Photo Credit: Solyndra
There has been a lot of talk lately about two US based solar manufacturers that have either entered into bankruptcy protection, ceased to operate with the likelihood of entering bankruptcy shortly and a string of predictions on who will be the next to fall.
Evergreen Solar (ESLR) and Solyndra are the two main points of conversation because they are both US based and have both received subsidy from the Government and resulted in failure, leaving the political battle ground open to negative commentary about the future success of renewable energy in the American economy. Also on the hit list is Energy Conversion Devices (ENER) popular manufacturer of laminate “stick on” solar panels according to Morning Star online and Seeking Alpha.
Without rehashing the points made regarding low cost manufacturing and China by Barry Cinnamon, CEO, Westinghouse Solar on Renewable Energy World, a popular renewable blog site or the stellar comments of Jigar Shah, CEO of Carbon War Room and solar visionary in Fast Company on the government’s role in picking winners in any industry there are still a wide variety of highly specific problems facing all US based solar manufacturers. Specifically US based solar manufacturers that want to sell their products in the USA.
The global demand for energy sources has not decreased and in fact it is increasing at an extremely frightening rate, demand at home for solar energy exists more than ever, costs have come down to competitive levels with other energy sources but yet the US solar market lacks the boom of other global markets. What gives?
In short the problem is the United States Government in its many forms.
If the government really wants to accelerate job creation, support solar in the free market and slow or avoid more US based manufacturers leaving the US or going bankrupt it will put Federal legislation in place that addresses the unnecessary barriers it has created and it should do so immediately. Clear the way for renewable energy manufacturer’s installers and most importantly customers.
In addition to the problems highlighted by Shah and Cinnamon both Solyndra and Evergreen they received Government investment but faced large barriers in their home markets, again created by their own government. Evergreen, based in Massachusetts, experienced a constant start and stop of local government support of utility based solar incentives. A state that supports solar manufacturing should supply constant support for solar installation.
Another perfect example is the bi-partisan legislation that promoted the growth of customer owned solar energy projects for home owners through local government bond issues. This is the same type of financing government’s use to develop sewer systems and roadways. The program, Property Assessed Clean Energy (PACE) bonds could have been an immediate success providing financing to home owners to retrofit properties with solar panels and other proven energy saving products. Success was immediately road blocked by Fannie Mae and Freddie Mac, Government run, heavily subsidized and failing mortgage giants. The two mortgage giants immediately issued guidance that stated they would not buy loans with open PACE loans attached making the program essentially useless to home owners.
There are roughly 30 states that have pro-renewable energy policies. However, within those states there are still heavy barriers that solar manufacturers and solar installers face when seeking markets of new prospects or when being sought out by customers. Additionally, this has nothing to with government rebates, incentives or subsidy. These barriers are purely local or state policies that contradict a pro-growth renewable energy policy.
Within states such as Texas (David Tharakan’s Story), Colorado, New Jersey and Pennsylvania (Robert Caffro’s Story) where the solar markets are growing because of policy, pro growth strategy and even incentives, installers are still running into issues with zoning restrictions or property owners associations that don’t allow solar panels. There is a clear demand for the product, the financing or investment exist, but yet local governments or community groups stand in the way of growth and consumer demand. Fortunately Florida, Abundant Energy’s home state, has a law on the books that prohibit this type of discrimination. However Florida has it’s own set of problems.
Florida, and some other states like it, where the sun shines bright but large utilities are granted a monopoly by the government and are limited to energy competition through third party renewable energy contracts. This means that innovative programs like Solar Power As a Service or the PPA are not allowed and those who dare to compete could face legitimate legal battles from well funded utilities if implemented by solar installers. This type of limitation on the so called “Free Market” place additional stress on US based manufacturers. It is a signal from the Government that says “we don’t REALLY want you here”. The President of Florida’s largest Utility says he welcomes competition, but openly admits the legislation is not there to support it.
In addition to Florida’s NO COMPETITION laws the state has also stiffed over 12,000 home owners on over $50 Million in rebates owed from it’s 2010 rebate program. Even with these huge barriers and confidence destroying issues local utilities, on the demand of the previous Public Service Commission have created small rebate programs that have all been exhausted within minutes of opening.
The demand exists. International energy demand exists at a level that continues to make a strong business case to not fully invest in the United States when it comes to renewable energy.
State by state these barriers exist and limit investment. Slowly they are being addressed as industry proponents chip them away through costly and time consuming lobbying efforts. Removing government created barriers needs to be a primary step in ensuring future government and private investment is successful. This should guarantee even more success in existing programs such as the 1603 Treasury Grant and the 30% renewable energy investment tax credit which are already perceived as widely successful even with the regulations that exist in the renewable energy market that do not exist in other growing industries. Pave the way for future programs like PACE, Feed in Tariffs, Renewable portfolio standards and further government and private sector support of new manufacturing technology.
The industry will still see failure and innovations and technologies will prevail over others but at least it could be done in a free market driven environment rather than through road blocks set up by the local, state and federal government agencies.