on your home or your business that will provide a substantial amount of its energy, so it relieves some of the stress on the grid because those electrons come from the solar panels on your roof rather than a power plant that may be 100 miles away.

"So greater use of distributed generation certainly helps to alleviate stress on the grid and cuts down on the need for major expansions. The second is that solar can be used by utilities to alleviate some of the hot spots: certain areas of the grid have more congestion than others. By putting solar on buildings strategically in those areas, again, you can alleviate that stress on the grid.

"The third is that you can build solar farms in the dessert or on landfills or on brown field spaces or other areas and can directly connect to interstate transmission lines. These solar farms could range from five megawatts to 500 megawatts, and depending on the transmission infrastructure you can connect some smaller projects to existing transmission lines that have the capacity to absorb more electrons. Now, you may not be able to build a 500 megawatt power plant on that line, but you certainly can build a 50 megawatt power plant on that line. You will see solar start to improve the efficiency of transmission by making sure that the transmission lines are being as fully utilized as possible.

"Finally, in the long run, we need to build new transmission in the United States. We have partnered with the American Wind Energy Association and developed a study and recommendations called Green Power Super Highways. It outlines all of the recommendations that are necessary in order to build new transmission in this country. It takes more than 10 years to build a new transmission line, and we cannot wait 10 years before we start to generate electricity from solar farms in the southwest. We cannot wait 10 years before we start to address climate change, so the siting and the financing and the permitting of these new transmission lines is critical," he says.

Resch believes that it won't be long before solar reaches a par with traditional fossil fuels. Solar is already cost competitive in certain areas of the country and is a viable cost alternative for natural gas. Natural gas is used to generate peak electricity, as well as base loads, and aligned with the time that solar can be maximized. He notes that solar is displacing the most expensive electrons to consumers: "Peak prices in California vary depending where you are, but in PG&E they're $0.37 per kilowatt hour and in San Diego Gas and Electric in the south, they're $0.42 per kilowatt hour.

"Those are double the current price of electricity, and solar is the lowest cost option in those areas already. It is critical is that state governments create an accurate price signal for electricity that not all electrons are the same. That you can't have the same rate 24 hours a day, seven days a week. Rather, when the utility is paying more for its electricity, consumers should pay more for their electricity. That becomes a very clear price signal in the marketplace that will allow solar to compete more with traditional fossil fuels.

Public attitudes have long supported solar; promoting its benefits to the legislatures is the hard part. A recent poll conducted by Kelton Research on behalf of the SEIA showed that 92 percent of the American public want the US to use more solar energy. Support from solar transcends party lines and economic strata.

"People strongly support greater use of solar energy - there are not many things in the world that achieve a 92 percent public support rate. It's putting us up in a category with puppy dogs and ice cream in terms of popularity and that is fantastic, but what we also need to do is to be smart about it and to make sure that it's not just a technology that people like, but a technology that people start to utilize and that we get Congress and the state governments to support greater use of solar energy.

American Recovery and Reinvestment Act

Top solar provisions included in the bill, which was igned on February 17, 2009

• Creation of a Department of Treasury Grant Program.
• Improvement to the investment tax credit by eliminating ITC penalties for subsidized energy financing.
• Creation of a new DOE Loan Guarantee Program.
• Creation of tax incentives for manufacturing by offering accelerated depreciation and a 30 percent refundable tax credit for the purchase of manufacturing equipment used to produce solar material and components for all solar technologies.
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[Source: www.seia.org]

Rhone Resch is the President and CEO of the Solar Energy Industries Association.