Solar has its day in the sun as wind is blown aside

Source: Nick Juliano, E&E reporter • Posted: Thursday, January 30, 2014

Coming off its most successful year to date, the solar industry seems to be emerging as the new cool kid in renewable energy circles with a prominent mention in President Obama’s State of the Union address this week.

In fact, solar was the only emissions-free source of electricity to earn a specific mention in the agenda-setting speech, a break from previous years when it was mentioned alongside the wind industry in presidential appeals to promote renewable energy. The continuing boom in domestic oil and gas production received plenty of attention as Obama touted his “all of the above” approach, but the specific shout-out for solar indicated the rapid growth that industry has seen even as development patterns in the wind industry have leveled off.

“It’s not just oil and natural gas production that’s booming; we’re becoming a global leader in solar, too,” the president told a joint session of Congress on Tuesday night. “Every four minutes, another American home or business goes solar, every panel pounded into place by a worker whose job cannot be outsourced.”

The speech was Obama’s first State of the Union that did not include a specific mention of the wind industry, but that may have reflected the relative paucity of public milestones the industry achieved last year.

“There wasn’t a lot of great news to talk about from last year. … Installation rates really plummeted, so it’d be really hard to brag about wind in 2013,” said Ethan Zindler, an analyst with Bloomberg New Energy Finance. “On the other hand, it truly was a record year for photovoltaic installations last year, with the most ever installed in the U.S.”

The solar industry also holds an edge in the number of Americans it employs and has been adding workers at a breakneck pace, making it a ripe candidate to underscore the president’s theme of finding ways to boost the economy. A Solar Foundation report released last week showed employment in the industry grew 20 percent last year to more than 140,000 workers throughout the United States (Greenwire, Jan. 27).

The wind industry, by comparison, employs about 80,000 Americans, according to industry estimates. In terms of installed electric capacity, though, wind is a clear leader, with more than 60,000 megawatts on the grid. Solar has about 13,000 MW installed, about what wind added in 2012.

In 2013, wind only added about 600 MW, Zindler said, citing internal estimates from his firm, but installations are on track to rebound this year and next, when Bloomberg New Energy Finance projects nearly 15,000 MW will be installed. The American Wind Energy Association is scheduled to release its own figures this afternoon.

Some wind industry players were a little “uptight” at the fact their industry wasn’t mentioned during the speech, said one lobbyist who was granted anonymity to discuss private conversations. But by and large, wind supporters are comfortable with the level of support they receive from the White House, especially the recurring proposal in the president’s previous budgets to make the production tax credit permanent and refundable.

“How can you say the president is dissing us when he proposes the dream legislation?” the lobbyist asked.

Other observers suggest the solar emphasis was more an effort to provide some variety to the State of the Union’s energy proposals.

“The president over the last five years really on energy has — through policy and also dramatic changes in the sector really — has been like a pop star churning out hits,” said Josh Freed, clean energy program director at the centrist Democratic think tank Third Way, pointing to previous speeches touting record wind installations or the benefits of using more natural gas for electricity.

It remains to be seen how the shifted statures of wind and solar affect a policy landscape where they typically are seen as allies, although their current needs are much different. As it grows, solar is adjusting how it communicates with policymakers and activists to emphasize its track record. For example, solar developers have lately teamed up with tea party activists in some states to fight policies that would limit deployment of rooftop panels.

“Oftentimes, when people look at renewable energy as an issue, we get lumped into this broad basket of renewables,” said Rhone Resch, president and CEO of the Solar Energy Industries Association. “But the technology has improved so dramatically in such a short period of time that the story really needs to be communicated to these groups.”

Still, Resch said his industry is not trying to “separate ourselves” from wind, but rather to establish an identity in its own right within the broader classification of renewable energy. It’s the same, he said, as the different approaches taken by the coal, oil and natural gas industries, even though all are fossil fuels.

Solar’s policy fights are primarily at the state level, as the industry beats back efforts from some utilities to weaken “net metering” rules that allow homeowners to sell excess electricity generated from their rooftop panels.

Wind, meanwhile, has much greater immediate needs from the federal government, though it also is fighting state-level battles to protect renewable portfolio standards that are under attack by conservatives in many areas. Its marquee incentive, the $23-per-megawatt-hour production tax credit (PTC), expired last year. While projects that were under construction by the end of last month will still be able to qualify, the industry warns that its project pipeline will soon dry up again without another extension.

However, the prospects for a “tax extenders” bill that would renew the PTC are murky. Sen. Ron Wyden (D-Ore.), who will soon become chairman of the Senate Finance Committee, has said he wants to move quickly on extenders, but his House counterpart, Ways and Means Chairman Dave Camp (R-Mich.), has shown no such enthusiasm.

Similar uncertainty reigned in 2012 — when the credit was less generous — and led to the downturn in activity observed last year.

In his State of the Union, the president did not explicitly mention the PTC, although he indicated support for continuing it in conjunction with eliminating benefits for the oil industry.

“Let’s continue that progress with a smarter tax policy that stops giving $4 billion a year to fossil fuel industries that don’t need it, so we can invest more in fuels of the future that do,” he said after touting the solar milestone.

Solar benefits from the separate investment tax credit (ITC), which covers 30 percent of an eligible project’s costs. That credit is in place until 2016, and its future beyond that is likely to be heavily influenced by continued efforts to enact a comprehensive reform of the tax code that are likely to remain a focus of lawmakers for the next few years. In the meantime, solar boosters are asking Congress to provide the same “start construction” eligibility wind developers got last year (Greenwire, Jan. 23).

While some wind interests have privately complained that the solar request is complicating their more urgent push to reinstate the already-expired PTC, the industries are trying to remain cooperative overall. Resch said he and other renewable energy officials were arranging a meeting with Wyden in the coming weeks to discuss tax extenders.

“The great unifier for all energy technologies, regardless of whether it’s fossil or renewable, it’s the tax code,” Resch said, pointing to the decades of permanent benefits baked into the code for fossil fuels compared with the temporary credits for renewables. Wind and solar alike want “equal treatment for all technology with regard to the tax code.”