We enjoy our perch here in the nation’s capital. Since we talk with most of our customers by telephone or online, we could be anywhere—but the great thing about being here in Washington DC is that you get to talk with people who are in the know, or who think that they are in the know. We went to a reception by the Clean Economy Network last night—we had a chance to meet with lawyers and lobbyists, financial analysts, and even a few solar energy installers.
We got a good review of industry trends and some of the upcoming challenges from Reed Hundt, CEO of the Coalition for Green Capital and Ethan Zindler, Head of Research at Bloomberg New Energy Finance. There is obviously keen interest in renewable energy these days. Take a look at the news article we posted today on some of the latest optimistic trends in the solar industry. Support for solar energy is up—right across the board, regardless of party affiliation or geography. Some want to reduce the threat of global warming, and some want to create jobs, and still others simply want to do their part to save energy. The solar energy industry is optimistic that the residential PV market will continue to expand.
At the reception, despite some of the hopeful signs, there were some long faces in the room. The single most important piece of legislation to the solar industry has been the 1603 treasury grant program, which provides a cash grant in lieu of the 30% tax credit. This grant program has been a major lever in the growth of the wind industry and to a lesser extent the solar industry in the past couple of years. The renewable energy industry has been lobbying hard for the extension of the grant program, but despite the mighty efforts of some politicians, the grant program has not been extended. Only those projects that have been commenced before the end of this year will be eligible for the treasury grant—unless Congress acts. Of course, a reinvigorated Congress may come back after the election and still extend 1603, but the outcome is far from assured—and with hundreds of millions of dollars riding on this legislation, it was no wonder that there was some gloom among some of the investors at the reception.
Zindler at Bloomberg suggested that even if 1603 were not extended, it would not significantly affect the industry as state programs remain very much alive. But as we have reported, state monies are drying up or being redirected. Many are not counting much on state or local programs to pick up the slack. Zindler did point out that globally, the cost of manufacturing photovoltaic panels has dropped considerably, and because the materials cost, primarily polysilicon, has plummeted (from $450/kg to $50/kg in the last couple of years), the cost of solar modules is expected to continue to fall. Everyone agrees, however, that further governmental support is critical if the solar industry is going to continue to grow.
Hundt also suggested that the failure of the energy bill was not the death knell of clean energy in the United States. “You need not despair,” he reassured us. There will not be a cap and trade bill in the new Congress, but there may be bipartisan support for tax levers to promote growth within the sector.
We are also optimistic that the solar industry will continue to grow—we do not see a return to the days when a solar panel is a rare bird. But remember that solar energy represents much less than 1% of all of the energy consumed in this country—there is a lot of room for growth. And only if the politicians on both sides of the aisle can come together after the election and craft policies that will allow the solar and renewable energy sectors to realize their potential.