Tag Archives: Federal Investment Tax Credit

A Trifecta for Solar Energy and Distributed Generation

We all have good weeks and bad weeks. For proponents of Solar Energy (and all other inhabitants of our planet) this has been an historic week, with major achievements at the International, National and California-state levels. Setbacks will be inevitable, but the events of this week will have memorable and lasting impact.

The first and International achievement was the December 12 Agreement of 188 countries at the United Nations Conference on Climate Change in Paris to take measureable actions with the eventual goal of keeping global temperature rise to less than 2ᵒ Celsius (3.6ᵒ Fahrenheit) by 2050 compared with pre-industrial levels. As we have repeatedly been informed, this is the level estimated by numerous scientists to avoid the worst affects of atmospheric warming and ocean rise.

Though yet to be ratified (a process that starts in April 2016), the agreement commits those countries that do ratify the agreement to establish national emission targets and report on progress every 5 years. While the agreement calls for zero net anthropogenic greenhouse gas emissions to be reached during the second half of the 21st century, lowering the target would (according to some scientists) move this goal forward to the 2030 – 2050 timeframe. Either way, implementation of this agreement puts pressure on countries to support low- and non-carbon energy sources, solar very much included, accelerating their deployment and continued improvements.

The second and national achievement has not been enacted as this is written, but is the tentative agreement by Republican and Democratic House party leaders incorporated into the Appropriations bill that would extend tax credits for solar and wind projects from the current end-2016 expiration date through 2021. The agreement was the result of a compromise where-in Democratic Representatives would support eliminating the ban on US oil exports in exchange for Republican support for the Tax Credit extension.

While the vote can still go awry, a senior analyst at GTM Research (who closely follows the Solar market and industry) commented “the extension to the federal ITC is without question a game-changer for U.S. solar’s growth trajectory. Between now and 2020, the U.S. solar market is poised to see a number of new geographies open up with a 30% ITC, within both distributed and utility-scale solar.”

Finally, the third and California state achievement was the December 15 proposed ruling by the California Public Utilities Commission (CPUC) to leave in place most of the charges and fees now in place between the state’s major investor-owned utilities (Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric) and customers who have installed residential and commercial PV systems. Though yet to be finalized (in January 2016), the proposed ruling leaves in place most of the terms that allow customers with PV systems to recoup their investments in a timely manner thereby increasing the desirability of these systems.

Challenges to PV-favorable net metering terms and (lack of) other fees have been raised in many states, and regulator decisions have been mixed. The proposed CPUC ruling is perhaps the strongest pushback by any state regulator to utility claims of the high costs distributed PV systems impose on other (non-PV owning) rate payers. While new costs are proposed, and some uncertainty is introduced by requiring PV-system owners to be placed on Time-of-Use rates (with unknown impact on their bills), the proposed ruling is seen as leaving the business environment favorable for continued expansion of distributed generation.

For now the sun shines on distributed generation and the growth of solar-sourced clean energy. Let us hope that all three events help realize solar’s potential contribution to our future energy mix for the sake of maintaining our habitable planet.

Why Rooftop Solar Advocates Are Upset About California’s Clean-Energy Law

By Ivan Penn, The Los Angeles Times

California’s aggressive push to increase renewable energy production comes with a catch for people with solar panels on the roof: You don’t count.

If a home or business has a rooftop solar system, most of the wattage isn’t included in the ambitious requirement to generate half of the state’s electricity from renewable sources such as solar and wind by 2030, part of legislation signed in October by Gov. Jerry Brown.

That means rooftop solar owners are missing out on a potentially lucrative subsidy that is paid to utilities and developers of big power projects. It also means that utility ratepayers could end up overpaying for clean electricity to meet the state’s benchmark because lawmakers, by excluding rooftop solar, left out the source of more than a third of the state’s solar power.

Owners of rooftop solar systems and their advocates aren’t happy about the policy…The rooftop solar industry and consumer advocates say opposition to including rooftop solar in California’s renewable energy mandate came from large developers that feared competition for subsidies as well as unions that were upset because rooftop solar installers typically aren’t members.

Read full article in the Los Angeles Times

Solar Power International: Moving into Second Gear?

It’s a challenge to summarize what transpired over four days at an event with 600 exhibits, 70 concurrent sessions (forcing choice between 6 at a time), 15 manufacturer-sponsored hands-on training sessions, 10 workshops, plenary sessions, parties and, oh, did I mention solar-supportive keynote remarks by Vice President Joe Biden to an enthusiastic audience.  With participants from over 75 countries, it’s easy to see why Solar Power International (SPI) claims to be the largest and fastest growing solar conference in North America.  But let me try to extract a few themes from this mid-September event sprawled across all four Exhibit Halls at the Anaheim Convention Center.

Clearly the industry is growing.  In advance of the conference, the Solar Energy Industry Association and GTM Research released their quarterly update.  With 1,393 Megawatts of PV capacity installed in the second quarter, the US Solar industry remains on track for an annual forecast total of 7,700 MW.   Of this, 840 MW (60%) was installed in California.  (A brief reminder that the capacity of a typical nuclear powerplant is 1,000 MW.)  The fact that the California Senate and Assembly passed SB350 increasing the state’s current Renewable Energy target of 30% by 2020 to 50% by 2030 days before SPI added to the conference’s buoyancy.  Repeatedly cited was the statistic that California has over 55,000 employees working in the industry (more employees than the state’s top 5 utilities combined).

Clearly the industry faces challenges.  The major one is the currently scheduled expiration of the 30% residential tax credit and reduction of the commercial investment tax credit (ITC) from 30% to 10% fifteen months from now, the Administration’s request for a permanent extension of the ITC not withstanding. A Bloomberg forecast released at the conference anticipates that without an extension, 2017 will see installation activity dropping to its 2012 level.  The loss of the tax credit would hit California’s businesses as hard as elsewhere.  In addition, the fact that California’s Public Utility Commission (CPUC) is in the process of redesigning the utility rate structure, including deciding on an appropriate level of compensation for customers who generate their own solar energy, has the industry on edge.  Utilities have requested the compensation (or credits) allowed solar customers be reduced by 40%, and that fixed fees be added to solar users’ bills.  (If this sounds completely contrary to the legislative action on SB350 cited above, welcome to the world of Government.)

But beneath these Good News / Bad News headlines, several themes emerged that cut across the gazillion specific new product and service announcements.

Energy Storage developments are booming with a variety of technologies and products. Over 50 firms provided products or services related to Storage.  Those in California are as diverse as 90-year old Trojan Battery Company of Santa Fe Springs and Milpitas-based JuiceBox Energy, a start-up barely out of the garage.  Many clustered together on the exhibit floor in a zone known as the “Energy Storage Pavilion.” The CPUC mandate to the state’s three largest Utilities and other energy service providers to procure 1.3 GW of energy storage by 2020 creates an immediate market in California.  And the recognition that commercial electric customers can utilize storage to reduce their bills through reductions in their peak demand charges creates a market rationale for growing storage demand beyond the utility mandate.

Finance is another area experiencing dramatic change.   While the discussion only a couple years ago focused on lease or buy, a plethora of new financial instruments and capital sources have emerged.  Sessions and exhibits provided information on new approaches to debt financing for non-residential projects (which appears to focus on financial support for Commercial and Industrial (C&I) customers, a growing solar niche), Tax equity markets, and the pooling of solar project cash flows (in what’s become known as a YieldCo).  The good news is that investors (not just system owners) are seeing value (!) in PV installations.

And of course there were new panel developments, racking system improvements, Inverter advances and the like.

So what’s the take-away?  The Solar industry is growing through its increased cost-competitiveness as a result of new product and service innovation. This dynamic was well captured by Vice President Biden’s comment, “Anyone who thinks it (Solar) is not happening just take a look at the market.  It’s a competitive choice for consumers. …  Look, this isn’t a government mandate, this is the market working.”  Yes, but the uncertain future of tax credits and utility pushback (in California and elsewhere) continue the uphill slog.

California Decision Means Rooftop Solar Owners Have Choices

By Amanda H. Miller, CleanEnergyAuthority.com

A new California regulation that allows companies to package energy from small producers and sell it on the wholesale market is good news for the long-term viability of rooftop solar.

As utilities push back against paying the full retail rate for the power solar customers feed onto the grid, some expect the popularity of rooftop solar to wane. News outlets this week have noted that the meteoric rise of rooftop solar could slow when the 30 percent national investment tax credit declines in 2016 and as utilities reduce net metering payments.

But the cost of solar panels has continued to decline and business innovators have continued to come up with creative new ways to make solar affordable. So, just as utility companies prepare to reduce net metering benefits, private industry swoops in with a viable solution that could keep the rooftop solar industry growing 50 percent a year in California.

Read full article from CleanEnergyAuthority.com

InterSolar 2015: Industry Growth or Decline is Up to Us

By Gerald W. Bernstein
Managing Editor, California Solar

One advantage of living in San Francisco is that the world periodically beats a path to our doorstep. For solar professionals and aficionados, this has happened for the past eight July’s with InterSolar North America at the Moscone Convention Center, the show claiming the highest attendance of any solar event in North America. I have attended these since 2012, by which time attendance had reached approximately 18,000 visitors (excluding exhibitors), a level it has since sustained.

What I find interesting in trade shows is walking the exhibit floors, talking with company reps, talking with press people who have attended many conferences over time, and “taking the pulse” of the event. InterSolar expands this opportunity with the companion conference comprised of 45 sessions on a variety of solar topics and over 200 speakers at the InterContinental Hotel next door.

This year’s emerging issue was storage. Conference sessions, press announcements and exhibits provided perspectives on utility scale, commercial, institutional and residential-scale systems with possibly favorable economics (subject of course to the individual user’s tariff structure) and numerous non-quantifiable benefits. But what I sensed as the mood of the show was different. I will be surprised if the organizers write “the mood of the show was optimistic” (as followed the 2012 show) or “the mood of the show was very optimistic” (as followed the 2013 show). I found exhibitors enthusiastic about their products, but I would not describe them as “optimistic.” More telling was the observation of a long-time attendee that the number of exhibitors was down to perhaps 500 this year from 750+ a few years earlier. (And yes there have been recent consolidations, but when have there not been?)

The conference and plenary sessions I attended also conveyed two tones. Industry (including trade association) leaders spoke of the growing number of megawatts and gigawatts of installed PV in an increasing number of states. Declining installation costs were often cited as a driver for future sales, driven both by declining panel prices and by reductions in other (balance-of-system and soft) costs. Individual states have additional demand drivers, such as the proposed RPS increase to 50% in California (in 2030), growing demand for community shared solar systems, and efforts to develop carbon cap & trade systems or markets.

But the elephant in the room (actually, overhanging all events) was clearly the possible effect of the 30% investment tax credit reduction to 10% for commercial investors and the possible elimination of the 30% tax credit for homeowners at the end of 2016. Some speakers minimized these impacts in light of favorable demand drivers such as those above. Conversely, one speaker (citing findings from an unnamed Stanford Business School-George Washington University study I have not been able to identify) warned listeners to “expect a massive drop in the PV industry.”

Yet the dominant theme of speakers was that solar does not have to be a political issue. There are blue and red state customers of solar technology who benefit from lower electric costs. Benefits accrue to rural and urban families. Individuals of all beliefs need to let their senators and representatives know that extending the tax benefits is good for consumers, businesses and the 170,000 individuals employed in this industry.

No one can realistically predict what will happen to the solar industry after the 2016 reduction in tax credits. But one thing seems certain: if we all participate in determining governmental policies regarding solar energy, we can build on recent success. If we stand up for solar, if we become even more engaged, more active, more committed to influencing decision-makers, thought leaders, and policy wonks — that can only bring benefit to our planet.

Solar Star, Largest PV Power Plant in the World, Now Operational

By Eric Wesoff, Greentech Media

BHE Renewables’ 579 MW Solar Star project in Antelope Valley, Calif. went fully on-line on June 19th, allowing it to claim the title of the largest operational solar project on the planet. All three of the world’s largest photovoltaic solar plants are now located in California—Solar Star narrowly edges out the 550 MW Topaz Solar project in San Luis Obispo County and the 550 MW and the 550-megawatt Desert Sunlight project in Riverside for the title.

Construction started in January 2013 on the two Solar Star plants, which are sited in California’s Los Angeles and Kern counties and span more than 3,200 acres. The projects employ approximately 1.7 million SunPower monocrystalline silicon modules on single-axis trackers.

Although we may not see too many more solar projects of this size, the utility-scale solar business is alive and well. The utility segment installed 644 MW in Q1 2015, and there are 25 projects developers with pipelines of 100 MW or more, according to GTM Research’s U.S. Solar Market Insight report. GTM Research expects a flurry of activity in the utility segment over the next 18 months ahead of the scheduled decline of the federal Investment Tax Credit.

Read full article from Greentech Media