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I'm hopeful that we are on the threshold of the solar century. As a solar enthusiast since childhood, I know the sun could supply most of our energy needs. As a consultant, I work for a start-up making solar windows where I see the real economic potential to reduce the installed cost of solar by integrating photovoltaic (PV) into the building structure/envelope. In the coming decade solar could be as transformative, pervasive and essential to our economy as cell phones were in the '90s and the internet is today. If we wish to reap the rewards of this new industry we need to invest now in developing the market, we have already ceded our leadership position to Japan, Germany and most recently China.
The confluence of rising fossil fuel prices, international competition over access to fossil fuel resources, rising global instability and grassroots concern about CO2 pollution make now the perfect moment to set forth a comprehensive national solar incentive that positions the U.S. to develop our abundant renewable solar resource. The countries that have created a stable, long-term, solar energy incentive are the ones that attract the capital investment and create the jobs throughout the solar supply chain, as Japan and now Germany have shown. There are compelling reasons why a national solar incentive program would generate significant benefits across the country. The primary benefit would be to stimulate the innovation and investments (money & jobs) in the U.S. solar supply chain to support significant annual capacity additions. One short-term but import benefit would be to signal to the world our commitment to supporting renewable/low carbon energy sources. Longer term benefits include energy diversification and reduced reliance on fossil fuel imports.
What would a national policy look like and how much would it cost? Two elements are critical: a nation-wide solar production incentive set at 10 cents per kWh (paid annually for 20 years) and a national net-metering law. The net-metering law ensures that PV owners get full credit for all the energy they produce, ranging from about 8-16 cents per kWh across the country, while the production incentive provides a modest yet stable return to the PV owner. This incentive would end when the U.S. has installed 20 gigawatts (GW) of PV, approximately 1% of U.S. electric demand (the U.S. now has ~ 0.5 GW of PV installed).
The cost of this program would be under $200 million per year in the first couple years, and grow to just over $4 billion per year once 20 GW of solar is installed. If we doubled the amount of solar installed each year, it would take nearly six years before the U.S. could install 20 GW. In total, the 20-year cost of the incentive would be ~ $80 billion, less than 1% of what Americans will pay for electricity over this period.
By creating this national solar incentive the U.S. could provide the kind of long-term stable incentive that the solar industry has repeatedly asked for, and what Japan and Germany's feed-in-tariff have demonstrated leads to reductions in the installed cost of solar. Based on the historical rate of solar cost reductions, installing 20 GW of PV in the U.S. will put solar on the threshold of grid parity in the coming decade.
Although some might suggest a higher national incentive, the $0.10 kWh level and national net metering should be sufficient incentive if combined with local or regional incentives to ensure that the U.S. installs 20 GW of PV within the decade. A higher national incentive might stimulate demand faster than supply can ramp up, leading to temporary supply disruptions and price increases like we currently see in silicon the primary feedstock of today's solar cells, due to Germany's high incentive level.
Taken together the proposed incentive plus net metering would ensure that anywhere in the U.S., solar panel owners will receive 18-26 cents/kWh of power generated. Assuming a midrange 22 cents/kWh, a solar regime with 5 hours of average sunlight (equivalent to 1800 kWh/yr, a level common in the western U.S.), and an $8/W installed system price will generate a 5% annual return, about what investors expect from low risk investments like U.S. bonds. As the price of solar falls to $5/W installed, areas with as little as 3 hours of average daily sunlight (common throughout the U.S.) would generate a 5% return. Hopefully states and other local regions will continue to provide additional incentives. Combining a national solar incentive as described above with California's exciting solar incentive would provide panel owners with annual returns of 10% or more.
Daniel Simon works as an optics consultant for SunPhocus, a start-up creating BIPV window products utilizing holographic concentrator technology. The company is located on the campus of the Illinois Institute of Technology in Chicago, IL.
The information and views expressed in this article are those of the author and not necessarily those of RenewableEnergyWorld.com or the companies that advertise on its Web site and other publications.
Nicely written, Daniel. I agree with your position for a number of reasons. We do for sure need nationwide net metering laws in place to encourage the use of PV and other Green Energies.
I have started a petetion for Sen Menendez supporting the S.O.L.A.R. Act (Solar Opportunity and Local Access Rights) bill he has co-written. You can all help to spead the word by signing it at the following site.
http://www.thepetitionsite.com/takeaction/654310470
Thanks for all you are doing,
D Miller
Re Mr. Passarelli's comments regarding "not building an industry on incentives", perhaps we take some of the subsidies (incentives) from the petroleum industry, which is realizing "windfall" profits currently, and focus them on the renewable energy industry. Also, I believe the agricultural sector receives very significant incentives via subsidies. Should renewable energy be the lesser focus of incentives and subsidies?
It seems that most of the rest of the world thinks differently than the U.S. re incentives for renewable energy. I wonder why?
More incentives would be nice, but you can't build an industry on incentives. The market will determine what works.
Solar & Thermal has solved the cost issue breaking the $3/Watt barrier. But buyers balk at 5%-10% return. {It's like battered spouse syndrome. We offer a better life, w/o abuse, stress, or degradation, but the victims keep returning.}
CSP has 20, 30, 50+ year reliability, 20-years rates <$0.09/kWh. Payback <10yrs, profits in 5yrs by selling open market REC's. It takes one cloudy day for the victim to scramble back to the old and familiar.
PV as a basis for comparison has technical merit, it's just too expensive. There are fundamental reasons it will never get below a certain price.
CSP is based on proven methods of heat changing to mechanical work, and work producing electricity. We do it at a very good price. http://www.solarandthermal.com/
An emphatic Yes, but how do we get Congress to understand this?
And 10 cents/kWh seems quite high, compared to the current 1.9 cent production tax credit.
I'd like to thank everyone for their comments. Its refreshing to hear that other people are also concerned with our continued reliance on fossil fuels.
T Cory is absolutely right that we need to push efficiency & conservation hard. I for one am driving my relatives nuts turning off lights/changing bulbs/installing powerstrips/carpooling when I can... These are things I didn't even think about 4-5 years ago so hopefully we can drag others on board.
P. Johnson, Is someone forcing you to use solar instead of wind? Shame on them, but you are certainly in the minority across this country.
Giving the small solar generator more for each Kwh than he pays to buy it would certainly be a great incentive to install solar. It is also in the interest of the country. It will ensure that there is a good supply of domestic, renewable energy when the fossil fuel economy goes pear-shaped as it is bound to do. However, it is not sustainable in the long run. The distribution companies have expenses and must pay less for energy than they sell it for to remain economically viable. There are many other measures any government could take to make solar financially feasable. See:
http://mtkass.blogspot.com/2007/07/solar-electric-government-role.html
Fred hit it, STOP the big subsidies for Oil , Fossil fuel and Nuclear. They are all losers. RENewables don't need any incentives if you remove the bad incentives !
It's very simple and clear. Don't subsidise any energy, then people will be more efficient and invest in passive designs, zero energy homes and companies. Ride a bicycle and even walk. This could reduce health cost too !
Todd, although it was a bit off topic you had the best comment.
Why should we wait on market forces?
Here's a thought - Why are you telling me I have to use solar instead of wind power and pay a lot more for it? Choice is the bottom line. I would choose wind over solar any day because I can actually afford it.
Once again, here is a solar PV article that says nothing about steps one and two first before step three solar PV.
Job 1 is conservation (I know that is a bad word there in amerikua) and efficiency upgrades.
Job 2 is SDHW.
Since sustainability is the real issue, we need to gather the low hanging fruits first rather than putting in gigantic PV systems to compensate for waste and inefficiency... especially when funded by public taxes.
Also why does solar PV need to economically compete with polluting, subsidized fossil fuel energy? Apples and oranges.
Todd
How strange mankind is, that it would so willingly cage itself, yet once caged, fight tooth and nail to be free again.
Some of you might think that this is "off the subject" but all one has to do is look at the much broader picture of the history of mankind to see where the future will go.
For thousands of years mankind did not need all of these energies that we so willingly utilize today. That all ended at approximately the same time that global human population began to dramticaly increase.
Here we are, only 100 years later looking for a way out.
Pity about Earth.
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