How can Congress use the next stimulus bill to promote renewable energy and green job growth? How will President-elect Barack Obama's recent Cabinet picks affect the push for alternative energy? During today's OnPoint, Rhone Resch, president of the Solar Energy Industries Association, explains how the solar industry can add more than 1 million jobs in the United States. He makes the case for why the government should include solar industry provisions in the next economic stimulus bill. Resch also addresses how the economic downturn is affecting investments and growth in the solar energy industry.
Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. With us today is Rhone Resch, president of the Solar Energies Industries Association. Rhone, thanks for coming back on the show.
Rhone Resch: Thank you for having me Monica.
Monica Trauzzi: Rhone, your group is calling for the government to include some key provisions relating to the solar industry in the next economic stimulus. What specifically are you asking for?
Rhone Resch: Well, when we step back and look at solar energy as a technology it is a perfect opportunity for us to make investments in new manufacturing and new installations of solar and really create substantial economic growth in this country in the next two years. So as part of the economic stimulus bill we're asking the Obama administration to look at four different items. The first is to improve the existing tax credits. In October Congress gave us a long-term extension of those tax credits. Unfortunately, the economy has shifted such that those tax credits really aren't all that usable anymore. So we're looking for changes to make them refundable, changes to allow some of the local municipalities and states to be able to use their full faith and bonding authority in order to provide subsidized energy financing that wouldn't count against the tax credit. We're also looking for increased government procurement. The government is the largest consumer of energy in the country right now, spending almost $6 billion annually just on electricity. By making a small investment into solar energy what they'll be able to do is not only lower their energy costs, but, again, create jobs. The third is to look at manufacturing. Right now the largest state for manufacturing of solar energy in this country is Ohio. The number two state is Michigan. By creating incentives to encourage new manufacturing in the United States you're going to bring more plants into those areas that need those jobs most. And the last is to look at a renewable portfolio standard. An RPS certainly will bring a lot of green collar jobs here to the United States and we think that it's critical that that gets passed early in this next administration.
Monica Trauzzi: And what changes do you think need to be made to the current RPS that was on the table last year? I know Senator Bingaman has said that he'd like to take that up very early in the next session, but what changes need to be made?
Rhone Resch: Well, the RPS that was passed in the 110th Congress is basically the same language that has been tossed back and forth in the Senate, in the House for the last eight years or so. It is critical that we update the renewable portfolio standard to recognize the changes that have occurred in the marketplace, the changes that have occurred in technologies that exist. So, specifically were looking for a solar set-aside of 30 percent. And part of the benefit here for the utilities and overall for the consumers is the fact that solar generates electricity at the point of time when consumers are using the most electricity, which is during the day. It's called peak usage. And so if we can have a correlation between renewable energy and generation at the same time that people are actually using the most electricity, it actually makes good sense. It offers the utilities a very positive gain on their net generating assets.
Monica Trauzzi: And beyond an economic stimulus we're expecting some type of energy legislation to come down the pipeline as well. What would you hope for in a package like that for the solar industry?
Rhone Resch: Well, there's a number of different provisions and I'm not trying to lay out kind of this wish list that we're needy, but what we're really trying to do with solar is to ramp up to be a large-scale source of energy. Our goal is that solar will generate 12 1/2 percent of all the electricity by 2020. In order to do that you really need to remove some of the market barriers that have been put in place over the last 75 to 100 years of electricity generation, electricity law. So first we need to rapidly expand transmission in this country. We have the world's best solar resources in the southwestern part of the United States, but there are no transmission lines to bring those resources, to bring that electricity to the market Center is in Los Angeles, in Chicago, and even all the way to New York City. If we build new transmission, if we expedite the siting for transmission, we think that those resources can come online very quickly. The next is really to look at interconnection and net metering. And I know this starts to get to be a little bit of an esoteric issue, but right now we do not have a national standard that allows a manufacturer of solar to put together a solar system that could go on a house in Maryland and then that same system could go on a house in Virginia. Instead, it's got to be redesigned for specific interconnection standards in Virginia. We think that's ridiculous. It's as if, I mean the analogy really is, you go to Best Buy, you buy your Best Buy phone in Maryland, you come to Virginia, you go to plug it into the wall and the outlet is completely different. So we're looking for a national approach that really allows us to build systems which will obviously lower the cost of solar overall. And then I think there's some other key elements in the long run that we need to focus on including climate legislation. We need to increase appropriations. We need to really streamline the way that the government interacts with the renewable energy community and industry. And so what we're calling on the Obama administration to do is create an office of renewable energy development within the White House itself. If renewables are going to be 25 percent of our electricity generation in 2025, it is critical that we have somebody in the White House who can really work with the Commerce Department and work with the Interior Department and work with the Treasury and other agencies to help streamline the permitting process and help move some of these projects forward. So those are just some of the ideas of what we're thinking about now and what we're proposing to the administration.
Monica Trauzzi: It sounds like there are many different interests that are trying to make their way into the executive office of the president. How do we prevent these from becoming ineffective like we've seen in the past with a climate person being in that office and maybe not being able to do as much as we were hoping from them? How can they work within that office to be as effective as possible and communicate with all the other agencies?
Rhone Resch: Well, I think things have changed a lot. First of all climate change, there will be a person at the White House who is a point person on climate change. I think the Obama team has been very clear about that and that's critical. Well, we're in a very different world today on climate change than we were with the Bush administration when they first came to Washington or certainly when the Clinton administration first came to Washington. So that issue has really elevated itself significantly and the same for energy, when you look back in the last four years we've had an energy bill every two years. That's unprecedented when you look back on the fact we didn't have an energy bill for 17 years before the 2005 energy bill. So we're seeing energy as an absolutely critical issue and I think that not only is it a priority for this administration, and that's been stated consistently, but it's a priority for our economy. And because of that it's critical that you have a point person in the White House to help coordinate those activities.
Monica Trauzzi: I want to talk about the economic crisis and its impact on your industry. Are sales and production slowing? Even though you guys got an eight year extension of your tax credits are you seeing sort of a downturn, especially looking towards 2009, the first quarter? What are your expectations and what are you seeing up until this point?
Rhone Resch: There's a pretty significant downturn occurring in the solar industry right now and it has to do with two things. The first is available access to capital. This is just debt financing. A lot of the big banks who were basically investors in renewable energy projects, and solar in particular, are either no longer in business or no longer have available capital to invest in these projects. So freeing up capital in the debt market is absolutely critical. The second, as you pointed out, is yes, we did get a long-term extension of our tax credits and we're very thankful for it. But, unfortunately, a lot of those organizations that invested into solar energy projects no longer have tax credit appetite if you will. And so we're finding it much more difficult to actually utilize the tax credits effectively to lower the cost of solar in this country. The wind industry is finding the same thing and although we don't have an estimate for 2009, what we hear from most of the installers is people aren't signing up for contracts. We're seeing a lot of uncertainty. They don't know if there's going to be a tax credit appetite. They don't know if there's going to be liquidity in the debt markets at this point, just a tremendous amount of uncertainty. So I think we can expect to see 2009 to probably be a flat year compared to what happened in 2008 unless some of these changes are made. And although people should say, well, you should be happy if your industry is at least remaining neutral, but the reality is we've been growing at 40 percent per year over the last 10 years. And so a downturn, or I should say a no-growth year, really ends up being a downturn for solar in the large part because many of the manufacturers have already made huge investments in new panel manufacturing capacity and simply those products won't come to market.
Monica Trauzzi: All right, let's talk politics for a minute. I want to get your thoughts on the chairmanship shift in the House Energy and Commerce Committee with the new chairman, Congressman Waxman. What do you think he's going to bring to the table that's different from Congressman Dingell?
Rhone Resch: Well, we've worked with Congressman Dingell for many years and he was a great chairman and his constituents in the state of Michigan are not just the auto industry. We have a lot of solar manufacturers as well. But I think what Congressman Waxman brings to the table is the fact that he's got a lot of new ideas and I think he's got a lot of new energy in trying to pass this legislation relatively quickly and make sure that it actually works. So we're looking at a renewable portfolio standard. We think it's critical that that language gets updated such that it really does reflect the challenges that are faced in the electricity marketplace today. We also think with climate legislation, the previous drafts of climate legislation, really did not work for the renewable energy industry. We think that substantial changes need to be made to make sure that proceeds from auctions and allocations and output based standards are made available to really help spur investment in renewable energy. And then once you have carbon-free generation from solar and wind and other technologies, that you can monetize that generation and you can receive carbon credits for generating carbon-free electricity and basically create a long-term revenue stream for those projects.
Monica Trauzzi: And President-elect Obama has picked Governor Bill Richardson as his choice for commerce secretary. What do you think he's going to do for the push for alternative energy? What does he bring to the table? He certainly has a lot of experience in the energy field.
Rhone Resch: He does. Governor Richardson not only having been secretary of energy, but having been a governor of an energy producing state that is not only oil and gas, but has some of the best solar resources in the entire world, and geothermal as well, is in a perfect position to really bring let's just say his expertise on energy issues and their relation to the economy. And I think when we start looking at major investments that the federal government can make commerce plays a key role in that, government procurement, those kinds of things. When we looked really at worker retraining and making sure that we're taking some of those factory workers that have been let go in other industries and putting them back to work in solar and wind and other technologies he'll play a very critical role. And I think what he really understands is the shift that's occurred already in our economy and that the next great growth sectors in our economy are going to be in the renewable energy industry. Solar has already become an economic engine in this country. It's absolutely critical we continue to make those investments, simply because if we don't and we decide we want to wait four or five years, we're going to turn around and wake up and see that we'll be importing these products from Germany and Japan and China, rather than having the manufacturing right here in the United States.
Monica Trauzzi: OK, we're going to end it right there. Nice seeing you again.
Rhone Resch: Nice seeing you, thank you so much.
Monica Trauzzi: Thanks for watching. We'll see you back here tomorrow.
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