A Year in Review for the Solar Industry

by Glenn Hamer

The good news is that all sectors of the photovoltaic (PV) market continue their robust growth. PV expert and author Paul Maycock’s data highlight activity in the grid-connected market – largely as a result of incentive programs in Japan, Germany, and California. The market now produces more than 560 megawatts (MW) each year – a significan number. The bad news is that the U.S., once the world’s leader in PV manufacturing, continues to fall further behind its international competitors, with manufacturing growth lagging behind the international pace.

In addition, 2003 may be remembered as the year that concentrating solar power (CSP) technology reappeared, with the announcement of a 50 MW plant in Nevada and more plants in the works in the U.S. and overseas.

Domestic and commercial solar water heaters, while still slow to grow in the U.S. (outside of Hawaii), are soaring in other regions, especially China and some of the Mediteranean countries. The use of solar technology for pool heating continues to grow as well. Hawaii, with the support of its new Governor Linda Lingle, renewed its renewables tax credit, which is critical to the success of the solar water-heating industry.

California is still the dominant force in the growth of the PV industry in the U.S. Jan McFarland, the new executive director of the Solar Energy Industries Association’s (SEIA) California chapter, has performed like the savviest veteran, orchestrating big wins on the California Energy Commission’s self-generation program and the California Public Utility Commission’s distributed-energy consumer rebate. The total of these victories is in the hundreds of millions of dollars; they continue to serve as a model to all states and localities interested in pursuing truly effective solar programs. This last point cannot be overstated. While over 30 states have some sort of tax credit or incentive for solar, only California has seen what can be described as real PV industry development.

New Jersey is gaining ground, in part by modeling its programs after California’s. The leadership of Governor Jim McGreevey and Jeanne Fox, the president of the New Jersey Board of Public Utilities, has created a consumer rebate program worth more than $30 million a year. Even better, the state seems ready to embrace a renewable portfolio standard (RPS) that would require PV to produce 120,000 megawatt hours (MWh) of electricity by 2008. The Long Island Power Authority in New York has also instituted a rebate program, which is resulting in the deployment of significant quantities of solar. Other states, such as Arizona and Nevada are advancing solar through RPS and consumer rebate programs too.

On the federal side, the appropriations budget looks like it will end up around $80 million – about the same as in the past couple of years. At SEIA, we continue to make the point that investing in domestic clean energy research is one of the most efficient possible policies; it helps retain domestic manufacturing in a booming sector, holds out hope for stabilized energy costs and increases our security and independence.

The energy bill is also an opportunity to realize some gains. For the first time since 1986, it seems that a 15% federal residential tax credit will be available to consumers interested in deploying PV or solar water heating. There is also a possibility that the wind production tax credit – $.018 per kilowatt hour – will now include solar-electric generation. This could provide a new incentive to CSP and PV for certain larger applications.

A provision that would urge the U.S. General Services Administration to use substantial funding in deploying PV on federal buildings also enjoys strong bipartisan support in the House. Another provision under consideration would allow the U.S. Department of Energy (DOE) to cost-share up to 40% of an installation made on a state or local building. And another provision – this one in the Senate bill – would authorize a new program to study the ability of CSP to produce hydrogen.

Both bills include language that would require each state public utility commission to consider a federal standard for net metering and interconnection. Plug-and-play simplicity is essential to the success of solar and other distributed clean energy sources. It’s also likely that language to make it easier for homeowners interested in purchasing solar to qualify for larger loans from the federal mortgage authorities will find its way into the final energy bill.

Looking ahead to 2004, if the energy bill is signed into law, the next question is where the industry should focus its attention. First, we will need to work with the states to ensure that those states with net metering standards that are less solar-friendly than the federally suggested standard make improvements.

Second, the residential market is replete with opportunities. Lower loan rates for homes that use solar may become a new priority. Tapping into the $1 billion or so available from the Millennium Challenge Accounts is another objective. As always, we will continue to fight hard for robust appropriations. The industry’s incredibly rapid growth is very encouraging; but it is the rapid growth of an infant. At every level of government, our work is just beginning.

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