The Good News About Solar: Five Facts You Should Know

  The Good News About Solar: Five Facts You Should Know Almost 90 percent of the world’s energy needs are met by non-renewable sources of energy suc...
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The Good News About Solar: Five Facts You Should Know Almost 90 percent of the world’s energy needs are met by non-renewable sources of energy such as coal, oil and natural gas. As these resources are depleted and energy needs increase globally, there is an ever growing demand for productive, clean, renewable sources of energy to supplement the existing electric utility infrastructure fueled by oil, gas and coal. Solar energy is perhaps the most often discussed renewable energy source among the media, politicians and the general public. Unfortunately, there are a lot of myths and misperceptions about solar energy. The facts are compelling. The U.S. Solar industry continues to grow. At the same time, the cost of solar installations has been dropping. And despite what you may have read or heard in the news, Americans support solar energy development and even government subsidies for solar energy. Industry Experts Reveal the Truth About Solar Energy The solar industry in the United States has a projected growth rate of 26 percent annually in the coming years. It is scheduled to add 24,000 jobs in 2012, a growth rate that is 10 times faster than the U.S. economy. "The solar industry is the fastest growing industry in America for the second year in a row, said Rhone Resch, president and CEO of the Solar Energy Industries Association (SEIA), based on a report from second quarter 2012. “What we are seeing in the U.S. is that policies are working to open new markets and remove barriers for solar. The industry is now poised for years of multigigawatt growth and the creation of tens of thousands of new jobs.” Established in 1974, the Solar Energy Industries Association (SEIA) has been working through advocacy and education to build a strong solar industry to power America. As the voice of the industry, SEIA works with its 1,100 member companies to make solar a mainstream and significant energy source by expanding markets, removing market barriers, strengthening the industry and educating the public on the benefits of solar energy. "Solar is the cleanest, safest source of energy and the solar industry is committed to ensuring social and environmental responsibility for our supply chain," adds Resch.



Brief Case Study: Inovateus Solar Inovateus Solar, an innovative, full-service solar integrator based out of South Bend, Indiana, is also dedicated to promoting the solar industry through education and research. To this end, they have formed a research group including staff members and other solar industry professionals. This research committee is using their decades of combined experience and knowledge to help dispel some of the myths about solar energy, starting with the success of their own company over the last few years. “Our company’s business is growing at an incredible rate,” said Kanczuzewski. “We have more active projects than we have ever had. And we predict that 2012 will continue to grow in sales as well. Inovateus has developed major partnerships with large companies over the last few years and completed large-scale projects for major players such as GE. The company has really diversified since it started, and this has helped us to grow. The entire industry is still growing.” Industry figures support what Kanczuzewski states. According to figures compiled by the SEIA, the U.S. solar industry achieved a new record for growth in 2011. Overall, there were 1,855 MW of Photovoltaic (PV) installations in all of 2011, representing 109 percent growth over 2010. PV demand grew 115 percent in the fourth quarter of 2011 over the same quarter in 2010 and 64 percent over the third quarter of 2011. And the US solar industry installed 776 MW in the fourth quarter of 2011, far surpassing the record set the previous quarter. Solar Power On the Rise The numbers for early 2012 support the hypothesis that solar is still on the rise: •

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The U.S. continued with increased solar installations in the second quarter of 2012 with an impressive 772 MW of solar electric capacity. This represented a 125 percent increase in deployment over second quarter of 2011. Utility-scale projects will continue to drive U.S. solar growth, with the best quarter on record in second quarter of 2012, at 477 MW installed. SEIA forecasts that the industry will maintain its rapid growth with an additional 2,100 MW of solar electric capacity projected for installation in the second half of 2012.

Solar Fact #1: The U.S. Solar Industry Continues Strong Growth. The solar industry has seen impressive growth over the past nine years, averaging 40 percent per year. In the U.S. alone, there are now over 5,700 MW of installed solar electricity – enough to power more than 925,000 American homes. The overall U.S. solar energy market continues to grow, making it one of the fastest growing sectors of the economy during a time that many industries have been struggling to stay afloat. The utility market saw eight states with 10 MW or more of installations, and the commercial PV market showed steady incremental growth with 98 MW of installations, up 42 percent over second quarter of 2011.



Source: U.S. Solar Market Insight, 2nd Quarter 2012

Globally, the solar industry has recovered quickly from the recession, growing at a rate of 70 percent per year since 2009, led by huge increases in the U.S. and China. The solar leaders are the countries with the highest market share. In order, they are Germany, Italy, United States, Japan, France, and China. Much of the success of these programs worldwide is due to government subsidies in the form of Feed-in Tariffs (FITs). The countries across the world or the states in the U.S. with the highest subsidies have the largest number of solar installations and the highest wattages. If properly supported and allowed to continue at its current rate, the United States will represent the largest market share of the solar industry in 2016 with 15 percent worldwide. “The solar industry is growing, not declining,” said Kanczuzewski. “Out of a thousand success stories, a few solar companies have had a rough go of things. This is mainly because of increasing competition. This competition is important, because it is weeding out the weaker players in the industry. That is why we see some solar industry firms closing up shop and getting attention on the evening news. The attention these few companies get from the media sometimes puts a bad spin on the entire solar industry, and that is a shame. The fact of the matter is; companies will not survive if they cannot cover their equipment costs and overhead.” Solar Fact #2: The Cost of Solar Continues to Drop Dramatically. The overall increase in the cost of fossil fuels and growing concerns about the environmental consequences of greenhouse gasses are large forces behind the growth of renewable energy. Because of this and other factors, the price drop of renewables is expected to continue. For example, the average cost of solar panels fell by an astonishing 50 percent in 2011. The average cost of a completed PV system dropped by 20 percent in the fourth quarter of 2011 compared to the fourth quarter of 2010, and since the beginning of 2010, the average cost of a PV system has dropped by more than 35 percent.



While these price drops are beneficial for the end user, this sharp fall in prices, driven in part by global supply, has put a serious strain on solar manufacturers worldwide. Competition in the industry is tough. Competition is seen as good for the industry, however, by pushing manufacturers to develop more innovative products at more competitive prices. These continually decreasing costs make solar more and more affordable for Americans every day. In 2009, the average installed cost of solar was approximately $7.50 per watt. In 2011, the overall average installed cost was $4.75 per watt. By fourth quarter of 2011, this average dropped to $4.08 per watt. As of Q2 2012, the national weighted-average system price fell by 22 percent quarter-over-quarter, from $4.44/W to $3.45/W. “It is incredibly encouraging how much prices for solar installs have dropped in the last five years, and I think they will continue to drop,” said Kanczuzewski. “More panels are being produced now than ever before.” Given the rise of fossil fuel prices and the drop in solar panel prices, some experts predict cost parity (when both forms of energy can be purchased at the same cost) could come as early as 2015. Experts agree that once the costs are equal, the biggest driving force behind sales will be ease and speed of installation, both of which are improving at a rapid pace. Solar Fact #3: Solar Power Creates Jobs. As the solar industry grows, so does its impact on the economy. As of August 2011, there were over 100,000 solar workers in the U.S., more than double the estimated employment in 2009. These workers were employed at over 5,600 businesses across all 50 states, many of which are small companies and residential installations. The increasing value of solar installations has injected some life into the troubled U.S. economy as well. In 2011, solar installations were valued at $8.4 billion compared to $6 billion in 2010. “Experts predict the investment interest in solar to rise, with the industry generating more than a trillion dollars over the next decade,” said Kanczuzewski. “Solar manufacturing jobs are expected to grow by 14 percent during the current year alone. Expansion will continue as major new manufacturing facilities come online in more than a dozen states in the next couple of years.” •

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The public perception is that renewable energy, in this case solar, will create jobs. Sixtynine percent of Americans think that developing alternative energy sources like solar would increase the number of jobs in the U.S., according to a CNN/Opinion Research poll from June 2010. Industry figures support the thesis that the solar industry is growing at a fast pace. The largest percent of the workforce has been in the industry for just 1-4 years. Further, jobs dealing with renewable energy are part of the fastest growing sector in the U.S., coupled with a dramatic increase in students enrolling in renewable energy college majors. The average industry pay for these renewable energy jobs is pegged at about $69,000 per year.


Solar Fact #4: Solar Incentives are Only a Fraction of Coal, Oil, and Gas Incentives. The United States continues record-setting growth in renewable energy project construction. This stronger and more competitive domestic manufacturing base will support more robust job creation and economic growth. Limited, short-term federal tax incentives like the Section 48C Advanced Energy Manufacturing Tax Credit jump-started investments in new domestic plants, as well as expansions of new facilities. However, the oversubscribed program lacked sufficient funding to meet the enormous demand placed upon it. New legislation, governmental incentives and subsidies could provide the support necessary to spur thousands of new jobs and develop US manufacturing’s global competitiveness. Countries such as China, Germany, and Malaysia continue to provide continuous government support to their renewable energy manufacturing sectors, making it very difficult for American companies who are currently hampered by short-term inconsistent federal policy. The 48C provided a one-time allotment of $2.3 billion for renewable energy projects in a competitive bidding process. Although 183 separate projects received awards, over 500 applications were submitted, totaling over $8 billion and oversubscribing the program by a ratio of 3 to 1. In 2011, the federal government provided an estimated $24 billion in support for developing and producing fuel and energy technologies. Tax preferences such as special deductions, special tax rates, tax credits, and grants in lieu of tax credits totaled $20.5 billion, or 85 percent of the total. The Department of Energy’s spending programs received funding of $3.5 billion, the remaining 15 percent of the total. The CBO’s reporting shows that until 2008, most energy subsidies went to the fossil-fuel industry. For example, in 2006, the federal government allocated $13.6 billion in subsidy money in the following percentages to these specific energy industries: 25.7 percent to oil and gas, 20.2 percent for coal, 34.6 percent for ethanol, 8.7 percent to nuclear, and an incredibly small amount to solar – 2.8 percent. In 2010, the U.S. Energy Information Administration compared subsidies for the various segments (from The Arizona Republic; May 5, 2012): • • • • • • • •


Coal got about $1.4 billion in direct subsidies, mostly for research and in tax incentives. Natural gas and petroleum got $2.82 billion, nearly all from tax incentives and none from the federal stimulus act. Biofuels got $6.6 billion, mostly in tax credits. Nuclear got $2.5 billion, mostly in research and development and tax incentives. Wind got $4.99 billion, nearly all tied to the stimulus. Biomass got 1.17 billion, split about evenly between tax incentives and research and development. Geothermal got $273 million, mostly tied to the stimulus. Solar got $1.13 billion, most in direct funding, and about 70 percent of which was tied to the federal stimulus act.


Conventional wisdom says that subsidies should be the greatest during the first 15 years of any industry's life, when the need is the greatest. However, research shows that government support of nuclear, oil, and gas per year was much higher during those industries' lifetimes than it ever was for the first 15 years of all renewables, of which solar is a small part: $4.86 billion for oil and gas and $3.5 billion for nuclear, compared with $0.37 billion for renewable energies. Renewable energy advocates argue in favor of federal support because it allows them an equal footing with oil and gas competitors that received so much federal assistance in the past in the form of subsidies. It is argued that this federal support will in time allow renewable technologies to eventually compete with fossil fuel. In 2011, total investment in clean energy (of which solar is a small part) in the US surged to $55.9 billion, an increase of 33 percent over the previous year. Venture capital and private equity investment made up $8.9 billion of these investment dollars.



The list of main players in the renewable energy sector includes solar panel and similar manufacturers, but also multi-national oil companies and investment banks. According to the CBO report, the ethanol industry topped the list of tax credits with over $6 billion, making it the largest of the renewable energy recipients. These government tax credits often go to refiners such as Exxon Mobil, Royal Dutch Shell, and BP. Wind is the second largest recipient of government tax breaks for renewables. Solar is further down the list. “There is a myth out there that solar energy cannot exist without incentives,” said Kanczuzewski. “What people don’t realize is that incentives also exist for oil, gas and coal companies. They receive their incentives up front, and this makes them less visible than solar incentives, which are received on the back end in the form of either rebates, through tax incentives, or from utility companies. Oil and coal get much larger incentives than solar. In fact, solar only receives only a fraction of the total government incentives handed out to the energy sector.” Solar Fact #5: Solar is an Essential Part of the Energy Mix. Solar is already the fastest growing energy sector in the US and by 2014 it will likely be the largest source of new electric capacity in America. In 2010 and 2011 alone, 41 new US solar manufacturing facilities began operations across America, including Arizona, Georgia, Ohio, Michigan, Mississippi, Pennsylvania and Tennessee. Continued industry growth enhances our energy security and diversifies our domestic energy portfolio. Solar energy isn’t the answer to the world’s energy problems, but it is certainly an important part of the solution. As seen in the chart to the left, the U.S. Energy Information Administration report for energy use by source for 2011 shows percentages of usage for each type of energy. Petroleum was the most widely used at more than 34 percent, natural gas was next at almost 25 percent, coal at almost 20 percent, nuclear power at 8.3 percent, and renewable energies, including solar, at 9.1 percent. Sixty-nine percent of Americans think it would be a “bad idea” for the US to stop developing clean energy sources during the current economic difficulty, according to a November 2011 poll by ORC International. Fifty-nine percent of Republicans, 73 percent of Independents, and 78 percent of Democrats agree. “We’re getting closer and closer to achieving grid parity nation wide, which means that point when solar becomes cheaper than buying power from a public utility,” said Kanczuzewski. “By 2016 or 2017, solar could be provided without any incentives at all.” Conclusion Based on the facts outlined above, it is easy to make a strong case for further government and private investment in the development of solar energy in the United States.



“Pursuing an all-of-the-above approach to our energy portfolio, including aggressively deploying solar energy nationwide, is the right choice today and critical for American competitiveness and national security," said Tom Kimbis, vice president of strategy and external affairs for SEIA. Public opinion matches this sentiment. Eighty-eight percent of Americans think we should rely more on solar power, according to a CNN/Opinion Research poll from March 2011. Solar was more popular than any other energy source and more than twice as popular as oil at 28 percent, coal at 43 percent and nuclear at 42 percent. "Just like traditional energy sources like coal, oil, and gas that have received federal support for decades, solar energy is providing benefits to Americans today thanks to smart policy and private innovation," added Kimbis. "Today, solar is the fastest-growing industry in America, employing 100,000 Americans at 5,600 companies – most of them small businesses – across all fifty states.” Answering the Tough Questions About Solar Incentives A Q&A with Inovateus Solar President T.J. Kanczuzewski Q: Are incentives for solar a waste of money, as in the case of companies who took federal funds and failed such as Solyndra? A: Many question the reasoning behind the approval process for the 1703 Energy Program because the pilot project (Solyndra) failed. The solar industry has grown immensely over the last couple of years, and so has the competition. Companies we’ve heard about on the news like Solyndra, Uni-Solar and Abound could not keep up with the drastically decreasing cost of solar from 2010-2011. Put simply, they couldn’t adjust their manufacturing costs quickly enough to deal with the rapidly changing market. And like businesses in any industry that cannot respond to market fluctuations, it led to their demise. The fact of the matter is; there are a number of companies who were recipients of federal funding who are still flourishing. Those few companies who failed are covered more in the media, but represent only a fraction of the total companies who received loans. We don’t hear anything on the news about all of the renewable energy and solar firms who used their federal funds to build successful businesses. Q: Are incentives for solar energy and other renewables just another one of the ways that liberals are spending our tax money for things we don’t need or that do not work? Did Solyndra receive funding because they were a political favorite and contributor of the Obama campaign? A: We are hearing the Solyndra story come up quite a bit in the media during coverage of the current presidential campaign, but our research shows that both George W. Bush and Barrack Obama supported the Department of Energy's $535 million grant to Solyndra. Of the 143 applications received under the 1703 Energy Program, the Bush White House accepted 16 companies, including Solyndra. The Obama administration continued the process started by the



previous administration by passing along the application to the DOE after approval by the Office of Management and Budget (OMB). Out of many grants that the DOE gave in the renewable energy sector, there was a very small percentage of failure. In total, the DOE approved $37.8 billion dollars worth of condition commitments. Solyndra’s loan of $535 million represented only 1.3% of that total. According to the Washington Post, who launched a full investigation into the situation, while politics was at the heart of many decisions, it was not the cause of the original loan guarantee for Solyndra. Not all Republicans are against solar incentives. New Jersey Governor Chris Christie recently signed into law a bill that boosts the amount of energy New Jersey utilities are required to get from renewables, and very publicly supported an $883 million Public Service Electric and Gas initiative to develop 233 megawatts of solar capacity in New Jersey. Republicans among the general public support solar as well. In a recent Gallup Poll, 69 percent of U.S. adults supported “spending government money on developing solar and wind power.” Support was lower among Republicans, but still a majority (51 percent) supported using taxpayer money to expand solar power. Q: Will the solar industry disappear once the government subsidies dry up? A: The other energy industries that have benefited from incentives in the past such as the oil, gas, coal, hydroelectric, and wind industries haven’t gone away. People need to understand that solar, wind, and other renewable energy sources are not being touted as the be-all and end-all solutions to all of our power needs. Each energy source plays its own part in the overall electricity production mix. The oil, gas, coal, and hydroelectric industries have been the recipient of massive amounts of government incentives, many dating back as far as the 1930s. Solar power incentives represent a very minute portion of the total government energy incentives awarded—both historically and annually. For example, between 2002 and 2008, fossil fuels pulled in an impressive $70.2 billion in incentives, according to data from the Environmental Law Institute. $16.3 billion in aid was received directly, with $53.9 billion in tax breaks. Oil companies also recorded record profits during this time period. For the same span of time, renewable energy, of which solar is a small part, received only $12.2 billion in government support, with $6 billion in direct spending and $6.2 billion in tax breaks. It is also important to note that incentives for renewable energy, solar included, are different than those for oil, gas, or coal. Those industries receive their incentives up front from the government, while solar gets their incentives on the back-end, once a project is completed. This causes a different perception to the public and in the media, because the incentives for energy sources such as fossil fuels are more transparent than the incentives for solar.



Sources (Check our Facts) “Assessment of Incentives and Employment Impacts of Solar Industry Deployment” “Debate over continued incentives for energy companies” “EIEA Releases New Subsidy Report: Subsidies for Renewals Increase 186 Percent” “Facts on America’s Solar Industry” PDF link: “N.J.’s Christie a Rare Solar-Friendly Republican” “The Real Deal on US Subsidies: Fossil’s $72B, Renewable Energy’s $12B “Solar Energy Facts: Year in Review 2011” “Solar Energy Facts: Q2 2012” PDF link: “Solar Energy Market Growth” “Solar Surge Drives Record Clean Energy Investment in 2011”; Bloomberg “The Case for the Solar Investment Tax Credit” “U.S. Solar Market Insight Report Q1 2012” PDF link: “U.S. solar power growth jumps to new record” “What are the major sources and uses of energy in the United States?” “Why shouldn’t we subsidize solar power?” “Will solar in 2011 look like automobiles in 1911?” Additional Sources: Energy Information Administration, American Petroleum Institute, American Wind Energy Association, Environmental Law Institute.