Despite the recession, the solar energy industry managed to maintain growth in new installations and employment in 2009. What were the key drivers for the market last year, and what is the outlook for 2010? During today's OnPoint, Rhone Resch, president of the Solar Energy Industries Association, discusses the state of the solar energy industry. He also explains how congressional climate discussions will affect the solar energy industry.
Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. Joining me today is Rhone Resch, president of the Solar Energy Industries Association. Rhone, great to have you here as always.
Rhone Resch: Thank you very much for having me, Monica.
Monica Trauzzi: Rhone, SEIA is releasing a 2009 year-end review report today and the top line being that the solar energy industry managed to maintain growth in new installations and employment during the recession. What were the key drivers in the market last year?
Rhone Resch: Well, I think what kind of the ultimate takeaway is we were in the middle of a great recession and yet here you have an industry that's just starting to take off, create 17,000 new jobs and see a growth rate of almost 40 percent across the board. And the reason why, I think, a lot of it has to do with the Recovery Act and some of the provisions that were enacted in February of this last year and a lot of it has to do with basically public opinion and the scale of the industry. So, as the public wants to go solar, do something about energy independence, about clean energy, about global warming, they're starting to turn to solar at the same time that the price of solar is coming down for consumers.
Monica Trauzzi: So, what are the specifics on the numbers, the percentage of growth that we saw?
Rhone Resch: So, in the photovoltaic industry we saw a growth of about 37 percent this year, actually that's solar electric in total. Solar water heating had a growth of about 10 percent. We, again, saw about 17,000 new jobs and we're looking at about 60 new factories under construction today, so overall a pretty substantial growth in the industry.
Monica Trauzzi: These are really big numbers, so I would imagine that if the recession hadn't been in place they would have been even greater.
Rhone Resch: Absolutely. I mean if we had the same kind of capital markets today that we had in 2006 we would've probably seen 100 to 200 percent growth in the solar industry, because all of the pieces of the puzzle are really getting there. The problem is we don't and Wall Street is still very much on the mend and so the provisions that were included in the Recovery Act, like the treasury grant program in lieu of the investment tax credit, the new loan guarantee program, those provisions are really just kind of up and running right now, absolutely critical for the growth of the industry going forward.
Monica Trauzzi: Some might look at that level of growth and question whether you need to continue receiving incentives and assistance from the government if you were able to maintain that level of growth during a recession.
Rhone Resch: Right. Well, I think that the level of growth really is an investment by the federal government into creating jobs. So, not only are we making an investment in global warming and reducing greenhouse gas emissions, but we're also creating jobs. And when I step back and kind of look at the 17,000 jobs, that's really just the beginning of what's going to happen in the solar industry. The beautiful thing about solar is you create jobs in all 50 states. The manufacturing sector, the biggest growth area, was in Michigan, second Ohio, third Tennessee. And then when you look at the installations, some of the new states that started to come on the map are the states that have been the hardest hit by the downturn in the economy. Florida, for the first time, is now in the top ten in installing solar. Arizona also in the top five. Nevada, Massachusetts, those states that really need those jobs are starting to get them in the solar energy industry.
Monica Trauzzi: We're starting to see Wall Street and the markets bouncing back. How much of an impact do you think the growth in the solar industry and other renewable industries is having on that bounce back?
Rhone Resch: Well, I think when you kind of look at the stock valuations, it's having a very small impact. I think ultimately though where you're going to see solar, wind, and other renewables play is that they are safe, steady investments for Wall Street to make. So, if I'm an energy investor in Wall Street and I look at the cost of a new nuclear power plant being in excess of $8 to $10 billion, a high risk venture with a lot of capital, but I can get into a solar project and get into a wind project with literally a guaranteed rate of return for a lot less money and I know that I'm going to be contributing, ultimately, to reducing global warming, so I can feel good about it and make money at the same time.
Monica Trauzzi: So, what's the outlook for this year, for 2010?
Rhone Resch: We're looking at a growth in the PB market of around 100 percent. We're looking at a market of a little over 1 gigawatt in the United States and the CSP, the concentrating solar power industry, there are 17 projects that are fast tracked by the Bureau of Land Management to be at least permitted by the end of the year to begin construction. Those projects represent a little over 6 gigawatts or 6000 megawatts of new installed capacity, enough for about 1.2 million homes in the United States. So you're going to see those projects come online, as well as so many of the others that are in the pipeline. So, it's a pretty good year coming forward for us.
Monica Trauzzi: How concerned are you about the impacts low gas prices might have on the future competitiveness of your industry?
Rhone Resch: Well, I think low gas prices are certainly seasonal and I think most of the utilities remember very clearly what it was like just two years ago when you had $11 to $14 MCF natural gas prices. So, I think ultimately having that kind of volatility in a commodity makes it difficult for those who produce electricity to really count on what their electricity costs are going to be and what they're going to be able to receive as a rate of return. I think that natural gas though will continue to go grow going forward and I think that solar, wind, and other renewable technologies actually are a perfect complement to natural gas and vice versa.
Monica Trauzzi: I want to get your take on the climate negotiations that we're seeing in the Senate. Obviously, your industry is watching them closely. Do you see a path forward on how to get something passed this year?
Rhone Resch: I do. I think that there is a deal to be made and certainly that the Kerry-Graham-Lieberman bill is starting to, let's just say, broker that deal. Ultimately, however, I think what's critical is that the principles of good climate legislation, which are to make sure that we are creating a clear signal on the price of carbon such that it spurs investment into carbon-free technologies like solar, actually doesn't get lost. And, certainly, as they're negotiating and they're trying to bring people into the deal, the fear of course is that they are going to be giving all of the allocations, basically all the resources, to the incumbent industries that, frankly, have been polluting in this country for the last 150 years. So, as long as the principles of good climate legislation are kept in place, it's something we might be able to support.
Monica Trauzzi: And you're also looking at a future jobs bill to provide incentives for your industry.
Rhone Resch: Absolutely. So, the Recovery Act was critical. We did create the treasury grant program in lieu of the tax credits. That has done more for the solar industry than any other provision out there and what's important to note is that expires by the end of this year. So, just as this industry is growing, creating jobs, we've now created a new mechanism for the solar industry and, frankly, all renewables to use to help address the financing issue left by a collapsed Wall Street. And we want to make sure that that provision continues to go forward. So we're looking at both a small business as well as an energy jobs bill in order to try to get the treasury grant program, the new manufacturing tax credits extended, as well as some of the other provisions to help ensure that the solar industry continues to grow going forward.
Monica Trauzzi: Okay, we'll end it there. Thank you for coming on the show.
Rhone Resch: Thank you for having me.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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