Feds playing catch-up as states take renewable energy lead

by Bob Haavind, Editor-at-large, Photovoltaics World

June 9, 2009 - In the US, some 27 states and Washington DC have renewable energy portfolios and mandates, but not the federal government. Meanwhile, countries like Germany, Spain, and Japan have spurred far more alternate energy installations. That may soon change, based on reports from an array of speakers at PV America, held this week (June 7-12, 2009) in Philadelphia, in association with the 34th IEEE PV Specialists conference.

"The states have a Governator," quipped Rhone Resch, president/CEO of the Solar Energy Industries Assn (SEIA), which organized the first PV America exhibit and conference, "And now we have a Cabinet filled with clean energy leaders."

The new approach is apparent in the huge economic stimulus bill, which has 19 provisions supporting solar, Resch explained. He also pointed out that solar has potential far beyond sun-bathed regions like California and Arizona. In fact, he pointed out, policy initiatives have pushed NJ into 2nd place in the US in solar behind California.

To emphasize his point, he said that Germany, a world leader in solar installations, has a solar profile like Alaska, but it has 5× the solar installations of the US, while Spain, with a solar profile like Idaho, has 30×.

"Political leaders put in policies," he said, "and innovators create new industries."

NJ has a mandate for 22% renewable energy by 2022, while PA is mandating 18% by 2020, with 0.5% of its electricity from photovoltaics. Resch said many states in the north-Atlantic region, as well as the Midwest, have solar set-aside programs with ambitious targets for the next decade or so, totaling 5077MW-7077MW [see table -- note that PA is still negotiating a final goal].

State solar set-aside program goals

State	Goals (MW)
Pennsylvania	690-2700
New Jersey	1800
Maryland	1400
Ohio	820
Maine	250
New York	100
Connecticut	17
TOTAL	5077-7077

Gov. Edward G. Rendell of PA said that his state, in 2004, was the 24th to pass renewable energy legislation in the absence of any federal program. State tax credit could provide up to $0.30/kWh for solar. The recent stimulus bill now has provided a $650M energy fund to PA, and $180M of that will go to solar, he said, $100M to homeowners and small businesses, and $80M to foster solar industries.

"The race is on for who can create the most resourceful, innovative, alternative energy," he said, citing work in solar, wind, and geothermal technology as well as fuel cells and batteries for electric cars.

The US needs to catch up with countries like Germany, he believes, while renewable energy industries are in a formative stage.

"We want the US to be the dominant solar manufacturer in the world, and to become a leading exporter," he added.

To foster innovation in his state, grants from the Pennsylvania Energy Development Authority (PEDA) are offered, with $20M available in the latest round, about $10M of that from the federal American Recovery and Reinvestment Act and more than 300 applications have been received. Already, Plextronics, a western-PA company making thin-film solar devices, has received three PEDA grants, he said, growing to 70 employees and aiming for large-scale production.

He explained that PA, like a number of other states, now has a net metering program where solar facilities can get credit from the local utility for feeding excess electricity back into the grid. But each state has its own quirks in the rules and limits, so a federal standard would help provide some uniformity. Rendell said that federal tax credits for renewable energy (RE) need to be made permanent, and a federal mandate for future RE targets, setting the bar even higher than the scattered state goals, is needed to nurture new industries.

"We need to focus with laser-like dedication," Rendell said, urging attendees to become advocates pushing Congress to quick action on renewable energy programs. For the US to achieve a strong economic turnaround, he believes two major programs are needed. One is a massive, 5-10 year infrastructure effort on roads and bridges as well as a smart electric grid, the other is green energy.

The innovators are eager to get to work, he suggested. Energy secretary Steven Chu recently told him that Washington has been flooded by renewable energy grant applications just like the PEDA program in his state.

Sam Baldwin, chief technology officer for the DoE's Office of Energy Efficiency and Renewable Energy, cited President Obama's May 27 announcement that $117.6M will be available for solar energy projects, including $51.5M for development and $40.5M for deployment.

Meanwhile, two renewable energy bills are making their way through the US House and Senate. But SEIA CEO Resch suggested some important points that should be included. One is renewable energy grants making up to 30% of installation cost for those who can't take advantage of tax credits. Another is an RE loan guarantee program that jointly covers manufacturers and installers. He also urged a 30% tax credit for new RE manufacturing investment, similar to what Germany and Japan have had for several years. Penalties should be removed where federal grants overlap state and municipal benefits.

Resch also called for a $3.1B for states to use for renewable energy and energy efficiency grants. This could create 110,000 new jobs over the next two years. The renewable energy portfolio should designate 2% for distributed generation installations for private dwellings and businesses, which would still leave the major share for utilities, he added.

Resch also called for a national standard on net metering, as well as uniform national standards for interconnecting to the grid. It doesn't make sense, for example, to require a 4-prong plug in PA, while MD allows a 2-prong plug, he said.

Another program urged by several speakers is a clean energy bank (CEB), providing lines of credit, low-interest loans, loan guarantees, and other benefits for renewable energy and energy efficiency projects.

Lower interest rates can greatly speed the march of solar technology to grid parity, Resch stated. If rates are pushed from 6% down to 2%, he suggested, over 80% of the US would quickly reach grid parity.

The availability and cost of capital are two factors that could hold back solar even if grid parity is reached, according to John Byrne, director of the Center for Energy and Environmental Policy at the U. Delaware. He proposed that a tax-exempt bond process be established for renewable energy. He pointed out that in the 20th century, this is how the US was able to build up its transportation system and housing.

The migration of the solar industry toward commercialization is evidenced by the change in the nature of the IEEE's PV Specialist conference. Years ago, this was the venue for detailed reports on materials and device developments in photovoltaics. While these topics are still covered, it is often by means of poster sessions for those interested in technology specifics. Meanwhile, many of the oral sessions deal with broader system-level issues, including government policies, markets, and lessons to be learned from other countries across Europe and Asia. Many of the engineers and scientists who have come to this meeting for years -- or even decades -- are now either starting companies or are involved in innovative new ventures. Solar is moving onto a new track.