Factors Collide to Fuel New Solar Optimism

Washington, DC [RenewableEnergyAccess.com] At Solar Power 2005, this year’s annual conference and trade show for the US solar energy industry, there’s an unmistakable buzz, a real sense of optimism, that a series of important factors have come together at the national level to propel this industry into a new and accelerated phase of growth.

“It’s hotter than it’s ever been,” said Clayton Handleman, President of Heliotronics, which specializes in solar energy data acquisition and displays systems that are specifically marketed for educational purposes. Handleman cited natural gas as one big factor for the exuberance around solar. Even before hurricanes Katrina and Rita threw exorbitant energy costs onto every newspaper’s front page in the nation, the costs for energy, particularly natural gas, have been rising up to remarkable levels. In the face of these natural gas prices and tight supply, solar looks particularly good because it provides the majority of its power during peak hours when natural gas for power generation is most constrained. It’s fitting too that this year’s conference, presented by the Solar Electric Power Association (SEPA) and the Solar Energy Industries Association (SEIA), is taking place in Washington, DC. Market-based energy factors like natural gas prices played a critical part in adding another factor to the rosy outlook for solar: the first federal solar incentives in almost two decades. Included in this summer’s federal energy bill is a two-year investment tax credit (ITC) of 30 percent, effective January 1, 2006. These two years are too short a window for solar module manufacturers to make giant production increase commitments but it’s enough to buoy the market and possibly buy the solar industry enough time to secure a longer-term extension on those credits. And since few lawmakers want to vote against a tax credit, which can be viewed as being pro-tax, it’s always easier to extend a tax credit than it is to secure one in the first place. The fact the energy bill was almost exclusively crafted by, and passed by, the Republican majority in Congress has served to shift the public’s perception of solar, says Handleman. “Republican support just gives solar more creditability,” Handleman said, referring to the aging stereotype that solar energy advocates are all liberal democrats. Moderate republicans, he says, are becoming some of the solar industry’s strongest supporters. Furthermore, there’s increasingly little political cost for lawmakers to be supportive of renewable energy and, in many respects, there’s a host of advantages. As a clear example, it was Senator Lamar Alexander (R-TN) who played the leading role in securing the 30 percent ITC in the energy bill. Although staunchly against wind power, Alexander’s support for renewable energy, particularly solar, has helped to dissolve the old partisanship that used to characterize support for renewable energy on Capitol Hill. And the nation’s top Republican, President George W. Bush, signed the energy bill into law at the Department of Energy’s Sandia National Laboratory under the backdrop of large Concentrating Solar Power (CSP) dishes. While arguably a staged photo opportunity, the signing of the energy bill under these solar dishes sent a clear signal of support for solar. Coincidence or not, the solar dish photograph was in fact a foreshadowing of things to come as much of the buzz at this year’s show has been directed specifically at the broad array of CSP approaches. Although mostly limited to areas of very high sunlight like the American Southwest, CSP offers the promise of large, commercial scale power projects that traditional rooftop solar photovoltaics simply cannot match. Julia Judd, Executive Director of SEPA (the conference co-sponsor), said she took a quick look in all the conference rooms within the first few minutes of them starting on Thursday afternoon and found the CSP room “completely packed.” There hasn’t been a CSP project since the early ’80s SEGS plants were built in California, yet there’s a flurry of new interest in the promising field. And backing this up, says Judd, is that surveys of the conference’s 1300-plus attendees showed 67 percent interest in PV, 46 percent interest in CSP and 44 percent interest in solar thermal hot water. Just in the past few months a slew of new CSP projects have been announced. Arizona-based Stirling Energy Systems (SES) is the new poster child for CSP having secured huge power purchase agreements (PPAs). The first one with Southern California Edison is a 20-year PPA for a 500 MW project with an option to expand to 850 MW. A second deal unveiled only weeks ago is a similar 20-year PPA, this time with San Diego Gas & Electric, for the output of a separate 300 MW plant with options for an additional 600 MW. These projects are enormous in scale — enough to eclipse all the installed capacity of solar that has ever been installed in the US, by many factors. Other projects from SolarGenix Energy, RWE Schott Solar, and International Automated Systems are also slated for construction. SES executives, however, are not sitting content on their PPAs. They’ve joined the chorus of support that is being echoed loudly at this year’s solar conference; that the federal tax credits available for the next two years must be expanded in order to allow the industry to make the longer-term commitments necessary to really grow and become a major energy industry. “An extension would provide a strong impetus for further development of a robust industry that will support thousands of jobs and generate significant tax revenues for rural America,” said Bruce Osborn, CEO of Stirling Energy Systems. Rhone Resch, Executive Director of SEIA, will play a key role in pushing lawmakers on both sides of the aisle into supporting the credit extension. He says Americans are “struggling with record energy prices, and that Washington is looking for solutions.” “Now the solar industry has come to Washington to present one solution,” Resch said.