Storage

Rhone Resch: An Industry, Not an Issue

Issue 5 and Volume 2.

“Any time you are embraced by the administration it’s a great thing, but opponents to the administration can make it work against you,” said Resch, the 44-year-old president and CEO of the Solar Energy Industries Association. This Washington, D.C.-based trade group represents the interests of the solar energy industry. Resch said he expects the mid-term congressional elections to result in more of a numerical balance between Republicans and Democrats on Capitol Hill. But he also believes fewer opportunities will exist for Congress to pass aggressive legislative initiatives that benefit renewables.

The solar industry became something of a political target in August. That was when $1.5 billion was pulled from Department of Energy loan guarantee programs by lawmakers as they looked for money to fund a bill benefitting teachers and state health care programs.

“Basically, it came down to political pressure that forced the leadership in Congress to search broadly to pay for education and state-level health care programs,” Resch said. Assurances have since come from the Speaker of the House, the Senate Majority Leader and the White House that money taken from renewable energy will be reallocated later. But in a conversation with The Interview, Resch expressed frustration that the Department of Energy may be taking too long to make loan guarantees available.

“It’s been a slow, laborious process in a program with a short deadline,” he said. As many as 80 loan guarantee applications for solar energy projects remain under review at DOE. One of the only solar-focused loan guarantees made to date–a $530 million guarantee to California-based Solyndra in March 2009–was actually an application related to a 2005-vintage program.

Resch said he believes that as loan guarantee applications are reviewed, DOE and the Office of Management and Budget have imposed requirements and standards far more onerous than anything private sector lenders might propose. Perhaps more troubling, project developers have received little guidance from DOE on how to modify their applications to speed up the review process.

“It’s the Department of Energy; they should be able to tap into the greatest minds to get technology assurances,” Resch said. “DOE is slow in getting the money out.”

Resch grew up in Wilton, Conn. and got an early idea that the environment might be his career after his kindergarten teacher presented him with a “Class Environmentalist” award, most likely for efforts to protect bugs on the playground, he said. (In February 2010 this magazine and RenewbleEnergyWorld.com presented Resch with a Leadership Award for his more recent work on behalf of renewable energy.)

Resch attended the University of Michigan and holds an MPA in Management from Syracuse University’s Maxwell School as well as a Master of Environmental Engineering from SUNY Syracuse. During the Clinton administration Resch served as program manager at the Environmental Protection Agency’s Climate Protection Division and later worked for the Natural Gas Supply Association. At EPA he directed the Natural Gas STAR program, which encouraged oil and natural gas producers to voluntarily cut methane emissions that result from leaks and losses in pipelines, gas gathering and related processing facilities. His time working with an “adversary” industry helped him appreciate the benefits of looking for common ground and areas of cooperation across the energy industry.

He views the EPA as both the logical and the correct choice to pursue carbon and greenhouse gas regulation. He also sees the natural gas industry as potentially a strong ally for the solar industry.

On the first point, Resch said carbon dioxide emissions from the electric power industry presents a classic example of inefficiency that can and should be corrected through regulation. Fossil-fired generators may object to new regulations, but the long-term effects of regulation typically benefit the economy and the environment.

“EPA regulating carbon emissions is a very, very important first step to addressing global warming,” he said.

When it comes to alliances with natural gas, Resch said the fossil fuel could be a good friend of renewable energy as perhaps 50 GW of coal-fired generation is retired in the coming years due to regulation and obsolescence. The natural gas industry expects an extended period of stable supply and prices as new, so-called unconventional resources are developed, primarily in tight sand and shale geologic formations across the Appalachians and into Texas. As these fields are exploited, opportunities will likely emerge to marry natural gas-fired peaking and intermediate-load plants with renewable sources such as solar photovoltaic and solar thermal to replace coal-based generation.

The combination of low natural gas prices, growth of utility-scale solar and interest in renewable energy among independent power producers signals the “beginning of a partnership” with natural gas, Resch said. At the same time, many utilities realize that solar energy can help them meet peak loads. After all, solar energy hits its maximum output around the same time of day that peak demand occurs. Solar energy has “huge value,” Resch said, because it can help meet peak load while reducing the need to burn natural gas in peaking facilities. At the same time it can strengthen reliability, particularly if solar PV is distributed widely across a utility’s service territory.

As state renewable portfolio standards evolve, Resch sees the need for mechanisms that create a distributed generation carve-out. Such mechanisms would create a solar renewable energy credit to send price signals. In east coast markets, for example, such credits already generate price signals that help justify more renewable energy investment in general and more solar in particular.

Unfortunately, Resch sees few of those same principles reflected in proposed federal renewable portfolio standards. “A straight 15 percent standard by 2020 doesn’t benefit all technologies,” he said.

Also inadequate–although appreci- ated–was the 30 percent tax credit for manufacturing included as part of the American Recovery and Reinvestment Act, the popularly termed “stimulus bill” of 2009.

“It’s great it was created but it’s woefully inadequate” to support the U.S. solar manufacturing industry, Resch said. One reason is that in the competition for manufacturing jobs, Asian governments are proving to be more aggressive than almost any U.S. state or even the federal government. Where a manufacturer might receive a one-time tax credit to locate a solar technology operation in a state, foreign governments may offer incentives that include long-term tax holidays, free land, low-interest loans and workforce training.

Such incentives are largely “not matched” in the U.S., Resch said. In the coming years, he expects the cost of manufacturing to focus less on the cost of labor and more on the cost of transportation and the importance of access to markets. It’s on those points that he sees U.S. companies having an advantage as the domestic solar energy market grows, perhaps even to lead the world within the next several years. Strengthening the prospects for manufacturers is the fact that solar energy comprises multiple technologies, everything from concentrating PV to building-integrated PV to solar thermal and hot water production.

“All have different applications and price points” as well as manufacturing opportunities, Resch said. Arizona, Oregon, North Carolina and Georgia have shown leadership in offering incentives to manufacturers. And Resch pointed to the $1 billion investment Dow Chemical announced last February it is making to build a manufacturing plant in Michigan for its shingle-integrated solar PV technology.

“To be honest, a lot of people poo-poohed solar,” Resch said. That attitude is largely a thing of the past and states now view solar as an attractive industry both for manufacturing jobs and for clean energy.

In his six years as head of SEIA, Resch said his most satisfying accomplishment has been to help the industry speak with one voice and with a consistent message. He said the investment tax credit might not have been created without the industry working and speaking collectively when it went to Capitol Hill.

“It takes a few dozen years to get to know how the legislative process works,” Resch said of working in the nation’s capital. He acknowledged that it’s a big challenge to work with companies and CEOs to keep them together and on message. “We’ve taken a fractured industry and brought it together to be a powerful voice in Washington D.C.,” Resch said.

And–no small feat–to reach a point where solar energy may finally be seen as an industry and not merely as an issue.

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