Solar Power:

Trade group head Rhone Resch reacts to lack of tax incentives in energy plan

As the first session of the 110th Congress wrapped up last year, the president signed a new energy bill into law. The plan increases fuel economy standards and boosts the use of biofuels. Tax incentives for renewable energy industries were left out of the final package, however. During today's OnPoint, Rhone Resch, president of the Solar Energy Industries Association, reacts to the energy bill and explains how his industry plans to address the need for incentives in 2008. Resch discusses the key technological and financial hurdles the industry needs to overcome to bring solar to the mainstream and explains the role the solar industry will play in the future of the green collar job market.

Transcript

Monica Trauzzi: Welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Rhone Resch, president of the Solar Energy Industries Association. Rhone, thanks for coming on the show.

Rhone Resch: Thank you for having me, Monica.

Monica Trauzzi: Rhone, the president recently signed an energy bill into law that left out tax incentives for the solar energy industry as well as other renewable energy sources. What is the solar industry's reaction to the energy bill and why was it so hard to come to a consensus on the tax package?

Rhone Resch: Well, we're pretty upset about the energy bill and the fact that we really were thrown under the bus. But I think when you step back and look at the 2007 energy bill what you'll realize is it really only addresses one third of the energy crisis facing America today. It really only starts to address transportation. We still have electricity and home heating that are having a huge economic impact on Americans. And we're hopeful that Congress is going to come back and address these issues in 2008, early in 2008.

Monica Trauzzi: OK, so what do you have planned for this second session of the 110th Congress? How is your association really going to attack this issue?

Rhone Resch: Well, one of the things we did in 2007 was to mobilize a grassroots capability. Basically, people employed by the solar industry, people who have solar on their homes, people who would like to see solar as part of our energy mix to reach out to Congress and really let them know that solar is an important part of our energy future. We had over 100,000 calls come in to Congress, over 100,000 letters come in to members of Congress, and it really showed that people want to see increased use of renewable energy. So, building on that, we're going right back to leadership as soon as we get back into Washington to communicate that, hey, this energy bill may have been a success in some fronts, but you still have unfinished business that needs to be addressed in 2008. We're hopeful that we're going to see an economic stimulus package introduced early in the session and that it's going to include extensions of not only the solar tax credits, but tax credits for wind and geothermal and hydro as well.

Monica Trauzzi: So, are we talking just an extension or are we also talking giving more tax credits? Because I know that that's been a problem for certain people in certain states. There were only a very small number, a limited number of incentives available. People would try to get them and they couldn't.

Rhone Resch: Right. One of the things that you've seen Congress do historically to stimulate investment in the energy sector is to provide long-term incentives. In the 2005 energy bill they provided a 12-year incentive for clean coal, 10 years for new nukes, and most of the oil and gas incentives are actually permanent. So, it's kind of ironic that in the 2005 energy bill, when they created the first new tax credits for solar in over 20 years, they created it for only two years. You cannot build an industry on two years. So we're going back to Congress and say, listen, we need a long-term incentive in place to help spur investment into the solar industry, expand manufacturing, which of course will not only create jobs, but bring down the cost of solar. And then educate the public that solar is a viable technology that they can use on their homes and their businesses. So we're specifically looking for an eight-year extension of the commercial investment tax credit. We're looking for a six-year extension of the residential tax credit and some modifications to make those tax credits more useful for more people in the United States.

Monica Trauzzi: Does the energy bill decision, is it going to have a negative impact at all on the solar industry moving forward?

Rhone Resch: I don't think so. I mean I think what you saw was a strong bipartisan support for solar. Everybody supported the investment tax credit across the board. What they didn't support was the "pay fors." And so as we look at the 2008 year I think what we're going to try to do is figure out what the appropriate "pay fors" are that are more acceptable, both to the entire Congress, but also to the White House. And we're optimistic that we're going to see a long-term extension this year.

Monica Trauzzi: You mentioned the oil industry and the incentives did they have gotten. What's your take on the nuclear and coal industries and the amount of money that's being put towards these sources of energy to make them cleaner, to make them more viable? What's your take?

Rhone Resch: Well, I think that for new nukes and for coal they have a lot of research and development to be conducted in order to make those technologies viable. The irony of course is what the administration says about solar, but the fact is solar has great technologies available today. We have not only photovoltaics, but utility scale concentrating solar power and solar water heating, very economically viable technologies that just need to be scaled up. So we don't need the research and development that clean coal and that new nukes needs, but rather what we need is market creation. We need a long-term incentive that's going to guarantee that those who invest in new manufacturing facilities in the United States are going to have a market to sell their products into. And Congress certainly is in a place to be passing that in 2008.

Monica Trauzzi: So, can solar live in the same world as nuclear and coal? Can they work together?

Rhone Resch: Absolutely! No, we need all new sources going forward. I think some of the advantages that solar has over other technologies is that it uses no water to produce your electricity. When you look at the southwest, over 40 percent of the water used in the desert southwest is used to generate electricity. That's not sustainable. When you look at Phoenix and Las Vegas and Southern California and parts of New Mexico, you have to use water-free technologies. And when you start to look at the fact that building transmission for these large-scale power plants is going to be complicated you start to look at other technologies, like distributed generation. And, again, solar can be put on your rooftop and generate electricity at the point of consumption. So it really addresses energy security issues as well. So I think going forward we need to be smart as a country and look towards 21st-century technologies like solar, wind, geothermal and other renewables that are not only good for energy independence and energy security, but also address our carbon issues and help reduce our greenhouse gas emissions in United States.

Monica Trauzzi: What are though some of the main technological hurdles that need to be overcome by solar in order to get it to the mainstream?

Rhone Resch: Solar is a completely viable technology today and it is mainstream technology. It is used. When you drive around, go look at the parking meters up on K Street, they're using solar. Go look at a lot of houses. Go look at a lot of the telephone transmission infrastructure powered by solar. Every satellite since 1950 has been powered by solar energy. It's now time to take that technology and put it in place on our rooftops throughout the United States. So what's really needed in the U.S. is scale of manufacturing. We need to create the markets that are going to attract the investment. I know I sound like a broken record here, but this is exactly what Germany and Japan did five and six years ago. The result is that Germany is seeing 50,000 new manufacturing jobs in the solar space alone, just in Germany. They currently install over eight times as much solar in Germany as we do in the entire United States each year, which is ridiculous when you think that Germany has the solar resources that are equivalent to Anchorage, Alaska. When you start to think that solar can work well in Germany and create an economic force in Germany, why can't we do it here in the United States? This is technology invented in the United States. It just needs to be scaled up. We don't need to spend a lot of time and a lot of effort focused on R&D and waiting for next-generation technologies to come out 10 years from now. What we need to do is create markets today to get the technology in place.

Monica Trauzzi: How low can we get the price though? Because right now it's cost prohibitive for someone living in the suburbs that are wanting to make their home more energy efficient. It costs $35,000 to put solar panels on their house. How low can we get that price?

Rhone Resch: Well, certainly the price continues to come down. When you look at where photovoltaics were in 1980, the price has come down by about 95 percent to where it is today. That's a substantial reduction with, frankly, very well help from the federal government. What we need to do now is to continue to decrease the price so that solar is the lowest cost option. We estimate that if those tax credits were put in place, the eight year extension on the commercial ITC and the six-year extension on the residential investment tax credit, solar will be the lowest cost option by 2015 for all consumers across the United States. But when you look at electricity generation today solar is economic in some places. That's why you've seen California invests in solar. That's what you've seen New Jersey invest in solar. That's why you're seeing states like Nevada and Arizona and others start to invest in solar, because it is an absolutely key resource for them to lower the cost for consumers in the long run.

Monica Trauzzi: We're hearing a lot about the green-collar job market. How will the growth of the solar industry play into that market?

Rhone Resch: Well, I think it's pretty easy to see that we have a chance to invest in an industry that's very fast growing, that creates high quality jobs. These are manufacturing jobs. These are architecture and engineering jobs. These are roofing installation, electrical worker, plumber jobs. These are quality, backbone of our economy types of jobs. We have a chance now to create that industry here in the United States. If we wait too long we're going to run the risk, just like so many other technologies invented in the United States, that they're going to be commercialized by the Germans, the Japanese, and the Chinese and we're going to be in a position of actually importing product from those countries rather than manufacturing it here in the United States. And you don't have to look too far to see where the solar industry today makes a pretty big economic impact. Merrimack, New Hampshire just had a doubling of their plant capacity at GT Solar, a great facility right in New Hampshire manufacturing solar products that they're actually selling to China. You look at Toledo, Ohio, they have the biggest manufacturing facility for solar in the United States in Toledo, Ohio manufacturing solar. Michigan, you looked at Hemlock Semiconductor in Midland, Michigan. Again, these are jobs in states where you're seeing a transition from heavy manufacturing, perhaps of the automobile industry or other industries towards solar, towards these green tech jobs. And I think we're really in a point, we're really in an inflection point where if we make that investment today we are going to create hundreds of thousands of jobs in the United States in these industries.

Monica Trauzzi: You mentioned Japan and Germany. Compare where the Europeans stand versus the U.S. when it comes to renewable energy.

Rhone Resch: They're smoking us. I mean they are so far ahead of us it's unbelievable. We see, specifically in photovoltaics, we see not only the manufacturing jobs being created, but we see about 10 times as much solar in total that is installed in Germany as in the U.S. The same thing on the wind side, same thing on the geothermal side. Japan created their incentives 14 years ago to spur investment in solar. This was during the worst economic downturn since World War II and they decided to make this investment. They had the foresight to realize that, guess what, solar is going to be a big economic driver. It is going to be part of the energy economy in the future. Let's make that investment today and ensure that we play in it. I'd like to think the United States has enough vision and that Congress can realize that energy policy needs to be created at the federal level, not just at the state level, which is what we've been seeing in the past, and that we can catch up to these countries in the near future.

Monica Trauzzi: All right, we'll end it right there on that note. Thanks for coming on the show.

Rhone Resch: Thank you Monica.

Monica Trauzzi: This is OnPoint. I'm Monica Trauzzi. Thanks for watching.

[End of Audio]

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