As the U.S. is muddled down in the healthcare debate, the bills in Congressdealing with revolutionary energy policy hang in the balance andhesitancy resides in the renewable energy industry over the ultimatefuture market size for cleantech. Even though the Recovery Act andsubsequent stimulus fundinghas initiated future clean energy plans, the cleantech community iscuriously awaiting a decision on key legislation such as the AmericanClean Energy and Security Act (ACES) or Cap-and-Trade billand a national renewable energy portfolio standard (RPS), which willboth be the game-changing bills, which will set the future course ofhow the country utilizes energy. Stimulus grants are designed to offeran approximate maximum five years of funding, while the cap-and-tradeand RPS policies would essentially be permanent. Furthermore, manystates are also awaiting the decision on a national RPS,not to over-commit themselves to a higher clean energy target or stateRPS than what may be required nationwide. However, it is possible thatsome states may lose out on the opportunity to attract relevant supplychains and green job growthin-state and be required to purchase geothermal power, for instance,from a neighboring state’s utility provider or other resource, untilthey are able to develop more renewable resources.
Nonetheless,the Recovery Act is helping lessen the blow of an industry-wide solarcell supply glut and creating new agreements that are leading to neworders by customers. The U.S. Department of the Treasury and the U.S.Department of Energy (DOE) recently announced a Stimulus program toaward $2.3 billion in tax credits, which are available for two years oruntil the funds have been exhausted, for manufacturers of advancedclean energy equipment. This program applies to but is not limited to wind, solar, biomass, geothermal, electric vehicle, advanced power grid systems, energy conservation, and greenhouse gas emissionstechnology companies. The Recovery Act has enabled a new tax creditprogram by authorizing the Treasury Department to offer developers withan investment tax credit of 30% for facilities that manufacture energyequipment of this nature. Companies whom receive grants are expected toreceive payments within 180 days of filing for the credit. For moreinformation on the program and application, an Advanced EnergyManufacturing Tax Credit site has been posted.
Similarly,the Treasury and DOE announced in July the availability of a payment inlieu of tax credits for facilities that produce renewable energy- aprogram that is hoped will result in more than $3 billion of stimulusfor energy development in rural and urban communities.
In the state of Arizona, a related solar process equipment tax incentive bill denoted as SB 1403was passed this summer, but the state lacks a significant driving forcefor the conversion to clean energy sources or energy efficiency, sinceit possesses one of the least aggressive RPS of only 15% by 2025 from both a percentage and time frame perspective, as observed at this DOE reference site. Currently, Arizona, having one of the highest solar power potentials nationwide, derives nearly half of its power from coal.
Thestate of North Carolina is taking its state-mandated RPS seriously andgetting ahead of the curve in preparation for a potential moreaggressive national RPS. At this time, the state requires the utilitiesto satisfy 12.5% of its customers’ power needs with renewables orenergy efficiency by 2021. Moreover, the law requires incrementalincreases in the amount of solar energy implemented, starting at 0.02%of the electricity sold by 2010 and rising to 0.2% by 2018. This policyhas prompted Charlotte, N.C- based Duke Energy, one of the largestpower companies in the U.S., serving about 4 million customers, to takematters into their own hands and develop a large-scale solar portfolio.
Similarly,more than 800 megawatts (MW) of solar power plants announced across thecountry in 2009, according to GTM analyst Daniel Englander, emphasizesthe increasing trend of power utility providers to own and operatetheir own solar assets. These companies are deciding to own and operatethe projects due to the financial uncertainty surrounding many solarcompanies during the inventory glut and because they can obtain better finance offers, due to their more consistent revenue streams, allowing them to reduce their cost of capital.
Inthe case of Duke Energy, the utility received approval in May from theNorth Carolina Utilities Commission to move forward with a $50 millionagreement to install 10MW worth of solar energy systems in the state,which is equivalent to the power target for approximately 1,300 homes.These solar systems will be installed starting later this year on theroofs and grounds of homes, schools, business parks, shopping malls,and even industrial plants. It is expected that the installations willrange from about 2.5 kilowatts on residential rooftops to more than 1MWon open land or attached to industrial facilities. The power will befed into the electrical grid and participants will be paid for use oftheir roofs or land, according to the size of the installation andamount of power generated at the site. It is definitely an interestingbusiness model compared to feed-in tariffs, which are prevalent in Europe.
The typical model of sporadic solar residential installations across the U.S., where surplus power created is returned for a credit, does not generate a significant strain on the current power grid system.However, high concentrations in one area could lead to imbalances on acircuit. By analyzing the data from the 10MW project, Duke Energy ispoised to gauge the limits of its electricity networkand avoid potential disruptions in the case of larger scale endeavors.The strategic placement of solar installations closer to the demand orcustomer actually contrasts with the agenda elsewhere of constructingmassive solar farms for harnessing electricity and taking advantage ofeconomies of scale that way. Perhaps, this is a way of simplifying griddynamics and reducing complications with adjusting power levels asneeded at solar or wind farms based on the less consistent stream ofpower from renewable energy sources. Furthermore, this model of meetinga RPS will receive serious consideration in the development of smart grid technology.
DukeEnergy has ruled out using concentrating photovoltaic (CPV) plants,which are becoming the preferred option for solar farms. The company isconsidering both silicon and thin-film solar modules and is stilldetermining options for various installations. Thus, any localizedsolar power source initiative will have deleterious effects oncompanies such as Phoenix- based Stirling Energy Systems or AbengoaSolar, who are building plants in Arizona. In addition, many companiessuch as Oerlikon Solar and Applied Materialsare counting on an increased trend toward solar farms and have designedtheir business model around offering turn-key solar power plantsincluding all the necessary process equipment.
In comparison tohistorical data across the industry, Navigant Consulting released itsannual report Analysis of Worldwide PV Markets and Five-YearApplication Forecast 2008-2009. This report noted that grid-connectedsolar applications, as opposed to stand-alone signs on roads, etc. arethe largest and fastest growing of all of the solar market segments,with an 80% share of global volume in 2004, an 82% share in 2005, an86% share of total volume in 2006, and a 94% share of total volume in2008. Furthermore, the fastest growing sub-set was the commercialsector of primarily investor-owned (>1MW) operations on fields androof-tops.
The coupling of government legislation, maturation ofindustry trends, and the urgency of demand will determine the face ofthe solar power and overall clean energy industry in the U.S. and othercountries, as they pursue a green revolution.
Representative image of Stimulus pie (media.point2.com).