Natural gas, Chinese manufacturing and austerity programs were the themes at a solar symposium yesterday in the Nation’s Capital. The GW Solar Institute brought together teachers, students, policymakers and the president of SolarTown to take on the subject: “Solar Energy: A Path to Energy Significance.” The Director of the GW Solar Institute, Ken Zweibel identified three major themes to the symposium. The themes are from Zweibel, and the explanations are mine.
Natural gas prices plummeting.
If you haven’t noticed, natural gas prices have plummeted, and now are at a 10-year low of the unheard of $1.98 per 1,000 cubic feet, down 80% since 2008. Solar and other renewable energy have a hard time competing with natural gas with the price of natural gas at this low.
Chinese manufacturing a disruptive force in the marketplace.
Only those who have had a bag over their head for the past year would not know what Chinese manufacturing of solar modules have done to world prices. Consumers rejoice all the way to the bank, and solar manufacturers have hit the bankruptcy button, do not pass go and definitely do not collect $200. Zweibel underscored this “disruptive force in the marketplace.”
Austerity programs target renewable energy first.
Many local governments seem to work on the principal first in first out. Many states, counties and states have innovated programs to support renewable energy goals, but as their budgets shrank, the first programs to get defunded have been programs to help solar energy and other renewable energy technologies. And on the federal level, the investment tax credit, which was assumed to be inviolate through 2016 has now come under attack. According to one of the panelists at the Symposium, twenty senators have recently signed onto a letter to foreshorten the life of the investment tax credit. The demise of 1603 was planned and expected, but investors and developers have reasonably expected the investment tax credit to survive.
Renewable energy is a religion.
The keynote speaker Timothy Simon, Commissioner of the California Public Utilities Commission, came from California where “renewable energy is a religion.” He vividly described one of the challenges of the seemingly intractable problem of transmission lines. “Everybody wants to go to heaven but nobody wants to die.” He seemed to be suggesting that distributed solar may get better traction in terms of quick deployment than large utility scale solar projects. Simon acknowledged that externalities are still not part of the PUC’s calculus in determining “just and reasonable rates,” but he forcefully made the point that utilities commissions should take a long-term view of rates. According to Simon, a diverse portfolio including renewable energy insulates the consumer from rate shocks. That does not mean that solar energy needs to be competitive today with fossil fuel technologies, just that the Commissioners believe that solar energy may insulate the consumer from price shocks in conventional energy sources.
Business cycles in solar manufacturing are incredibly short.
Tom Bimbis of the Solar Energy Industries Association (SEIA) gave an overview of the solar industry, stating the obvious that business cycles in the solar industry have been “incredibly short.” You think? SEIA is a lobbying organization so it was no surprise that Bimbis heralded the 109% growth in PV installation in 2011 from the previous year. Bimbis suggested that by 2014 the world’s largest solar markets would be China, the U.S. and Japan. US is now projected to overtake Germany even though, as Bimbis pointed out, that in December alone this past year Germany installed 3 gigawatts of solar capacity compared with 1.8 gigawatts in all of the U.S. for the entire year. It was also pointed out by one of the other panelists that the average installed cost of solar PV in the US was $6 per watt, compared with $2.50 per watt in Germany, even though the cost of the solar panels and other balance of system equipment is roughly the same in each country. The study was conducted a while back and of course the US installed per watt has come down considerably, but there continues to be a wide gap because of “soft costs” such as permitting and fees. One member in the audience chimed in that he has had a solar panel system on his home for a year in Los Angeles, but has been waiting for the inspector to come out and the interconnection to go live.
Losing our edge in solar manufacturing.
The U.S. Department of Energy was represented by Minh Le, who echoed what we have all known for some time that the U.S. has long since lost our manufacturing edge, from 42% of manufacturing PV cells to now less than 4%. Le talked about the dramatic changes in just one year, but that the DOE continues to support incubator companies to innovate new technologies. According to Le, the two major factors in driving out solar manufacturers has been access to capital and tax policy and not labor costs, although one of the other panelists disagreed especially when it comes to the manufacture of crystalline solar panels, which has become a commodity product, compared with thin-film solar products, which may not have become commodities.
No one seemed to suggest that it was going to get any less dull in the solar market in the coming year, but the forecasts were few and far between as the solar market continues with its fits and starts.