Renewable Energy Technology Conference
We attended the Renewable Energy Technology Conference (RETECH 2010) here in Washington, D.C. the last couple of days. I am sure that there will be much written about the conference that concentrated on strategic issues, finance and incentives for renewable energy. The Conference highlighted many of the common challenges faced by renewable energy projects, regardless of whether they are solar PV, biomass, wind or geothermal. There were some recurrent themes at many of the sessions that I attended.
Government Plays a Leading Role
Government, whether we like it or not, has to play a leading role in supporting renewable energy technologies and projects. We have always been on the cutting edge of developing technologies, but as the President of ACORE said at the opening plenary session, “the world is moving past us. Are we going to lead or be a follower?” And Google’s Dan Reicher suggested that we are losing the green energy race to China.
The paralysis in Washington hangs like a looming dark cloud over the horizon, and another speaker, John Geesman, the President of GreenEnergy War, suggested that if Congress were not able to lead, it should step aside and let the states take leadership.
Federal and State Incentives for Solar Energy
At one of the panels, this one devoted to federal and state incentives, Alan Nogee, the Clean Energy Program Director at the Union of Concerned Scientists, gave a particularly insightful analysis of the energy bills pending in the House and the one reported out of committee in the Senate. The basic charge is that both bills are riddled with so many loopholes that they amount to mere slogans. According to Nogee, the 15% goal for renewables in 2020, net of loopholes is actually 7.2 – 10.2%.
He liked the House version, which sets a goal of 20% by 2020, but again the loopholes swallow the effectiveness of the bill. He thinks that the federal government should adopt a “real standard” of 25% by 2025 with no opt outs and no loopholes. According to the projections of the Union of Concerned Scientists, adoption of this standard would allow us to avoid building 50 new nuclear power reactors—that’s right, 50 nuclear power reactors. Now that sounds like a compelling argument.
The Administration is Allocating Huge Resources to the Renewable Energy Market
The administration’s representative at the conference, Kristina Johnson, Under Secretary at the Department of Energy, gave a long laundry list of accomplishments of the DOE—and indeed the accomplishments in the past year seem to be impressive under the leadership of Secretary Chu, who has reinvigorated the Department. According to Johnson, solar grew 40% in 2009, creating 18,000 new jobs. Under the FY11 budget just released, there is a 22% increase slated for the Department’s solar energy programs. The Department is investing our federal resources into numerous “signature programs” – high risk but high impact programs. The Department takes very seriously the goal to reduce the US carbon emissions by 83% by 2050. Nevertheless, Johnson noted that China, South Korea and Japan are out investing the US 3 to 1 in renewable energy in the next three years, but “let’s not give up the fight; let’s not concede.”
Federal Incentive Landscape Still Changing
SolarTown has been evaluating various financing mechanisms to release some of the potential of solar energy. The business community in general and particularly the energy industry prefer to operate in a stable regulatory environment, and the extension of the income tax credit to 2016 has injected some stability into the market, but other programs are more precarious, and as one lawyer on a panel suggested, the “cliff in tax benefits is coming.” I assume that he was referring to the grant in lieu of the credit, which from a dollar standpoint has fueled the growth of the wind industry in 2009. But these grants are scheduled to end in 2009, and as one DOE official indicated, the Administration has not taken a position on their renewal—leaving again a vacuum. There are proposal to shift responsibility to the IRS, but for the time being there is considerable uncertainty about whether this program will survive, be modified or will end.
The credit markets and investment community frozen after the financial downturn in 2008-09 are now coming back to the market. But financing is still a huge challenge, and not just because of a difficult lending environment, but because many lenders simply do not understand the technology or the incentives that may accrue to a project, such as rebates or renewable energy credits.
State and Local Programs for Solar Energy
Many state programs have activated the renewable energy market. The renewable energy standards now found in 29 states and the District of Columbia have provided significant support for renewable energy, and without these programs, few utilities would move forward with renewable energy. And the solar carve-outs have targeted and given a real boost to the solar industry.
Many of the speakers spoke passionately about new programs that have emerged in the past few years. The BerkeleyFirst program, an elegant solution, under which the homeowner puts the cost of the solar system on his or her property tax assessment, has been embraced throughout the country. These programs, known as Property Assessed Clean Energy or PACE programs are now in 16 states and over 300 cities throughout the country. Of course, the city needs to finance these programs by issuing a bond, but more cities have been willing to issue a bond.
Some of the speakers also spoke glowingly about the other major trend in support for renewable energy in general and solar in particular: the feed-in tariff. The gold standard in feed-in tariffs of course has been Germany. Apparently some city officials went to Germany to view firsthand the German solar miracle and adopted the approach. Gainesville, Florida was one of the first cities in the US to pass a FIT with exceptional results as more PV was installed in Gainesville than in the rest of Florida. A city official from San Antonio, New Mexico was on the same study visit to Germany and in August 2009, San Antonio also passed a feed-in tariff.
New Financing Product from SolarTown
The US is a laggard in solar and falling further behind. The leader in solar, Germany, added 20 times more solar in 2009 than the leading state in the U.S., California. We at SolarTown are now working with our strategic partners to develop a financing product to help jumpstart some solar projects in 2010. We hope to have news to share in the coming months.
Tags: department of energy, energy program, Feed-in-tariffs, PACE, property assessed clean energy, renewable energy projects, renewable energy technology, RETECH 2010, solar energy, solar energy incentive programs, solar tax credits, state incentives