Clouds Lifting for Solar Energy

Clouds Lifting for Solar Energy

April 14, 2010

Ken Silverstein
EnergyBiz Insider
Editor-in-Chief

Some clouds have lifted but the solar energy still has to contend with rough weather ahead. Industry advocates say that less restrictive financing and more access to public lands would brighten their day.

The industry, in truth, has grown exponentially and continued to win a goodly share of the venture capital dollars entering clean energy markets. But it remains a tiny sliver of the overall electricity mix, pushing the sector to ask more of its government by allowing it to develop utility-scale solar energy projects on public lands and to speed up loan guarantees promised in the stimulus bill to such plants.

"The American public overwhelming supports the development of solar energy," says Rhone Resch, president of the Solar Energy Industries Association. "It is time for our elected officials to respond to this high public demand and enact policies that allow solar to compete with other energy sources on a level playing field."

In the United States, five new pilot plants came on line in 2009 and more than 100 utility-scale solar projects are under development. Those projects represent more than 17 gigawatts of capacity, or enough to provide clean power to 3.4 million households and to create more than 100,000 American jobs, says the solar group.

To be clear, utility-scale solar facilities, often referred to as concentrated solar power, is different than rooftop solar panels that are used by residential customers. The former are best-suited in the southwestern United States where conditions are sunny and dry. But such facilities require large plots of land. At the same time, those plants are expensive or about $1 billion to build. Commercial banks simply won't take the chance.

And lenders would be at risk. The bigger facilities are both untested and largely unable at present to connect to transmissions systems to take the electricity from the desert to the cities. Rooftop solar panels, by comparison, are proven, less controversial and can be easily connected to existing power lines.

"The banks are now recovering and there is some capital now available, but this generally tends to be for smaller projects," says Fred Morse, chair of the concentrated solar power division at the solar group, in a story published in Concentrated Solar Power Today. "So the U.S. Congress included a federal loan guarantee in the stimulus bill, which for most project developers is very important. It gives them access to the kind of financing they need."

Consider NextEra Energy Resources: It has applied to build a 250-megawatt plant in the Mojave Desert that it says can be expanded to 850 megawatts by 2015. While it continues to await permission from California regulators, it is now fears it won't meet the year-end deadline that is set by the federal government so that it can get $300 million in stimulus monies to help pay the total $1 billion cost.

Assertive Role

California regulators are not naysayers. They just have too many pending applications before them. They want to be able to do each justice so as to ensure that these projects get built without wreaking havoc on the landscape. While the California Energy Commission grants approval for those in its territory, the Bureau of Land Management is called in if the facilities would be located on federal property.

Altogether, 49 projects that would produce 11,000 megawatts are under consideration there, says the California governor's office. That would certainly help the state meet its renewable portfolio standard set at 33 percent of all electricity sold by the regulated utilities by 2020.

"Over the next few years, we'll see half of the utility-scale solar mega wattage currently on the drawing board go by the wayside because of financing challenges," says Edwin Feo, with energy law practice of Milbank, Tweed, Hadley & McCloy. "Between transmission costs, water use, environmental impacts and the winnowing scythe of the federal loan guarantee process, many of these projects won't be able to obtain the financing they need to be commercially viable."

While solar photovoltaic (PV) power is less controversial, it is still too expensive for the vast majority of homeowners. Residential users can expect to pay as much as $25,000 to retrofit their homes, all before state and federal incentives kick in. The good news is that technology is improving and prices are dropping as a result.

To make the sector more competitive with other fuels, PV suppliers are also asking all policymakers to take more assertive roles. Mike Miskovsky, general manager for U.S. operations of Canadian Solar, says that at the federal level "feed-in tariffs" should be established. That means, simply, that the utility or the government will pay homeowners a flat fee for every kilowatt of energy they produce.

That's the kind of system that Germany has established, he adds, enabling it to become the world's leading market for solar power. The country's utilities stand behind the policy because it is positioning them to meet Europe's rigorous renewable portfolio standard of 20 percent by 2020.

"A national policy or set of policies, similar to those implemented in many European countries, could rationalize the U.S. PV market and make it easier for both PV companies and end customers to understand how best to adopt solar PV," adds Parker Barnes, market analyst for Trina Solar in San Jose.

Solar energy can play a bigger part in U.S. energy policy. But it must be able to overcome persistent regulatory and financial concerns. With an improved economy and a receptive government, developers say that they are more committed than ever.

To subscribe or visit go to: http://www.energycentral.com