People often wonder why the United States, the largest economy in the world and a nation world-renowned as a technology and research powerhouse, is not the global front-runner in the race to install renewable energy sources. Solar Choice is keeping a close eye on developments in the North American solar industry, and once we have consolidated our UK operations (www.solarselections.co.uk), plan to be live in the USA within the next two years.
One likely explanation for the USA’s delay in achieving its solar superpower potential may be that it is a nation that has historically been a strong proponent of free markets and averse to government intervention in business. As a result there a mandatory national target for adoption of renewable energy does not exist, while such targets do exist in the EU, Japan, and even Australia. Although the ever-combative political climate in the US makes it unlikely that sweeping renewables legislation will be passed on the federal level anytime soon, there are numerous solar-friendly state policies that are promising steady growth and long-term stability for solar power and other renewable energy sources. It is decentralised, market-based mechanisms will likely be the driving force in future growth.
Germany champions installed solar, China leads in renewable energy investment. Where is the US?
If asked to name the world-leading country in solar power policy and most installed photovoltaic capacity, most people would immediately and correctly think of Germany, which has a justifiably good reputation as a ‘green’ country that has given true priority to the environment and takes its responsibilities seriously. The interesting thing to note, however, is that much of the progress made in Germany has been relatively recent, as Seb Kilborn pointed out in a previous blog entry about the state of solar power in Germany: feed-in tariff legislation, as well as a panoply of investment tax credits and other incentives, came into effect in 1991 as the EEG, but the rate of uptake really didn’t begin increasing significantly until the year 2000. Since then, the market has taken off: with a whopping 9GW installed capacity in 2009, with no sign of slowing down. The number of new installations per year has been increasing dramatically, and the situation seems likely to continue on this track for the foreseeable future, despite scheduled feed-in tariff rate regressions. The EU-wide emissions trading scheme (ETS) adds another level of security to the German solar power industry’s health, and to the health of the renewable energy industry as a whole.
Solar power as one (big) piece of the renewable energy puzzle
Solar power–both concentrating and photovoltaic power–is the poster child for renewable energy: it is clean, simple-looking, has little or no moving parts, and takes advantage of the world’s most abundant energy source and the basis for virtually all life on earth: the sun. However, the sun is not the only renewable source of energy, and solar policy is often lumped in with other renewable energy sources, such as wind power. It is therefore important to take a look at the big picture with regard to renewable energy policy. In many cases the capabilities and qualities of different renewable resources are equal: electricity generation from naturally occurring sources, little or no carbon footprint, little to no pollution. But in many ways they are not: solar power only produces when the sun shines, wind power only when the wind blows. Any ultimate solution to the world’s energy requirement problems will include, but not be limited to, the deployment of solar technologies.
Germany may have a phenomenal lead in installed solar power capacity at the moment (with roughly half the total installed global solar power capacity!), but the world solar industry is moving and changing with amazing rapidity, and it may only be a matter of time before other, more populous countries catch up. China, for instance, according to a report by the Pew Charitable trust (pdf), has as of 2010 taken the #1 spot for renewable energy investment (at about $55B), although the majority of this is in wind power, with only a relatively small proportion going to solar (see tables 2 and 3). It is also important, however, to keep in mind that China is the world’s manufacturing capital for solar photovoltaic panels, thanks to significant government support: it may just be a matter of time before the domestic solar market takes off. Behind China for gross renewable energy investment are Germany and then the United States, which has now managed to slide to third place, down from the top spot 3 years ago.
What is the solar power situation in the United States?
At first glance, it may look like things are not progressing well for the US solar power industry; this is admittedly true considering the size of the US economy. A close examination of the situation in the United States, however, still reveals numerous burgeoning markets for the solar industry, and a complex network of solar power and other renewable energy policies that promises long-term market stability in addition to the robust growth currently being seen there; 9.56MW of solar power was installed in 2010, adding up to a cumulative total of 2.6GW.
A recent report, “U.S. Solar Market Insight 2010 Year in Review“, by the Solar Energy Industries Association and GTM Research, paints a picture of a rapidly expanding solar power industry in the country. Even though the nation as a whole remains behind a number of nations in terms of installed solar capacity (Germany 9GW in 2009, Spain 3.5GW in 2009, France 2.89 in 2009, US2.6GW in 2010, and–for reference–Australia 300MW in 2010), some forecasts predict that the US is on the verge of realising its promise as a world-leader in not only the amount of installed solar power capacity, but also in terms manufacturing and production capacity.
Rhone Resch, president of the Solar Energy Industries Association (SEIA), in an interview with RenewableEnergyWorld.com, commented that the growth that the US is seeing is in all three market segments (see figure 1 at top of the article): whereas the German market is mostly focused on residential, rooftop photovoltaics, and the Italian and Spanish markets on utility-scale concentrating solar power, the US has seen significant growth in utility-scale/industrial, residential, and commercial solar, not to mention in manufacturing. The future is looking bright, and solar power is looking skyward.
Federal Renewable Incentives in the US
As mentioned above, although there have been attempts to do so, the US federal government has not produced legislation to mandate a certain percentage of energy to be sourced from renewables for the nation. The EU, Japan, and Australia have. (The US federal government has set a percentage Green Power Purchase Goal for its own energy consumption–7.5% from renewable sources in the year 2013. The US military is also looking to deploy more solar.)
Nevertheless, there are a number of schemes that have managed to make their way through both houses of congress to become legislation. These can be divided clearly into market- and tax-based incentives (carrots) and standards/requirements (sticks?), the majority of which are targeted at corporations and businesses, taking advantage of the nation’s corporations’ competitive, capitalistic instincts, ideally for the greater environmental good. The corporate incentives on the federal level include tax incentives, tax exemptions, corporate tax credits, grants, and loans. The regulations and policies include energy efficiency standards, building energy standards, the federal Green Power Purchasing Goal, and standards for grid-interconnection for small power generators. There are also personal federal tax credits and personal exemptions for individuals who have installed renewable energy generation units, which includes solar photovoltaics. (For details, see DSIRE: Federal Incentives/Policies for Renewables and Efficiencies.)