The Future of Solar Energy in the us: a technological, Political and Financial Enquiry
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- 2.0. International Political Economy of Solar Energy and US Solar Policy
- 3.0. The Domestic Political Economy of U.S. Solar Policy
- 3.1. Key Actors in Solar Energy in the US 3.1.1. Consumers
- 3.1.2. Producers
- 3.1.3. Government
- 3.2. Domestic U.S. Solar Policy
- 3.2.1. Pro-solar Lobbies
- 3.2.2 Anti-solar lobbies
| 1.4.0 Batteries and Storage
Though the collection of solar energy in the most efficient way possible has been a focus of development of solar technologies, there are other technological components that will be important for the widespread implementation of solar energy. Because insolation is a diurnal cycle, solar cell systems require a way to store energy so that a user is not limited to electric power only in the daytime. Additionally, calculations of solar insolation indicate that everyday there is enough solar energy striking the earth to more than fulfill humans’ energy consumption, yet the curvature of the Earth means that this insulation is clearly not equitably distributed27. To solve this problem, all solar systems should be equipped with a storage unit, so that energy generated during the day can be used during periods of low insolation, or even transported to regions that may lack ideal insolation levels. There have been some solutions presented to the necessity of solar energy storage, but most encounter problems such as the degradation of the battery materials or low efficiency. A survey led by Juan Carrasco and colleagues28 for the Institute of Electrical and Electronics Engineers studied grid integration and storage of renewable energies enumerated on the different storage mechanisms commonly used for photovoltaic cells. Among those are lithium batteries, common among residential users, and increasingly connecting small scale photovoltaic systems directly to the grid. The United States Department of Energy has put out literature and informational web sites to encourage home solar energy users to put their excess energy back into the grid. Discussion of the grid will be continued later, but it serves as an interesting and extant solution to dealing with excess energy production. The solution to easily store and transport solar energy is one of the most formidable technical barriers to the implementation of solar energy, and is an active area of research. If continued research can be done to facilitate better storage, the feasibility for solar energy in the United States becomes significantly more viable.
In order to realize the full potential of all the solar technologies described here, there needs to be continued monetary support for research, development and optimization of these technologies. Funding and investment in solar energy has come from many sources, such as the U.S Department of Energy, which operates several incubators through an initiative called SunShot. This program has a goal of reducing the cost of solar energy to $.06 per kWh over the life of the collector, and has given our over $2 billion for photovoltaic research and implementation29. Additionally, the National Science Foundation has recently awarded millions of dollars for solar energy technology development in fields such chemistry, engineering and biochemistry. Currently, there are multiple subsections of the NSF taking proposals and awarding grants for research on sustainability and energy30. All of these funds are focused on scientific research and technological advancement, and do not include outside research and information that would be important in holistically assessing the feasibility. While these types of grants typically fund developmental research, there are also many privately funded projects to develop solar energy systems, which will be discussed later in this paper. Research by non-governmental groups such as the Solar Energy Industries Association have recorded optimistic gains by the solar industry in increasing capacity and decreasing costs over the past ten years, with continued growth projected into the next few decades. However, these gains, while impressive, have tremendous amount of growth needed to become a serious competitor with coal and other fossil fuels used for electricity. Additionally, despite some of the most promising and feasible solar energy technologies being presented above, technology is not the only or perhaps most important component to the widespread implementation of solar energy in the United States. As a cross-disciplinary approach, this paper will now examine political and economic factors that contribute to the funding and feasibility of developing solar power, including the specific sociopolitical challenges proponents of solar energy will face in implementing solar energy in the United States. We have divided our political analysis into two sections - international and political. We first look at the effect of international organizations and treaties on US solar policy, following which we look at the domestic determinants of US domestic solar policy. 2.0. International Political Economy of Solar Energy and US Solar Policy: The implementation of solar and other renewable energies has increasingly become the focus of many countries and multinational alliances outside of the United States. As concerns of the ramifications of climate change and industrial combustion of fossil fuels, many countries, as well as the United Nations, have begun to call for the development of sustainable technologies and promotion of sustainable development in countries such as China, India and many African nations. In regions of high insolation, solar energy has proven to be a strong contender for electrical development and reduction of carbon emissions. Multilateral organizations such as the Intergovernmental Panel on Climate Change have researched the global feasibility of implementing solar energy and other renewables globally as the result of anthropogenic climate change. In the Kyoto Protocol, mention of renewable energies is brief, with most focus placed on the reduction of emissions. However, the Kyoto Protocol was never ratified by the United States and did not include many nations that were considered developing and have become major contributors to global carbon emissions. Subsequent U.N. Conference of Parties (COP), such as those in Copenhagen and Paris, have continued to focus on cutting emissions and the development of low emission development strategies. Solar is, in the written accords, not explicitly mentioned, but many nations committed to the development of clean technologies focused on the implementation of renewables as a way to cut their gross tonnage of carbon emission in their individual pledges. While COPs are often surrounded by grandiose pledges of commitment to the environment, these negotiations have done little to influence domestic policies on renewable energies. Many large nations have been reluctant to sign any agreement that is both legally binding and stringent enough to make a serious impact on global climate change, as they fear the economic ramifications of committing to more sustainable practices. While many other nations have exceeded the standards for renewable energy set forth by agreements such as Kyoto and the Copenhagen Accord and by nation-specific initiatives, the United States has lagged behind and continues to be one of the highest carbon emitters per capita, and does not appear to be swayed by the voluntary agreements of the international community. Perhaps the only place where international organizations have played any sort of direct role in shaping US policy has been in the creation of the American Solar Energy Association (ASES), an offshoot of the International Solar Energy Association. ASES has played an important role in the dissemination of international research and information among the US polity, and has managed to slightly color the nature of the solar energy conversation. However, we find that domestic political actors have done far more to catalyze the development of solar energy in the United States. 3.0. The Domestic Political Economy of U.S. Solar Policy An analysis of the solar industry requires an analysis of the political context within which the industry is being shaped. As an extremely capital-intensive industry, entrepreneurs in the solar production sector require the assistance of the government in order to smooth their costs. In fact, nascent capital-intensive industries are frequently established only after they have received considerable government support31. Solar energy is such an industry, as the initial research and development costs, coupled with the high level of infrastructure investment required to make the technology scalable are too high for individual entrepreneurs to bear32, and too risky for established energy corporations to invest too heavily in. The industry therefore requires the intervention of the government, which in turn brings a number of political dimensions to the issue. This section first tries to understand the key political actors in the solar energy industry, which are broken down into consumers, producers and the government. It looks at their various preferences and relevant actions in the solar industry. It then looks at the dynamic interactions between these actors, after which it provides a range of outcomes that seem plausible based on these interactions. 3.1. Key Actors in Solar Energy in the US 3.1.1. Consumers Consumers can be broken down in into three main categories: residential, commercial and industrial. The main categories of consumers are as follows:
These are household level consumers who make use of solar energy by installing solar panels on their rooftops that convert solar energy to electricity, or by directly receiving heat energy generated by solar panels. Residential consumers benefit from solar because their monthly electricity bills are greatly reduced. They do, however, have to pay for the installation and maintenance costs of solar energy (which can range from upwards of $10,000 for the lifecycle of an individual installation33). Residential consumers can be incentivized to demand solar energy for price reasons, such as solar energy being cheaper than conventional energy, or for non-price reasons, such as an individual preference for perceived “greener” technologies. A key possibility to note here is that households can sell the excess electricity generated from their solar panels to the grid34, creating a lower effective price per MW of solar energy relative to conventional energy.
These are firm-level producers who make use of solar energy through similar means as residential consumers. Commercial firms face the same incentives with regards to solar energy - they may adopt solar energy for both price and/or non-price reasons. Current famous examples of firms using renewable energy include large technology companies such as Google and Apple, as well as Swedish furniture manufacturer and retailer Ikea35. A key aspect of both residential and commercial is that they both experience convex adoption rates36. In other words, the installation of solar panels has “peer effects” - the adoption of solar energy by a household or firm is likely to induce further individual actors to demand solar panels, which in turn induces yet more actors to adopt solar energy. Thus, the adoption of solar panels by highly visible consumers such as firms like Apple can help contribute to the increased demand for solar panels. 3.1.2. Producers In the US, the producer side of the solar market is divided into four broad categories. First, there are solar cell manufacturers, who compete both with each other, as well as foreign solar cell manufacturers. Second, there are solar cell installers, who install solar panels on residential or commercial rooftops, or assist in the construction of utility-scale solar energy production. Third, there are solar leasers and financiers, who help consumers with the financing of their solar purchases. Finally, there are utility-scale solar energy providers who purchase or rent huge swathes of land and install an extremely large number of solar cells in a centralized location before distributing the energy that is harnessed. Each of of these categories of producers has its own supply chain (going as far back as raw materials/mining for solar manufacturers). Furthermore, companies do not strictly fall into any single one of these categories - it is possible for a company to be entirely integrated and manufacture, install and service its solar panels37. Despite the varying nature of producers in the solar energy industry, each one of them faces certain core problems. While some might be in the business for perceived environmental reasons, all of them want to maximize profits and/or minimize costs. Given that solar energy requires a large amount of initial capital costs, producers require incentives from the government to engage in production in the solar energy industry to help them increase their revenue or decrease their costs. 3.1.3. Government Finally, the third actor is the government. Given the high initial costs and long gestation periods explained earlier in the paper, the US government plays a key role in shaping the solar energy playing field. Highlighted below are four of the key federal policies the US government is undertaking to support the solar energy industry38.
RPS requires electric utilities and other retail electric providers to provide a specified percentage or amount of customer electricity with eligible renewable resources. RPS tend to establish incremental targets that increase over time - for example, a state might mandate that its electric utility companies increase their renewable generation by 2% a year over ten years, resulting in a 20% renewable generation portfolio at the end of the mandate. Most RPS does not necessarily specify what type of renewable generation utility companies must use - however, some RPS may have specific requirements called carve-outs, or a minimum percentage or capacity, for distributed generation or certain types of renewable energy. There are currently 18 states that have solar carve-outs within their RPS.39 These carve-out have massive effects - estimates account them for having caused 30-50% of new additions in solar capacity40.
Net Metering enables residential or commercial customers who generate their own renewable electricity (e.g., solar photovoltaic panels) to receive compensation for the electricity they generate. Net metering rules require electric utilities in a state to ensure that customers' electric meters accurately track how much electricity is used on site or returned to the electric grid. When electricity generated on site is not used, it is returned to the grid; when on site generation is not sufficient to meet the customer's needs, the customer uses electricity from the grid. On average, only 20-40% of a solar energy system’s output goes into the grid41.
PACE is a voluntary program in which a home or business owner will receive financing from a local government to cover the up-front cost of qualified energy improvements, and in exchange, will repay the up-front cost through a special assessment on their property tax over a period of years or decades. The financing is secured with a lien on the property. This means that in the event of a foreclosure, the financing must be repaid before other claims against the property. The repayment obligation also remains with the property, so if a solar customer sells their home, the new owners simply take responsibility for the remaining payments as well as ownership of the solar array42.
Grants, loans, rebates, and tax credits are provided at both the federal and state level to encourage solar energy development. While there are quite literally hundreds of different solar energy policies across the US in different states and localities, one of the most powerful and popular policies is the federal Business Energy Investment Tax Credit (ITC), which allows “a taxpayer to claim a credit of 30% of qualified expenditures for a system that serves a dwelling unit located in the United States that is owned and used as a residence by the taxpayer”43. This tax has been extremely helpful in the setting up of solar enterprises44 - however, it is set to expire in December of 2016, with a lowered tax credit of 10% to take its place. These policies were not implemented in a vacuum. Rather, they have been shaped by the efforts of a multitude of actors across different sections of American society. We now examine how the different actors stated above have tried to influence U.S. solar policy. 3.2. Domestic U.S. Solar Policy As a democracy, the US government is accountable to its constituents, who are both consumers and producers of solar energy. These constituents also include conventional energy producers and employees (such as those in the coal and natural gas industries). The policy of the US government, on both a federal and a state level is therefore a reflection of the weighted aggregation of the preferences of these constituents. This aggregation of preferences leads to the political framework that shapes the economic context within which the solar industry exists. The key focus of this section of the paper is to demonstrate that this aggregation is dynamic - it is constantly evolving under pressure from different constituent parts, and that a prediction about the future of solar energy in the US must attempt to predict the dynamics of the political-economic processes that affect the industry. The pressure democratic constituents apply on their legislators can be through organized actors (such as lobbies) or as unorganized actors. We define organized actors are defined as groups that have clear preferences, a clear perception of the actions required to satisfy those preferences, a relatively smaller group sizes and a hierarchical group structure, while unorganized actors lack one or more of these characteristics. Past research has strongly suggested that lobbies have an extremely large amount of influence over the US government in the formation of policy45. Indeed, some members of the relevant actors listed in the previous section are organized in some lobby or the other. We therefore aim to look at some of the key solar lobbies in the US today and examine their role in the formation of solar policy. 3.2.1. Pro-solar Lobbies There are two main national-level organizations that lobby the US government (on both a federal and state level) in support of solar energy46. These are the Solar Energy Industries Association (SEIA) and the Solar Electric Power Association (SEPA).
The SEIA is a bonafide lobbying group - a 501(c)6 organization that is organized the same way as a traditional lobby group such as Americans for Prosperity or the American Wind Energy Association. The SEIA represents the entire solar industry - from manufacturers to researchers to installers, and has been involved in some of the landmark policy decisions regarding the solar industry since 197347. A recent example of this is SEIA’s successful effort to convince the Federal Energy Regulatory Commission to allow the fast-tracking of the interconnection of solar projects with the electricity grid48, saving solar companies huge amounts of time and money. SEIA expressedly funds political efforts on the local, state and federal level by organizing conferences, workshops and meetings between legislators and solar representatives.
The SEPA by contrast is a ‘think tank’ - a 501(c)(3) organization whose main purpose is educational in nature. SEPA primarily aims to convince utilities of the value of solar through academic endeavours such as research, surveys and summits. SEPA publishes its research in the form of various reports and publications. SEPA’s conferences and seminars tend to bring together representatives from the solar and conventional power industries, and focus on how the industries can complement each other rather than competing with each other (for example - solar could be a viable long-term strategy for power companies, while power companies provide the grid that allows solar power to reach people beyond rooftop installers). It generally tries to steer clear of endorsing politically controversial topics such as the ITC, net metering or RPS in order to remain (or be perceived) as completely unbiased49. While both SEIA and SEPA have a common interest in the promotion of solar energy across the US, they do sometimes wind up in conflict through the different means they employ to achieve their interests. One of the areas where the two organizations come into conflict is when short-term action is required to either promote or preserve a key solar policy. Recently, this conflict was manifested when the US Internal Revenue Service announced that the solar ITC was set to be reduced from 30% to 10% after December 201650. The SEIA aggressively campaigned for the ITC to be extended - it even publicly called out to SEPA to join it in committing financial resources to push for a credit extension. As of the time of publication, SEPA has chosen not to involve itself in the advocacy the SEIA is asking it to. 3.2.2 Anti-solar lobbies To our knowledge, there is no lobby in the US that is openly centered on suppressing state support of solar energy. Rather, the bulk of pressure the solar industry faces is from power companies that use conventional energy and industrial lobbies that could see solar as a threat to their long-term profitability. For convenience, we refer to these lobbies as anti-solar lobbies in the rest of the paper. Prominent anti-solar lobbies include:
ALEC’s website describes it as the US’s largest nonpartisan, voluntary membership of state legislatures with a stated mission of limited government, free markets and federalism. Nearly one-quarter of state legislators are members of ALEC, and many prominent members of the organization have gone on to become Members of Congress or Governors of their states. ALEC does not have an official view on solar energy as industry, but it does seem take issue with most federal and state policies that aim to support solar energy. In particular, ALEC takes issue with the policy of net metering, and has published many reports that it has distributed to its members51, which many analysts contend has been one of the key drivers in getting new solar consumers. ALEC tends to exert its influence by organizing policy workshops or hiring lobbyists that communicate with state and federal level representatives and help bring about policies that either remove support for solar energy, or enact policies that are expressedly anti-solar, such as charging consumers with rooftop solar panels higher rates for grid electricity Directory: bigproblems bigproblems -> The Potentials and Problems of Expanding Use of Shale Gas in the Continental U. S Download 224.94 Kb. Share with your friends:
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