To gain an overall picture of the solar power industry today imagine David and Goliath, with valiant David representing solar, and Goliath the big, bad fossil fuels.
Then imagine David’s sling shot is subsidized by the federal government.
At Solar Power International, the solar trade show that ran wrapped up yesterday in Anaheim, CA, the tone set by Solar Energy Industry Association CEO Rhone Resch, and echoed by keynote speaker Robert Kennedy Jr., was one of defiant confrontation with fossil fuels and their lobbyist axis of evil in DC.
Their plan: fight fire with fire. The solar industry needs to band together and hire an army of lobbyists to demand more money and favors from federal and state governments — or just a level playing field with fossil fuels, depending on how you look at it.
It’s Just Un-American!
But out in the trenches, where solar companies large and small are trying to make a go of it, the tone was much more conciliatory, even plaintive.
During a panel entitled “How the U.S. Can Become *THE* World’s Largest Solar Market,” the elephant in the room was the simple fact that, as it stands right now, all solar power projects, from a 4 kW residential installation to Brightsource’s 440 MW Ivanpah plant depend on some sort of government intervention to be viable.
In other countries, especially Europe, heavy government subsidies are generally considered more acceptable. Germany, for instance, has a feed-in tariff for solar energy that has been very successful in spurring new growth. And China has been pouring cash into solar energy with single-minded enthusiasm.
But government “meddling” is generally an anathema to how Americans like to see ourselves and our “can-do” spirit. Even as the Obama administration provides billions in stimulus funding to solar energy, there are mixed emotions among many Americans as to whether such intervention is right. If I may go so far, I would even say that I sensed a slight tinge of embarrassment or unease from execs that the amount of federal and state tax credits, grants, and other assistance makes such a decisive impact on their bottom line.
As Adam Browning, Executive Director of Vote Solar, and one of the panelists said, solar will never make a real go of it as an industry as long as it depends on government subsidies.
We’ll Get There
Of course, coal and other fuels get subsidies too — $72 billion worth versus a mere $1 billion for solar, according to Resch. But those industries are many times bigger than solar, and dividing that number by the amount of watts they produce, and their products would still be cheaper, even without the subsidies.
The good news is that solar is getting there. The price of solar panels is falling, both because of a market glut, but also because the cost of manufacture is falling. Even pessimistic predictions put solar power at “grid parity,” ie, the same price per watt of electricity generated from traditional sources, some time in the next decade. And at the same time, there is increasing momentum behind pricing fossil fuels not simply their cost of extraction, but on their cost to the environment as well.
On the retail end, new pricing strategies are also opening the door to solar for consumers who are daunted by the high cost of installations. Various forms of solar leases, which were pioneered by SolarCity, as well as PPAs, or power purchase agreements, recently introduced by installer Borrego Solar and others, are contracts whereby homeowners and businesses essentially lease either their rooftops to installers, or the panels from the installers for little or no money down, in return for electricity at a price guaranteed lower than what utilities charge.
The Dark Side
Was 2009 the decisive moment in solar energy’s rise from a measly 0.5% share of the electricity generation to 10, 20, 30% or more? Only time will tell. I would argue that 2009, with its financial ups and downs, was more of a lull, and that it will be the next couple of years that really defines the industry.
And while the world needs more lobbyists like a hole in the head, Resch and others have a point about the balance of power. One blatant example: while oil and gas companies have hundreds of permits to operate on federal land in this country, to date, solar has exactly zero.
It looks like it may take a trip to the dark side for solar to have a bright future.