Recent gains in the U.S. solar market are due largely to support from two federal funding programs that are set to expire this year and next
By Maria Gallucci, SolveClimate News
U.S. solar energy installations are poised to double in 2011 for the second year in a row, but the industry could fall short of its lofty, long-term goals for growth if two key federal programs dry up, officials say.
“We are in reach of our goal of installing 10 gigawatts of solar annually by 2015. That’s enough to power more than 2 million homes with clean reliable solar energy each and every year,” Tom Kimbis, vice president of strategy and external affairs for the Solar Energy Industries Association (SEIA), told reporters on a conference call.
“But to reach that goal, Congress needs to make the right investments in solar energy,” he said.
Around 1,800 megawatts of solar power will be installed in the U.S. this year, up from the 887 megawatts installed in 2010, Shayle Kann, managing director of solar research at GTM Research, said on the call.
“This is going to be a time when we see enormous changes ... and everything that comes with the maturation of a sector is going to be compressed into a very short period of time over the next year and a half in the U.S.,” Kann added.
Last Thursday, Kimbis and Kann announced a joint solar market insight report for the first quarter of 2011.
The report noted that grid-connected photovoltaic (PV) installations grew 66 percent in the first quarter over the same period last year, bringing more than 250 megawatts of solar electricity online — enough to power around 50,000 homes.
The boost brings total grid-connected PV projects in the U.S. to over 2,300 megawatts, or the amount of power used to light up 460,000 homes.
Although no new concentrated solar power (CSP) or concentrated photovoltaics (CPV) projects were finished in the first quarter this year, a total of 1,100 megawatts from both technologies are now under construction across the country, and more than 9,000 megawatts of CSP and CPV projects are currently in the pipeline.
Kimbis said the steady gains in the U.S. solar market are due largely to support from the Treasury’s 1603 Cash Grant Program and the Department of Energy (DOE)’s Loan Guarantee Program, both of whose funds for solar are set to expire before the industry approaches its five-year target.
He added that the programs had contributed in part to the doubling of solar industry jobs from 2009 to more than 95,500 positions in 2010, a figure expected to increase by nearly 30 percent this year, according to the 2010 National Solar Job Census.
“Smart targeted investment of taxpayer dollars can yield a high return on investment for the public,” he said. “It gives solar businesses a predictable policy framework that allows them to innovate and drive down the cost of solar.”
Industry Lobbies for Extension
The 1603 treasury program gives cash grants to cover 30 percent of the cost of a renewable energy project, in lieu of a 30 percent investment tax credit. The U.S. Treasury thus far has given $936 million in stimulus grants to nearly 2,200 solar projects, according to an ongoing tally by SEIA.
Kimbis said SEIA is lobbying to extend the cash grant part of the program beyond October 2012 — when final applications to get the incentive are due — to 2016, when the entire treasury program expires.
He pointed to a March study by the Bipartisan Policy Center that found that “one dollar in cash has nearly double the value of a dollar in tax credits to a project developer,” according to the center’s press release.
“1603 is one of the linchpins of continuing the growth of the solar market at the rate it is growing today in the United States ... and is one of the critical bridges toward getting us across this lack of tax equity that we have in the market today,” Kimbis said.
The DOE’s Section 1705 loan guarantee program helps solar developers to secure funding by promising to pay back loans if borrowers default. Using stimulus dollars, the DOE so far has offered a total of $10.4 billion in loan guarantees to 11 solar projects. The program is set to end on Sept. 30 this year if it is not renewed.
“We are working with the administration and Congress to make sure that with the expiration of the stimulus [funding], the loan guarantee program will be able to roll over,” Kimbis said.
However, he added: “We are certainly facing a tough environment within Congress to get anything extended that has a cost associated with it in this period of cutting the budget and our deficit.”
Solar Growth to Slow in Top States
As funding uncertainty reigns at the federal level, growth in the nation’s top two solar states — California and New Jersey — is expected to lose some steam.
Kann of GTM Research said that while California’s residential solar market continues to expand, commercial-scale projects are increasingly harder to pencil out since the state’s California Solar Initiative stopped doling out rebates for projects over 30 megawatts in two of three utility territories.
Although New Jersey was the fastest-growing market for solar energy in the first quarter of 2011, clean energy advocates have cautioned that Gov. Chris Christie’s proposed Energy Master Plan could greatly curb the state’s leadership in the sector.
Christie proposed to scale renewable energy goals to 22.5 percent of all electricity generation by 2020, down from the 30 percent renewables goal set by an earlier version of the energy plan. The draft also suggests eliminating certain solar energy incentive programs and lowering statewide targets for the clean energy resource.
Kimbis said that SEIA would join industry group SolarAlliance in commenting on the plan at three public hearings scheduled for this summer.
“Essentially we saw that there were some inaccuracies in the draft report in regard to the number of jobs that were being created in New Jersey from solar, as well as the value of solar to the New Jersey economy,” he said.
Still On Track to Overtake Europe
Despite the potential impact of losing federal and even state incentives, Kann said the United States is still on track to surpass major European markets such as Germany and Italy within the next five years as growth in those nations continues to slow.
The U.S. global market share will likely increase to 9 percent in 2011, a meaningful rise from the 5 to 7 percent share the country has held since 2005, he said.
“It is clear that the U.S. market is going to be much more important on a global scale in a short period of time,” Kann said. That potential growth is already attracting global solar manufacturers and suppliers to increase production here.
U.S. production on PV modules rose by 17 percent to 348 megawatts in the first quarter of 2011, compared to the fourth quarter of 2010, according to the SEIA-GTM Research report. Overall, manufacturing in the U.S. grew by less than 4 percent.
Kann noted that the United States has 55 active PV manufacturing facilities across the component value chain in 19 states, with more factories underway this year.
General Electric is building the nation’s largest thin-film solar factory to produce up to 400 megawatts worth of solar cells per year. First Solar is also building a 250-megawatt thin-film solar plant in Arizona to complement its existing plant of similar size in Ohio.
Kimbis said that the vastness of the U.S. market is particularly enticing to solar firms seeking to expand their operations.
“You don’t have just one shot in the United States as you do in other countries — you have 50 different markets that at any time can carry the load and leadership. That is a critical point to understanding why the U.S. is attractive ... to many companies,” he said. See Also: As Solar Panel Prices Plunge, U.S. Developers Look to Diversify GOP Ally for Senator Sanders's 10 Million Solar Roofs Bill 10 Million Solar Roof Law, Stuck in Congress, Could Get Boost from DOE Program New York City's Solar Landfill Plan Finds Eager Energy Developers