Buildings and Energy

Solar Progress on Capital Hill

As Congress begins debate on the Climate Bill, those attending Solar Power International 2009 got an update on solar progress in Washington.  The 11:00 am session on issues that affect everyone in the industry was surprisingly under-attended.  Perhaps that reflects a dazzling exhibition hall and our perennial frustration with Congress.

John Lushetsky, head of the Department of Energy’s solar program told an audience of about 250 that the DOE commitment to solar will rise from $175 million in 2009 to $320 million in 2010.  Of that, $149.5 million will be directed toward PV.  In addition, DOE will administer stimulus funds totaling $50 million in 2009 and again in 2010.  They will also guarantee up to $40 billion in commercial and utility-scale loans.

The importance of $40 billion in guarantees cannot be overstated.  Construction credit and solar development funding is in short supply.  Banks still in the game are announcing commitments of less that $100 million per portfolio.

The DOE believes that the declining cost of solar will equal the rising cost of fossil energy by about 2015 and could comprise 10-20% of US electric output by 2030.  Many would like to see 30% by that date, but new policy at the DOE is a very positive step.

A slide deck from a similar presentation is available at http://files.eesi.org/lushetsky_051409.pdf

DOE and the Treasury are issuing checks for 30% of the cost of a solar project, There is no limit on the size of the project.  Keith Martin of Chadbourne & Parke (law) told the session that 276 applications were filed for grants through early September. To date, payments totaling $1.2 billion (Treasury funds) were paid to 70 renewable energy projects.

This program is essential to commercial and utility-scale solar.  Until the close of 2008, solar projects were financed, in part, through the Investment Tax Credit (ITC).  As the recession deepened, Congress provided the option of a cash grant in place of a tax subsidy.  In a recession, few need tax breaks.

Kate Johnson, Washington representative of the Sierra Club, is working toward a national Renewable Electric Standard (RES) in the Climate Bill.  It would require at least 20% of US electricity be produced from renewable sources by 2021.  The Sierra Club is fighting efforts to dilute the standard from 20% to 12% or lower.

Katie Cullen of SC Partners LLC has an interesting job.  She advises solar developers and, like Keith Martin, works with Congress to write solar legislation.  Initiatives include extending the 30% DOE Cash Grant program, lengthening the time horizon on the DOE loan guarantees, and extending a 50% bonus on depreciation of solar power assets (tax break).

If you’ve followed the development of utility-scale solar projects in the southern deserts of the US, you know that the permit process can be costly and time consuming.  Cullen supports a provision that gives the Federal Energy Regulatory Commission authority grant approval for solar projects rejected at the state level in 180 days or less. 

Other issues include national standards for net metering, connecting solar to the grid, and encouraging federal agencies to sign power purchase agreements (PPAs) with independent wind and solar power generators.

Jim Presswood of the Natural Resource Defense Council described important provisions that NDRC is working to include in the Climate Bill or other energy legislation.  Perhaps most important is a provision to fund renewable energy deployment (construction of renewable power facilities) by channeling pollution allowance funds (carbon pollution allowances) to renewable energy developers.  NDRC is working to get a 35% “carve out” for renewable deployment.

During Q&A, the audience expressed concern on several issues including the time and cost involved in Environmental Impact Report (EIRs) for solar projects and Feed-in Tariffs (FiTs).  Many were surprised to learn from John Stanton, general council for the Solar Energy Industries Association that SEIA’s board is undecided on a national FiT, but might support FiTs at the state level.  Kate Johnson added that a renewable electric standard was more important at this point in time.

Though I read dozens of solar news reports each day, I was surprised by the progress made on our behalf, but also the extent to which industry organizations and individuals were influencing (and sometimes writing) public policy to bring about a renewable energy future.