RMI’s Jesse Morris and Ned Harvey are both at the Summit, and covering it on Twitter! Follow them @ja_morris and @nedleeharvey for updates on #SolarTech.
2011 was a tough year for U.S. solar. That was clear at a “state-of-the-market” summary delivered by Shayle Kahn, managing director of solar for Greentechmedia research, speaking at the 2012 Solar Leadership Summit.
Demand for solar photovoltaic units was flat through most of the year. For solar PV manufacturers, average prices in the U.S. of the most common solar modules plunged from $2.76 to 97 cents per watt from 2009-2011.
“This negative margin for manufacturers meant that in most cases, they were just trying to keep the lights on,” said Kahn. In August, Evergreen Solar went bankrupt. In September, Solyndra failed, and the Department of Energy federal loan guarantee program fell under intense political scrutiny.
The Solyndra fallout has played a large role in politicizing clean energy—which is currently playing out in early political ads.
“We can shy away from this negative press or treat is as an opportunity,” said Kahn. “Let’s tell a story about what’s actually going on—especially downstream where we are seeing enormous solar growth.”
In the U.S., the diversity of state-to-state energy market conditions, mandates, incentives, and politics creates a complicated system that prevents the nation from having a one-size-fits-all program like Germany’s, which has let that country be a leader in installed PV.
However, this challenge can present the biggest opportunity to position the U.S. solar market for long-term competitive advantage. Currently, 19 states have more than 10 megawatts of solar installed, up from just four states in 2007. By developing smart state incentives, Kahn advised, we can create a market by “filling in the map” as quickly as possible.
RMI agrees. Reinventing Fire, RMI’s vision and blueprint for running a 158 percent bigger U.S. economy powered by efficiency and renewable energy, shows that smart state or regionally led policies can help overcome Washington gridlock and drive the investment and innovation that will overcome our costly fossil fuel dependence. Diverse state-by-state policies mean innovative business models are emerging to provide residential solar and a larger suite of customer options.
Americans can yell at the government for eliminating any number of renewable energy incentives, including a Treasury cash grant program for solar or the production tax credit for wind. But unless the U.S. government collectively decided to enact a nationwide rate structure specific to PV, the situation unfolding in Germany won't happen here.
Thousands of Germans are currently protesting proposed cuts to the country's widely successful feed-in-tariff (FiT) program. Interestingly, the U.S. solar industry isn't as exposed to this kind of policy . Because of the fractured nature of our electricity system where individual utility commissions approve incentives and rate structures such as FiTs within each state, we'll never see protesters yelling at the federal government for the same reasons.
This state-led transformation doesn’t have to mean that everyone has to reinvent the wheel. Instead, leading states can serve as models for others, armed with the right information and lessons learned to develop programs tailored to their local markets.
For example, in 2008 RMI found a huge gap between leading and lagging states’ electric productivity, estimating that if the rest of the country achieved the normalized electric productivity of top performing states, the U.S. would save the equivalent of 30 percent of its annual electricity use, or about 60 percent of the nation’s coal-fired power. Top performing states such as New York, Connecticut, and California can be examples of how to overcome barriers to efficiency practices, provide incentives to electric utilities, and accelerate the adoption of existing efficiency technologies. Lower-performing states like Kentucky and Mississippi could build on these successes, and close the gap using known and tested technology and policy.
Solar 3.0, the central focus of the 2012 Solar Leadership Summit, is following a similar “lead-by-example” model. Aiming to achieve a 50 percent reduction in non-hardware balance of system costs across approximately 90 percent of the U.S. solar market in targeted communities, summit participants laid the groundwork for innovative, scalable regulatory approaches and process enhancements. Solar 3.0 partners are looking at 100 US Cities in 2012 poised as market tipping points.
As an industry operating in the politicized U.S. climate, solar companies simply can't rely on the federal government to create standards for everyone to follow. Instead, it will be in the hands of state and local governments to facilitate the proliferation of efficient, standardized, low-cost best practices.