Operation Solar Century

The Middle East is churning (for good cause this time) and oil prices are spiking.  What a shocker.  Isn’t this getting old already?  Oil price increases hurt the economy in the US and across the world. It’s effectively a tax hike on all consumers and businesses.  Just search “oil and recession” online and you will find an abundance of information about the correlation between oil price increases and the economic impact.  Here are just a few recent articles:

CBS Money Watch: Oil Prices and Recessions, 40 Years’ Worth
WSJ Article: Rising Oil Prices Raise the Specter of a Double Dip
NYT Times Article: Why the Disruption of Libyan Oil Has Led to a Price Spike

PROBLEM

What impacts economic growth?  Most agree that monetary policy (interest rates) and fiscal policy (taxes) are two of the most critical economic inputs.  Energy prices are probably in the top five.  What’s startling is that we have no control over the supply of such a critical economic input.  Imagine the US Federal Reserve, the entity responsible for setting monetary policy, were controlled by sovereign nations unbeholden to our national interests.  Who would stand for that?  Well this is what’s going on with OPEC.  A group of sovereign nations managing their assets to maximize revenue for their countries controls the price of the most important global commodity, and a top five variable that impacts the economy.  Since the majority of readily available global reserves reside within OPEC borders, its influence will only grow over time if current trends continue.  Furthermore, exogenous events such as revolutions, terrorist attacks and the like continue to pose a stark threat to supply.

Then consider the politics.  The US sends over $200,000,000,000 annually to OPEC.  Where are those funds going?  What type of regimes does this massive transfer of wealth support?  And while we don’t trade directly with Iran, our support of the global oil market enables that nation to sell its production at market rates. On the demand side, rising economic powers such as China and India have a seemingly insatiable appetite for petroleum and this new demand is contributing to surging prices.  We have fierce global competition for this vital resource.

It must be acknowledged that oil is only one component of the vast, complex and interconnected energy landscape.  Electricity is generated from diverse sources (oil continues to be a key fuel for power generation on Long Island).  But all fossil fuels have flaws, including severe environmental repercussions.  Natural gas is the cleanest burning fossil fuel, and increasing domestic supplies have helped keep the price of that fuel low.  Historically its price fluctuations correlated with oil but recently there is a divergence because of new supplies.  However, these new supplies have damaging environmental impact.  Take a look at this excellent piece in the NYT about the environmental challenges of natural gas drilling.

SOLUTION

Every day we grow more confident that implementing renewable energy and energy efficiency solutions is the answer to the energy challenge.

Take solar, our area of expertise.  Solar is a highly effective technology that we believe is going to dominate the 21st century energy landscape.  Today the technology works incredibly well and because of local, state and federal incentives it is a very smart investment to make by homeowners and businesses.

We are able to reduce or virtually eliminate many homeowners’ electric bills with the technology.  Businesses and non-profit organizations are reducing operating costs.  Fueling electric vehicles with solar energy is a home run.

Increased demand is leading to decreasing costs.  Incentives to go solar are still necessary but have been reduced gradually to promote market transformation.  One reason why solar is so promising is that costs should continue to come down over time, and incentives won’t be needed in the future.  Consider electronics such as computers and cell phones that are largely made of the same materials and manufactured in similar fabrication facilities.  Economies of scale have brought these technologies to the masses.

The potential benefits of solar from a macroeconomic point of view are profound.  Prices of this energy technology will come down over time.  Think about that.  Historically, energy prices have been volatile and risen over time, with occasional spikes that lead to economic misery.  Instead we have an energy technology that is going to come down in cost.  Replace uncertainty with certainty and all economic participants stand to benefit.

It is our theory that solar, other renewables, alternative fuels and energy efficiency will lead to dramatic economic growth, and growth in per capital income in the US and across the world.

Call To Action

It’s time to launch Operation Solar Century.  The goal of this operation is to make solar the dominant energy technology of the 21st century through strategic planning, smart policy and leadership.

We are grateful to solar advocates at LIPA, NYSERDA and in state and federal government, and numerous people and organizations for having the vision and determination to get us this far.  Because of these supporters we have a nascent but energized solar industry.

Now we must work together to promote the next generation incentive structure that can drive massive solar growth by providing long term visibility to the industry, and also be smart for ratepayers.  Both objectives can absolutely be achieved with the same policy.  New York has much to gain by taking a leadership role on this issue.  Stay tuned to learn about specific legislation that you can support.

Within time solar will achieve grid parity, at which point it will be competitive with the grid without subsidies.  To get from here to there we need smart policy and political leadership.  Decisions made today will have great consequence for economic well-being of our state, the nation and the world.  With the right leadership, solar will continue to be a wise investment for homeowners and businesses today, and over time will require fewer and fewer incentives to provide the same great economic benefit.

Now we must take the next steps to solidify our gains and make solar the dominant energy technology.

By working together, the 21st century will become known as the Solar Century.



Affordable Solar Electric via Feed-in Tariffs?

The National Renewable Energy Lab (NREL) reports that feed-in tariffs are responsible for 75% of solar photovoltaic and 45% of wind projects worldwide.  Feed-in tariffs (FITs) require utilities to pay per kilowatt-hour to purchase electricity from renewable energy generators.  They enable stable and reliable pricing, and small generators and large plants have an equal opportunity to compete. Countries in Europe, especially Germany, France, and Spain, have used feed-in tariffs to greatly increase renewable energy production because of their increased cost-effectiveness.  For example, California receives 70% more sunlight for producing solar energy than Germany does, though the latter installs 15 times as many solar electric systems per year due to the effective use of FITs.

Generally, green markets in the United States lack strong federal support, and instead, progressive states like California create markets and regulations that eventually spread to the rest of the country.  Though many states have established FITs before, institutional resistance, too high or too low pricing, and bureaucracy have rendered them virtually ineffective. California is again taking the lead and has recently proposed to launch a new variation of the tariff.  In California, investor-owned utilities will be required to purchase electrical energy from renewable generators that are 1MW-20MW in size.

New York recently pushed a bill for FITs on Long Island, but it did not pass. The Long Island Power Authority (LIPA) already awards large rebates (up to half of system cost!), and the 25% New York State and 30% federal tax credits have already made solar systems incredibly cost-effective.  We can only hope that pushes for cost-effectiveness like the FIT can get the United States on par with our European friends.

NYSES Solar Financing

Last Wednesday, the New York Solar Energy Society (NYSES) hosted an educational solar financing event.  The speakers included Stanley Fishbein (tax attorney and President of CapQuest Group), Rémy Trotabas (President of The Real Thing), and Richard Schoen (FTL Solar) each presenting on a different topic: equipment leasing, power purchase agreements, and feed-in tariffs, respectively.  Each presenter did a great job on hitting the key issues related to their topic.  The best part of the event may have been the duel (of words, unfortunately) between Fishbein and Trotabas, vehemently arguing over which is superior: equipment leasing or PPAs.  Both had some good jabs, but I think it’s safe to say it was a tie.

Here’s a breakdown of the issues (click the chart for a larger image):

More good news from Fishbein: he says the 50% bonus depreciation for solar equipment should be back soon!

And a special thanks to Ameriprise Financial for kindly hosting the event.

EmPower CTO Presents on Solar for EJCLI

On February 17, EmPower CTO Greg Sachs gave a presentation on solar energy systems for Engineers Week hosted by the Engineers Joint Committee of Long Island.   The event was attended by about 70 people and was held at the Dave & Buster’s in Farmingdale.

Greg’s presentation covered solar energy basics including system design and installation.  Overall, the event was success.   As Greg said:

We were honored to be hosted by the EJCLI.  There were especially lively questions about the possibilities of feed-in tariffs (FITs) as a financing mechanism and the influence of FITs on system interconnection.  The people were interested in how each of their different disciplines of engineering  specifically contribute to the overall photovoltaic design process.

EmPower is proud to participate in educational opportunities such as this one.  Watch our calendar to find out where we will be next.

Feed-In Tariff Legislation a Possibility in NY

Feed-In Tariffs (FITs) implemented in Germany and Spain spurred record growth in their renewable energy industries, making them global leaders in solar energy. Now, there is a chance FITs could come to New York, bringing with them unprecedented benefits and opportunities.

A FIT establishes a premium rate at which renewable energy systems (small or large scale) sell their energy to the grid. Instead of net metering, system owners are paid for every kWh generated, not just those they don’t consume. Read the NREL paper to learn more about how FITs function.

Around the world, FITs have been proven to be the fastest and most economical way of deploying renewable energy systems. The New York Solar Energy Society gives 16 reasons why FITs are advantageous and effective. Some of the most prominent are:

1. A FIT will create tens of thousands of clean energy jobs in NYS

2.  Reliable, predictable credit flows from FITs promote private sector investment

3.  FITs promote investment in large scale AND small scale systems

A petition is out to support FIT legislation in NY. Add your name here.