Financial Innovations and Falling Prices Lead to Solar Growth

2012 was a very productive year for solar and 2013 is looking just as promising. Between a wide variety of financing options and falling costs, solar is becoming even more readily available to anyone who wants it.

An increase in third party solar leasing programs gives potential solar customers more options to go solar, especially if they’re not in the financial position to go with a purchase. Solar leasing allows customers to–at zero or low upfront cost–have solar installed on their homes. The monthly lease payment and utility bill with solar are less expensive than your utility bill without solar.  Since utility rates are only projected to go up, this means substantial savings over time.

Solar Savings

Customers also have the choice of a Power Purchase Agreement (PPA) in which case the customer pays for their energy at a set rate (per kilowatt hour). In either case, with third party financing, the risk for the customer decreases as they don’t have to shoulder the responsibilities that come with ownership (maintenance, monitoring, insurance, and production guarantees).

These financial innovations are part of the reason why total installed solar capacity reached 1,992 MW in 2012 with 684 MW occurring in the third quarter alone–118 MW of which being residential installations.

The growth of the solar industry can also be attributed to costs dropping almost 40% in the past two years. Though this has been beneficial to consumers, the price drop comes in part from an increase in global oversupply which has created problems for the US solar manufacturers who’ve had trouble competing with unfairly low prices.

But despite quarrels over the oversupply, solar in the US is still growing and responsible for adding 13,872 jobs in 2012 according to the National Solar Jobs Census report. Currently, there are more than 119,000 workers employed in the solar industry, a 13.2% increase since 2011.

Between financial innovations and falling costs, solar is becoming even more accessible to families, businesses, and a wide range of other applications including utility scale projects and military installations.

Military’s Mobile Solar Systems

The U.S. military has been instrumental in developing new technology, helping it develop so that it can be adopted by the private and consumer markets. The military has geared up another project that allows for large scale mobile solar energy systems.

As traditional energy costs and the military’s need for energy continue to rise solar technology for remote locations has become an interesting prospect brought on by SunDial Capital Partners.

Founded in 2009, SunDial created a mobile solar energy unit specific for on the move military operations and operations in remote locations. These units come in 20-foot long containers that are packed with 120 photovoltaic panels that can be set up into a fully functional solar field within 2 hours. Once unpacked, the container itself can then be used as a field operations facility.

A single unit can produce 28.8 kW of power and charge 64 storage batteries stored in the container’s floor so that the power can be used in the container at night. If the battery power begins to dwindle, a diesel generator kicks in to provide power until the sun comes up and the panels begin producing power causing the generator to shut off.

Though the military recognizes climate change as a potential threat to national security, right now, the military is imploring these renewable energy projects as a tactical move. With the ability to pick up and go within a few hours, remote areas that were previously unsuitable because of the diesel fuel needed to be transported can now be accessed. Relying almost completely on renewable energy decreases the need for costly and dangerous convoys for fuel. Self-sufficiency improves reliability, mobility, and most importantly, safety for our troops.

The idea of a mobile solar unit can apply to more contexts than just military. Anyone hoping to operate off the grid could benefit from this solar/battery/diesel hybrid system–from disaster relief efforts and rural electrification to powering outdoor concert events. With the military known for taking technologies out of their testing phases and proving viability, any private sector skeptics will be able to see applications of these hybrid systems and apply them to their specific needs.

Net Metering: Doubling California’s Solar Energy Goal

The California net metering battle has come to an end–til 2015 at least–and will raise California’s maximum roof-top solar capacity from the current 2,400 megawatts to about 5,200 megawatts.

The state Public Utilities Commission (PUC) voted on Thursday to make a technical tweak in the way it calculates how many electricity rate payers can participate in the net metering program. This tweak includes residential, commercial, and government buildings whose excess solar power gets sent back to the grid, giving the solar user a lower bill.

In the simplest terms, net metering enables solar users to get credit for the electricity generated by their solar system when their overall usage is low (i.e. when you’re not home during the day). This credit can then be used towards their bill when they’re using electricity but their solar is not generating (at night, when the sun’s not shining).

The daytime solar generation – nighttime usage = a lower bill.

Net metering gives solar owners an element of predictability. Based on the credits received for the solar contributed to the grid, a homeowner can project the savings they’ll incur over the life of their solar system (25+ years).

The net metering issue has been under scrutiny recently as the PUC was gearing up to vote on how to calculate a cap on net metering eligibility. Consumers and utilities opposed to net metering argued expanding the program would create unfair subsidies for wealthy people who can afford to install solar in the first place and shifting costs to non-solar customers who either can’t afford solar or don’t want it.

A 3-year-old PUC study estimated the amount paid by non-solar customers to be $140 million annually to cover the net metering program for their solar owning neighbors. But a more recent study done by Berkeley energy consultant, R. Thomas Beach, concludes that the benefits of using solar (decreasing fossil fuel dependence, decreased carbon dioxide emissions) outweigh the subsidy costs.

Net metering is a very important driver of residential solar adoption. As it is, California’s solar industry employs more then 25,000 workers and provides a clean, renewable source of energy to homes and businesses.

After the extension of the net metering program, PUC  President Michael Peevy announced, “Today’s decision ensures that the solar industry will continue to thrive for years to come, and we are fully committed to developing a long-term solution that secures the industry in California.”

And How Should We Proceed? The Future of Solar in California

California has been pushing its solar industry. It’s not a secret. In pushing the solar industry came a flurry of jobs. Based on the “Solar Industry & Occupations: Distributed and Utility Scale Generation” report, California is currently home to 3,500 solar firms employing 25,000 people. Based on these trends, the state could add as many as 18,000 jobs in the solar industry by 2015.

This increase in jobs is of course, welcomed, however at present there may not be enough qualified people to fill them. Although California’s community colleges have done a good job of not only training, but fulfilling the market demand for solar installers, the future of solar in California will require different skill sets, many of which are not being taught in college programs.

The solar curriculum in California’s community colleges needs to be expanded to cover the basics of energy production, power plant management, and solar technologies the report recommends. This will be especially prudent in certain areas of California where the  solar industry is becoming more popular, but the market for installers is saturated. Class options need to be diversified in order to address other skills needed in the solar industry. By incorporating skill sets relevant to other aspects of solar aside from installation (manufacturing and distribution for instance), colleges might be able to better prepare graduates for their impending job searches.

There are 15,000 students enrolled in 300 different green job training programs. There will come a point in the near future where policy makers will need to catch up to educational institutes that are driving green jobs. If California’s community colleges succeed in diversifying classes in green jobs, will California’s green economy evolved enough for these graduates to find work in their fields? California won’t be able to realize the full economic potential of green jobs if this doesn’t equalize. If we train people in green jobs but there is no market for them it will all be for naught.

Will Congress Give Renewable Energy The Support It Needs?

Between innovative technologies and years of subsidies, the cost of wind and solar power has dropped dramatically–almost to the point where these industries are close to delivering cleaner electricity at prices competitive to fossil fuel generated power.

It’s important to note, though the renewable energy industry is close to offering competitive rates, they’re not there yet and wind and solar companies are telling congress they can’t be truly competitive without a few more years of government support. With Obama giving their efforts a boost by proposing a package of tax credits for renewable power and manufacturers, you would think we’d be well on our way to aiding these industries.

Unfortunately, there is little enthusiasm for renewable energy subsidies in Washington. Concerns about the overall deficit and tax payer’s losses on the Solyndra debacle have marred images of pouring billions into the renewable energy industry.

The wind and solar industries argue that there is less risk with the tax breaks they are seeking–tax credits wouldn’t be handed out willy nilly, but taken only by businesses that are already up and running–leaving taxpayers less likely being stuck subsidizing a drowning company. These tax breaks would create jobs while increasing domestically produced, clean energy. The renewable energy industry isn’t hiding the fact without new breaks, they will be forced to scale back production and eliminate jobs in an already starved economy.

Federal incentives have helped renewable energy use to almost double, said Obama while at Buckley Air Force Base in Colorado in an effort to support clean energy projects as a way to help foster energy independence and employment. A one year extension of the 1603 tax grant (a program which allows renewable energy companies to get 30% of the cost of a new project back as a cash grant once completed), would create 37,000 solar jobs in 2012, according to EuPD Research.

Lobbyists for both the wind and solar industry are pushing for tax breaks to be passed quickly, and are trying to tack on an extension of the payroll tax cut as well (taxes paid by employees and self employed lowered from 6.2% to 4.2%), as it is coming to an end in February.

Of course it’s all up in the air what Congress will actually decide. It may end up that Republicans will use the recently postponed Keystone XL oil pipeline as a bargaining chip to approve the renewable energy credits. Which would be crafty, and most likely not appreciated by the renewable energy sector and environmentalists alike, but that’s a different story.

As it is, oil’s been subsidized for almost a century, getting $41 billion annually, with renewables ranging about $6 billion–and trust me that has not been going on for a century. It’s time to stop sinking money into a fuel supply that’s diminishing, and focus on tax breaks to increase renewable energy that will lessen our foreign fuel dependence, bring manufacturing back to the states, create jobs, and focus on getting energy from a source that’s not environmentally destructive.

Though support for subsidies is dwindling, it’s important that energy tax breaks be granted to wind and solar companies to even the playing field between renewable energy and fossil fuels. Until it is, renewable energy won’t make any headway.

Solar Wars

Solar wars might not be terribly riveting to the average American, but it’s definitely something solar manufacturers and installers are keeping tabs on.

An invasion of inexpensive solar panel imports from China are sparking mixed reviews from the U.S. solar industry. On the one hand, parts of the industry say the cheap panels are creating a solar boom in the states. On the other hand, panel manufacturers are concerned because its hurting their businesses, and want a tariff attached to the imports.

SolarWorld’s Gordon Brisner argues that China’s threatening SolarWorld’s underlying principles, “to build products here in America, for America’s community, for America’s energy independence, and really leave the world a better place.”

By flooding the market with cheap panels, Brisner argues it’s contributed to the collapse of some U.S manufacturers. Brisner has petitioned the U.S. Department of Commerce and the International Trade Commission to tie tariffs to Chinese panels to level the playing field.

Though most people agree that American panel manufacturers have indeed been harmed by Chinese imports, it remains to be seen whether or not there’s any illegal activity occurring–in which case a tariff would be justified. “Dumping” refers to a foreign producer selling a product in the U.S. at a price that is lower than the cost of production, or subsidizing panel manufacturers so they can sell below the average price.

A tariff would indeed rise the price of solar, causing concern with the Coalition for Affordable Solar Energy  (CASE) who says higher prices will hurt solar installers–whose numbers outweigh the number of U.S. manufacturers.

Kevin Lapidus vice president of SunEdison and worker at CASE argues that we’ve just gotten to the point where solar’s reputation of being too pricey for regular people is being let go, and imposing a tariff will set the industry back by years.

Though some people who go solar are interested in buying American made (like SolarWorld), most are just looking for the best price. With Chinese panels running about 10% cheaper, they’re a popular choice.

Imposing a tariff could come with potential consequences, a trade war with China, higher panel prices hurting installers, a ripple effect throughout the solar industry if there are less installations. But is establishing a “made in America” industry worth it?

A big push behind solar energy (and renewable energy in general), is not only to be less fossil fuel intensive, but to stop importing foreign oil. Establish energy independence.

Of course, I think some solar is better than no solar regardless of where it comes from, but aren’t we contradicting ourselves a bit if our aims are to achieve energy independence if we’re importing solar panels from a foreign country? Would it be worth it to pay a slightly higher price for solar panels if it meant keeping jobs and manufacturing at home instead of abroad, if it meant actually achieving energy independence instead of shifting our dependence to another country?

Over the next few months, the federal government will decide if China is playing by the rules, or if a tariff on Chinese panels should be imposed.

 

The Creation of a Unified Solar Front

Last week the Solar Energy Industries Association (SEIA), the national trade association for the solar energy industry, announced its merging with The Solar Alliance, a state focused group allying solar manufactures, integrators, and financiers and establishing solar policies and programs at the state level. The Solar Alliance will now be operating under the SEIA brand in order to present a unified solar front in all state level matters regarding the solar industry.

As president and CEO, Rhone Resch commented, “The solar energy industry is expanding and it is critical for SEIA to mirror this growth and put our resources and expertise into developing state policy that expand markets for solar energy.”

SEIA has also been establishing collaborative relationships with a handful of state and regional SEIA chapters to create partnerships (though independent entities) to bring to the table additional resources that mirror SEIA’s goals.

Resch added, “The focus on state-level policy allows SEIA to speak as the voice of the solar industry in all government arenas.  We have important work to do to ensure solar energy has access to energy markets across the country and that solar is cost competitive in all 50 states. This is a major step in that direction.”

By presenting a unified front, SEIA is hoping to address policy issues ranging from international trade, to extending the 1603 Treasury Program while targeting state policies including net metering, and addressing barriers for grid interconnection and permitting.

Hopefully this merger will work to remove the barriers that have kept solar from becoming a mainstream form of renewable energy by strengthening the industry at not only state levels, but federal as well.