Greg Chafee, Morris, Manning & Martin, LLP
July 21, 2010 | 14 Comments
During the Constitutional Convention in 1787, Benjamin Franklin was waiting to sign a document that would hold the fate and destiny of the United States of America. As he stood, his eyes fell on a carving on the back of George Washington's chair, a carving of half a sun. He stared thoughtfully, questioning whether it was a rising sun that would continue to shine brightly over the nation or a setting sun that would bring darkness.
Our Founding Father could not have imagined the symbolic power that that image now holds as our nation looks to the sun as a source of clean renewable energy to brighten our future. Today 92% of Americans want our country to develop solar energy resources, and 77% believe the federal government should make solar power development a national priority.
Despite the recession, new U.S. solar installations are rising, as are new jobs and new economic growth. Data from the Solar Energy Industries Association show that total U.S. solar electric capacity from photovoltaic and concentrating solar power technologies climbed past 2,000 megawatts (MW) in 2009. Solar industry revenues also surged despite the economy, climbing 36%. Another sign of optimism is that venture capitalists invested more in solar than any other clean technology in 2009 – over $1.4 billion. For an industry with a total U.S. volume of $4 billion, that signals huge optimism about near-term growth.
The solar industry accounts for about 46,000 jobs in the U.S., and is expected to rise to 60,000 by the end of 2010. North Carolina, a state that has embraced renewable energy development, projects that as many as 28,000 new jobs and a 10 million ton reduction in greenhouse gas emissions will be achieved by 2030 if the state can draw 14% of its electricity from solar sources.
These figures are impressive, but the development of solar energy in the U.S. remains heavily aligned with federal and state incentive programs and policy. Between 2002 and 2008 over $70 billion of federal tax dollars went towards fossil fuels and just $1.2 billion towards solar power. New nuclear plants get more than triple the government subsidy that new solar plants get.
Still, there are some bright signs. The federal ARRA stimulus legislation has deployed more than 46 MW of solar power with the help of Section 1603 Treasury grants in lieu of investment tax credits. Solar equipment manufacturers have been awarded $600 million in manufacturing tax credits under ARRA, representing investments in new and upgraded facilities of more than $2 billion.
Property assessed clean energy financing, or PACE, legislation has been enacted in a growing number of states. PACE provisions will allow homeowners and businesses to finance solar energy systems through municipal or government-backed bonds via an assessment on their property taxes. This ensures the availability of credit, reduces up-front costs and facilitates transfer of the solar system to new property owners. [For a recent RenewableEnergyWorld.com article on PACE, click here.]
There is some innovative legislation in Congress too. Senator Bernie Sanders (I-VT) recently introduced a bill aimed at getting 10 million new solar rooftop systems and 200,000 new solar hot water heating systems installed in the U.S. in the next 10 years. The cleverly titled "10 Million Solar Roofs & 10 Million Gallons of Solar Hot Water Act" will provide rebates that cover up to half the cost of new solar systems, along the lines of incentive programs in California and New Jersey, the #1 and #2 states for installed solar in the country.
The bill also includes measures to insure that those who receive assistance get information on how to make their buildings more energy efficient. The passage of this bill would dramatically re-orient our energy priorities. When fully implemented, this legislation would lead to 30,000 MW of new PV, tripling our total current U.S. solar energy capacity. It would increase by almost 20 times our current energy output from PV panels. The legislation would rapidly increase production of solar panels, driving down the price of PV systems and it would mean the creation of over a million new jobs.
Here's how the Ten Million Solar Roofs Act works: take the example of a homeowner who decides to install a 5-kilowatt solar system which, depending on location, would produce enough electricity to cover most, if not all, of an average electric bill (the solar panels would produce excess power during the day that can be sold back to the utility, covering some or all of the cost of electricity when the sun is not shining). That system today costs roughly $35,000 to purchase and install. The federal tax credit of 30% reduces the system cost to $24,500. Most states offer additional tax incentives. For example, if a homeowner could get an additional rebate of $1.75 per watt, the system cost is now reduced to $15,750.
The Ten Million Solar Roofs Act would provide an additional rebate of as much as $1.75 per watt, covering up to 50% of the remaining cost. The result: the consumer now pays $7,875 for the solar system. That's pretty attractive for a family that plans to stay in its home or wants to increase its home value or a small business looking to stabilize its energy costs. Plus, our nation would benefit by reducing expensive construction of new power plants and lowering health care and other costs associated with air and water pollution from fossil fuels.
When Ben Franklin stared at the half sun on the back of George Washington's chair, he proclaimed "I have the happiness to know that it is indeed a rising, not a setting, sun." The power of the sun is here to harness. If we do so wisely, our nation will have the energy capacity to continue to rise as well, just as our Founding Father intended.
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