Peter Belisle: Solar Doubles Down
- Jan 23, 2011
2010 was a big year for solar power in the U.S. And thanks in part to two recent federal legislative actions, 2011 is shaping up as an even bigger year.
One of those legislative actions was part of the tax deal that famously extended Bush-era tax credits and unemployment benefits. Embedded in the bill was a provision allowing companies to depreciate 100 percent of the cost of renewable energy in the first year.
Congress also extended Section 1603 of ARRA for another year, which means property owners can continue to get a 30 percent Treasury Grant for solar installations. The 30 percent was originally designed to be a tax credit, but was switched to a grant since many businesses are not profitable enough to use the credits.
There are some great state incentive programs as well, particularly in New Jersey and Maryland, which require utilities to get a percentage of their power from renewable sources generated by private-sector firms. Right now, a commercial property owner in the right area can make a tidy profit from a solar program that’s implemented properly.
Incentives have played a big role in the growth of solar in the U.S. Nationwide solar capacity doubled in 2010 and broke the 1 gigawatt mark for the first time, according The Solar Energy Industries Association. The cost of solar fell 8.5 percent in just six months, fueling demand but also as a result of increasing demand. SEIA predicts the market will double again in 2011, and we will end the year with about 2 gigawatts of capacity.
All these government programs have the same catch – you have to act fast. In the case of state utility programs, the need for speed is simple supply-and-demand economics: Utilities are willing to lock in agreements at high rates now because their requirements exceed local renewable energy capacity. When enough owners catch up with solar installations in a couple of years, market balance will be restored.
The federal programs require fast action simply because they’re short-term incentives, designed to stimulate jobs and investment as well as to generate clean energy. The wind and solar industries employ nearly 200,000 Americans between them, and solar alone added an estimated $18 billion to the U.S. economy, including exports. The government wants to accelerate that.
But most owners aren’t ready to make a quick decision on renewable energy. There are several different ways to structure a deal, and many of the people knocking on owners’ doors are pitching their solution as the one that works best. Faced with conflicting information and a “buy-now” sense of urgency akin to late-night infomercials, owners will tend to do nothing rather than risk falling for a snake-oil sales pitch. That’s understandable, but unfortunate. There really is a great opportunity hidden in all the hype.