Help Wanted: Government Incentives for PV and CSP

Even though solar is currently in the middle of a slow down when it comes to the manufacturing and the purchasing of panels and arrays, it still has the chance to become a big player in powering the world. Solar photovoltaic and concentrated solar power (CSP) developments are already making great strides in powering parts of Europe and Asia. But the U.S. is lagging noticeably behind and will need a little push from the government to get things started, namely in financial incentives and a firm piece of climate legislation signed into law.

The International Energy Association released two roadmaps that say solar could power 25 percent of the world’s electricity by 2050. IEA estimates that world solar output in 2010 will be 37 TWh and PV will account for 5 percent of available power globally by 2030. CSP will contribute 5 percent of the electricity used by 2020 in the U.S., central Asia, India and Latin America. Also, CSP and PV combined can provide 2.3 percent of the world’s total power by 2020 and 8.8 percent by 2030. It could grow to 9,000 TWh by 2050.

The road maps also said that PV and CSP are not competitors, but partners in cutting carbon dioxide emissions by 6 billion tons globally by 2050. What’s more, North America will be the largest producing and consuming region for CSP electricity.

Industry groups like the Solar Energy Industries Association (SEIA) and the Solar Electric Power Association (SEPA) are practically begging the U.S. government to make incentives and rebates available again to help spur the growth of PV and CSP. It’s a plea that should not fall on deaf ears. As the country moves to shift from fossil fuels to cleaner renewables, it appears to be difficult also to shift the government’s mindset that renewables will have to be a major part in curbing carbon emissions, along with installing emission control technology at coal- and natural gas-fired power plants and building nuclear plants for the first time in decades.

Monique Hanis, spokesperson for SEIA, said about $74 billion has been invested in oil- and natural gas-fired power between 2004 and 2008, but barely a fraction of that has funded solar in the same time period.

“Investing in fossil fuels is an investment done by the governments,” Hanis said. “If the public wants to shift to renewables, there is a need for a shift in investment.”

One reason for the hesitation is that solar is still seen as the “newcomer” to the electricity generation party, much as wind was a few years ago. Since solar projects were originally relegated to residential rooftops, it is taking some time for it to be seen as a major generator of electricity.

Solar’s slow growth also ties into siting issues. Many projects are being developed in deserts, some of which happen to involve federal ownership. The agencies responsible for those federal lands are trying to balance helping states reach renewable energy goals and keeping the lands safe.

The government will need to gain more experience with solar installations as it did with wind power. Once solar becomes more familiar, the backlog of siting permit requests should begin to ease.

The U.S. government will also need to put back the $2 billion it redirected from the loan guarantee initiative to the Cash for Clunkers program. The government will also need to recapture the Solar Investment Tax Credit, which extends a 30 percent investment tax credit (ITC) for eight years for solar energy projects. Treasury grant program eligibility will need to be extended for two more years and include real estate investment trusts (REITs) as eligible entities.

Of course, these solutions have their own challenges as well, such as where to get the federal funds to begin investing again and issues with REITs not being able to receive an ITC without creating a special purpose taxable entity.

Even if these renewable energy subsidies are successful, they will need to gradually decline to give people incentives to buy. The IEA said not having a decline is what caused the slowdown in purchasing and investments this time around as the market was inundated with solar panels and products and no place to put them.

Another big issue is transmission. Getting the power from sun-rich areas in the West to load centers is an ongoing battle still playing out through the Federal Energy Regulatory Commission and the states. It plays back into the need for legislation and an even bigger need for government agencies and states to figure out how to get remotely-located renewable energy resources to areas that need the electricity.

The U.S. has the potential to achieve everything that needs to be done for PV and CSP to light up the world, but only if and when the government climbs on board. When that happens, the sky’s the limit for solar.

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