Conflicting Policy Drivers Shape Growth of Solar Industry
In what should be received as good news within the solar industry, the Bureau of Land Management (BLM) yesterday decided to continue accepting applications for large scale solar projects on public lands. The announcement reversed a May 2008 decision to freeze new application reviews pending the completion of a Programmatic Environmental Impact Statement on the impact of solar plant development.
Solar thermal power is “the fastest-growing, utility-scale renewable energy alternative after wind,” according to Business Week, and is increasingly attaining status as a legitimate market player and political talking point. The long-term success of solar energy initiatives, however, depends to a considerable extent on the provision of a variety of federal, state, and local tax credits and incentives that reduce the initial costs of capital outlay, provide research and development compensation, ensure economic viability, and otherwise nurture the nascent industry.
The most important federal policy supporting solar development, the Production Tax Credit, which has fostered the establishment and growth of renewables as a viable energy source, is set to expire on December 31, 2008. On June 17, the Renewable Energy and Job Creation Act of 2008 (H.R. 6049), which contained funding to extend the renewable production tax credit, died in the Senate. The Senate filibuster of the bill was the most recent in a series of failed attempts to extend the credit.
Some states have acted independently to support solar development, but many of these existing programs are facing cuts or financial difficulties. The state rebate programs in Florida and New Jersey, for example, have encountered backlogs as the number of applications for solar rebates exceeds the pre-set allotments.
Last week, the Arizona House of Representatives committees moved forward a bill (HB 2872) that offers income and property tax breaks for solar firms locating in the state, but the solar credits have been held up on the House floor. Also last week in Arizona, the Goldwater Institute filed a lawsuit asking the Arizona Supreme Court to strike down rules that require Arizona Public Service Co. to get a certain percent of electricity from renewable sources such as solar, and arguing that the Arizona Corporation Commission overstepped its authority by requiring APS to charge customers a monthly tariff to support renewable energy.
These recent setbacks may be counterbalanced by new state policies supporting solar installations, including Massachusetts’ Green Communities Act, signed July 2, which allows individuals with installed solar power to sell back to the grid and which encourages utilities to advance distributed solar generation. Massachusetts has a goal of 205 MW of installed solar by 2017.
As the prices of solar components decrease and the prospect of grid-parity approaches realization, solar has entered the foray of viable renewable energy resources. The question remains what combination of legal and policy drivers will prove optimal for its sustainable development and success.
Tags: solar