Letting the light shine on solar power

Kevin Smith, CEO of SolarReserve, outlines the critical challenges currently facing the solar power industry.

Do you believe that current policies at both state and national level are effective in promoting the growth of solar power generation? What key changes would you like to see?

Kevin Smith. While there are both state and federal policies in the US that help promote renewable energy, the major difficulty in the US remains the lack of a long-term federal energy policy relating to renewable energy. Current policies in the US include state renewable portfolio standards (RPS), which currently exist in just 29 states, and the investment tax credit for solar, which expires in 2016. The majority of subsidies for energy actually flow to fossil fuels and fuel burning technologies – with fossil fuel subsidies more than double those spent on renewable energy. These fossil fuel subsidies include those for mining and exploration of coal, natural gas and oil.

A long-term energy policy on renewable energy would provide the necessary clarity to utilities, manufacturers and investors that the renewable energy industry is part of the permanent infrastructure plan for the US. This would further stimulate investment and job creation, in addition to helping the US address the critical issues of climate change and energy security.

Two major policy options have been in discussion for some time: a nation-wide federal renewable energy standard (RES) and a climate change bill. A federal RES would require utilities in all states to purchase a certain percentage of their energy from renewable energy sources, and the climate change bill would mandate a reduction on carbon. While it may be difficult to pass the climate change bill due to its complexities, a federal RES is critical for the US and the renewable energy industry.

A common criticism of solar technology has been that it is not efficient enough to provide a viable source of alternative energy. Is this view still valid or are innovative new solutions making a difference?

KS. Solar energy has no fuel-burning component, and therefore no costs or pollutants are created, so the primary issue becomes the overall cost of delivered energy as opposed to the efficiency of the technology. It’s critical to evaluate the long-term cost of the electricity and escalation over the 25-30 year life of an energy project, not just the cost in the first year.

New solar energy technologies can certainly compete on a long-term basis with conventional fuels when you understand the escalation in costs associated with fossil fuels and the costs for the environmental damage created.

SolarReserve’s energy storage technology, developed by United Technologies Corporation, increases efficiency by eliminating the intermittency problems associated with other renewable energy technologies. This storage technology delivers electricity reliably during peak demand periods and allows us to compete and replace conventional fuel burning technologies.

Funding is a major issue for the solar generation business. What are the key challenges involved in obtaining funding and what could be done to make the process more reliable and streamlined?

KS. Market-leading technologies, well-structured projects and experienced management teams will continue to attract funding. The short-term stimulus programs and the Department of Energy loan guarantee program have provided significant assistance during the recent economic downturn, and the extension of those programs would be helpful. However, only a long-term energy policy here in the US will create the certainty necessary to the finance community to address the future funding needs of the industry.

In the current economic climate, some are wary of devoting funds towards something like solar power. What clear benefits could investing in solar bring to the nation?

KS. Unfortunately, short-sided business and policy decisions have led us into our current energy mess – heavy dependence on fossil fuels and foreign oil, climate change issues and tremendous concerns about energy security. Solar energy, however, will stimulate the economy by creating solid jobs in the US, but will also wean us from fossil fuels, reduce our dependence on foreign oil, and help mitigate climate change. In 2009, China invested almost twice as much money in renewable energy projects as the US ($34.6 billion versus $18.6 billion) and China is on the verge of becoming a world leader in renewable energy technology. The US is capable of taking that world leading position, but in order to do so, critical action is essential now.

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Biography

Kevin Smith, CEO of SolarReserve, has held senior executive positions in a number of successful energy development and technology. He has held senior executive positions in a number of successful energy development and technology companies including those that develop solar and wind energy projects. In the last 20 years, he has managed the successful development, acquisition, financing and construction of more than 40 power generation facilities in the US and internationally.