Solar, wind and geothermal power sources accounted for only around 1.5 percent of US energy consumption last year, but a number of factors are merging to make solar a more realistic option, from the failure of the first round of high-profile projects to the redirecting of government land for renewable power programs and the emerging trend of leasing solar energy systems to make them more affordable.
It was to much fanfare on 4 May that the US unveiled its first large-scale solar power project on federal land in Clark County, Nevada. The project will produce enough energy to power some 9,000 homes, and is one of one 28 solar projects approved by the Obama administration. Nevada’s goal is to produce 25 percent of its electricity from renewable sources by 2015.
The administration has 16 additional solar power facilities, wind farms and geothermal power plants in the works on government land. Indeed, since the Obama administration set out on its renewable energy crusade in 2009, fossil fuel production on government land has declined by 7 percent.
The solar energy industry has struggled in an up-hill battle but its growing pains will amount to something in the end.
Efforts to make solar affordable to the consumer through leasing programs that involve monthly payments without upfront costs could lead to a breakthrough in the industry.
The solar lease program, first optioned by Sunrun in 2007, is gaining momentum. Under this system, the solar company maintains ownership of the solar equipment, while the consumer has the option to pay a fixed monthly fee regardless of the power generated, or a non-fixed monthly rate based on how much power the individual system generates each month.
Sunrun, which controls the lion’s share of this leasing market, says it has installed $1 million in solar power systems under the lease program since January 2011. Now, Sunrun and others are teaming up with big investors to improve the options for consumers and expand leasing outreach. This has become particularly expedient in light of the expiration of government subsidies for the industry at the end of 2011.
Another dynamic is also threatening the solar industry in the form of China’s own solar manufacturing expansion and infighting among solar manufacturers and installers in the US.
Two coalitions – the Coalition of American Solar Manufacturers (CASM) and the Coalition for Affordable Solar Energy (CASE) – are at loggerheads over state policies intended to allure private investment to innovative renewable energy technologies and how to deal with Chinese competition. The manufacturers’ coalition is calling for tariffs while the installers’ coalition is concerned that protectionism could spark a trade war with China and result in increased prices and anti-dumping retaliation from China.
In late 2011, the US launched an investigation into the China’s solar trade practices. It was a reluctant investigation, especially given the lobbying by the installers’ coalition which prefers not to rock the Chinese boat and start an expensive and potentially devastating trade war. In March, the US put tariffs of 3 to 5 percent on Chinese solar panels in response to accusations of illegal dumping and illegal export subsidies from China. But CASE’s fears are based largely on the assumption that the US cannot compete with Chinese solar manufacturing. Some disagree, however.
There are some who believe that the US could possibly compete with China on the solar level, while it cannot compete in manufacturing for other sectors, pointing out that the US companies “remain leaders in the production of polysilicon, the linchpin of the supply chain”.
Slate magazine notes that an October study by the US Department of Energy concluded that American companies “have a slight comparative advantage over their Chinese competitors in solar-panel manufacturing”.
In the meantime, China is pursuing solar advances with renewed energy, implementing a five-year-plan for the industry that would increase government control and financial support in the race to produce more exports. According to CASM, which filed the anti-dumping complaint against China last year, China currently produces 32 percent more than domestic demand and exports 95 percent of its solar products.
"China is steamrolling American manufacturing and jobs and breaking its trade commitments in plain sight," Gordon Brinser, president of SolarWorld Industries America Inc. (a member of the CASM coalition) said in a statement. "No wonder the American public has grown increasingly anxious about the state of U.S.-China trade. China is scoffing at international trade rules."
Representatives of CASE disagree, strongly, calling CASM’s statements “hypocritical” as insinuating that SolarWorld follows the same aggressive pricing strategy as China. CASE also points out that SolarWorld has received “millions of dollars in subsidies” itself and as such has little ground for attacking China on its five-year-plan to increase government control and financing of the solar industry.
Many have been quick to write the solar industry off, particularly since the failure of Solyndra in 2011. But failures like this are part of the growing process – and a necessary part. Sunrun CEO Edward Fenster told CNBC in April that “so much of the general public does not realize that the [technology] price reductions that caused companies like Solyndra to fail now make solar affordable.”
The solar revolution may not have happened that way it was originally envisioned, but it is happening. According to a March report from GTM Research and the Solar Energy Industry Association (SEIA), solar is “smaller” but gaining in outreach, focusing on “utility scale” solar systems, over 60,000 of which have been installed in the past year. Coupled with that, solar technology prices have also dropped by 30 percent since 2010 due to more efficient technology and cheaper manufacturing costs.
Consumers are not looking at the solar revolution in terms of its costs in comparison to coal, for instance; rather, they are looking at the costs of installation as compared with the monthly utility bills that come in the mail. To this end, the solar system leasing program stands to make significant gains.
By. Charles Kennedy for Oilprice.com