As the U.S. is muddled down in the healthcare debate, the bills in Congress dealing with revolutionary energy policy hang in the balance and hesitancy resides in the renewable energy industry over the ultimate future market size for cleantech. Even though the Recovery Act and subsequent stimulus funding has initiated future clean energy plans, the cleantech community is curiously awaiting a decision on key legislation such as the American Clean Energy and Security Act (ACES) or Cap-and-Trade bill and a national renewable energy portfolio standard (RPS), which will both be the game-changing bills, which will set the future course of how the country utilizes energy.
Stimulus grants are designed to offer an approximate maximum five years of funding, while the cap-and-trade and RPS policies would essentially be permanent. Furthermore, many states are also awaiting the decision on a national RPS, not to over-commit themselves to a higher clean energy target or state RPS than what may be required nationwide. However, it is possible that some states may lose out on the opportunity to attract relevant supply chains and green job growth in-state and be required to purchase geothermal power, for instance, from a neighboring state’s utility provider or other resource, until they are able to develop more renewable resources.
Nonetheless, the Recovery Act is helping lessen the blow of an industry-wide solar cell supply glut and creating new agreements that are leading to new orders by customers. The U.S. Department of the Treasury and the U.S. Department of Energy (DOE) recently announced a Stimulus program to award $2.3 billion in tax credits, which are available for two years or until the funds have been exhausted, for manufacturers of advanced clean energy equipment. This Clean Energy Industry Feasting on Stimulus Pie: Pending Legislation Ultra-Critical August 20, 2009 program applies to but is not limited to wind, solar, biomass, geothermal , electric vehicle,
advanced power grid systems, energy conservation, and greenhouse gas emissions
technology companies. The Recovery Act has enabled a new tax credit program by
authorizing the Treasury Department to offer developers with an investment tax credit of 30% for facilities that manufacture energy equipment of this nature. Companies whom receive grants are expected to receive payments within 180 days of filing for the credit. For more information on the program and application, an Advanced Energy Manufacturing Tax Credit site has been posted.
Similarly, the Treasury and DOE announced in July the availability of a payment in lieu of tax credits for facilities that produce renewable energy- a program that is hoped will result in more than $3 billion of stimulus for energy development in rural and urban communities.
In the state of Arizona, a related solar process equipment tax incentive bill denoted as SB 1403 was passed this summer, but the state lacks a significant driving force for the conversion to clean energy sources or energy efficiency, since it possesses one of the least aggressive RPS of only 15% by 2025 from both a percentage and time frame perspective, as observed at this DOE reference site. Currently, Arizona, having one of the highest solar power potentials nationwide, derives nearly half of its power from coal.
The state of North Carolina is taking its state-mandated RPS seriously and getting ahead of the curve in preparation for a potential more aggressive national RPS. At this time, the state requires the utilities to satisfy 12.5% of its customers’ power needs with renewables or energy efficiency by 2021. Moreover, the law requires incremental increases in the amount of solar energy implemented, starting at 0.02% of the electricity sold by 2010 and rising to 0.2% by 2018. This policy has prompted Charlotte, N.C- based Duke Energy, one of the largest power companies in the U.S., serving about 4 million customers, to take matters into their own hands
and develop a large-scale solar portfolio.
Clean Energy Industry Feasting on Stimulus Pie: Pending Legislation Ultra-Critical
August 20, 2009 Similarly, more than 800 megawatts (MW) of solar power plants announced across the country in 2009, according to GTM analyst Daniel Englander, emphasizes the increasing trend of power utility providers to own and operate their own solar assets. These companies are deciding to own and operate the projects due to the financial uncertainty surrounding many solar companies during the inventory glut and because they can obtain better finance offers, due to their more consistent revenue streams, allowing them to reduce their cost of capital.
In the case of Duke Energy, the utility received approval in May from the North Carolina Utilities Commission to move forward with a $50 million agreement to install 10MW worth of solar energy systems in the state, which is equivalent to the power target for approximately 1,300 homes. These solar systems will be installed starting later this year on the roofs and grounds of homes, schools, business parks, shopping malls, and even industrial plants. It is expected that the installations will range from about 2.5 kilowatts on residential rooftops to more than 1MW on open land or attached to industrial facilities. The power will be fed into the electrical grid and participants will be paid for use of their roofs or land, according to the size of
the installation and amount of power generated at the site. It is definitely an interesting business model compared to feed-in tariffs, which are prevalent in Europe.
The typical model of sporadic solar residential installations across the U.S., where surplus power created is returned for a credit, does not generate a significant strain on the current power grid system. However, high concentrations in one area could lead to imbalances on a circuit. By analyzing the data from the 10MW project, Duke Energy is poised to gauge the limits of its electricity network and avoid potential disruptions in the case of larger scale endeavors. The strategic placement
of solar installations closer to the demand or customer actually contrasts with the agenda elsewhere of constructing massive solar farms for harnessing electricity and taking advantage of economies of scale that way. Perhaps, this is a way of simplifying grid dynamics and reducing complications with adjusting power levels as needed at solar or wind farms based on
the less consistent stream of power from renewable energy sources. Furthermore, this model of meeting a RPS will receive serious consideration in the development of
smart grid technology.
Duke Energy has ruled out using concentrating photovoltaic (CPV) plants, which are becoming the preferred option for solar farms. The company is considering both silicon and thin-film solar modules and is still determining options for various installations. Thus, any localized solar power source initiative will have deleterious effects on companies such as Phoenix- based Stirling Energy Systems or Abengoa Solar, who are building plants in Arizona. In addition, many companies such as Oerlikon Solar and Applied Materials are counting on an increased
Clean Energy Industry Feasting on Stimulus Pie: Pending Legislation Ultra-Critical
August 20, 2009 trend toward solar farms and have designed their business model around offering turn-key solar power plants including all the necessary process equipment.
In comparison to historical data across the industry, Navigant Consulting released its annual report Analysis of Worldwide PV Markets and Five-Year Application Forecast 2008-2009. This report noted that grid-connected solar applications, as opposed to stand-alone signs on roads, etc. are the largest and fastest growing of all of the solar market segments, with an 80% share of global volume in 2004, an 82% share in 2005, an 86% share of total volume in 2006, and a 94% share of total volume in 2008. Furthermore, the fastest growing sub-set was the commercial sector of primarily investor-owned (>1MW) operations on fields and roof-tops.
The coupling of government legislation, maturation of industry trends, and the urgency of demand will determine the face of the solar power and overall clean energy industry in the U.S. and other countries, as they pursue a green revolution.
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Representative image of Stimulus pie (media.point2.com).
Source reprinted from solarfeeds.com
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