Paid for by NDN.
Solar Energy: The Case for Action
by Michael Moynihan
August 1, 2008
Read the full paper here.
Solar Energy: The Case for Action
Executive Summary
As a growing global population and higher standards of living drive increasing demand for energy while testing our planet's capacity to sustain humanity, energy has entered a new phase in its history. The stalwart fuel sources of the industrial age -- coal, oil and gas -- that powered the development of the modern economy are running out. If not in the mnext 10 or 20 years, certainly in the next 50, oil supplies will pass their peak.
Reflecting a tighter market, energy prices have been rising sharply, not only for oil but also for natural gas and coal. Meanwhile, demonstrable and potentially devastating changes in the climate have imposed a need to reduce production of greenhouse gases such as CO2 from carbon-based fuels. New geopolitical challenges, echoing earlier struggles over natural resources, have taken on new import with the proliferation of weapons of mass destruction. In an era of global terrorism and small state nuclear power, territorial conflicts over natural resources pose greater risks than ever before.
It is fortunate, therefore, that at this critical moment, new energy technologies are emerging that not only offer alternatives to fossil fuels but promise to revolutionize the global economy. While a variety of renewable fuels have different strengths, the subject of this paper, solar power -- ubiquitous, not tied to any nation or territory, clean and free once capital equipment to capture it has been installed -- holds special promise.
A Call to Action
We believe that solar will play a key role in creating the new low-carbon economy of the 21st century and that promoting leadership in solar technologies to take advantage of this immense new opportunity must be a major policy priority of the United States. The transformative capability of solar is exceptional and the United States must take a driving role in developing its potential, both for our own economic stake since solar is likely be a huge creator of wealth and central to our national interest, but also for the sake of the world. High-level attention to this vital issue is required by the President, U.S. Congress and other leaders.
The Road Forward
However, the large political and corporate infrastructure supporting fossil fuels has created a huge incumbent advantage that solar energy, like other renewables, must overcome if it is to compete effectively in the marketplace. Fortunately, the barriers to solar energy's proliferation are clear and, so, therefore, are the solutions. To compete with fossil fuels, solar energy must first and foremost grow more affordable. This is already happening. However, the most critical factor to drive down the cost of solar power is to increase scale (or quantity produced) and here government can play a critical role. Incentive programs such as the Investment Tax Credit have proven crucial to increasing production and driving down costs. The money these programs cost is well worth the investment because of the cost savings that result from lower prices as volume grows and from savings in social and environmental costs.
Second, new technology will be critical to reducing cost. While private capital is flowing into the sector, the cost of clean technology development is high and much of the mresearch and technology needed to unleash solar’s potential will require government support.
Third, improved market mechanisms are critical to driving solar adoption. So long as utilities make more money running their plants than selling solar power produced by others, they will resist rather than support solar energy. For this reason, decoupling of utility profits from power production must occur.
To tap the American entrepreneurial spirit, net metering is needed to enable electronpreneurs to sell power back to the grid. Additionally, we are proposing a new concept of net billing in which customers are given the opportunity to buy power from electronpreneurs or others and take a reduction on their utility bill to increase the influence of market forces.
Finally, a variety of non-cost barriers continue to hamper the deployment of solar energy.
Recommendations
To unleash the power of solar energy, this report makes the following recommendations:
- Congress should extend the Investment Tax Credit for eight years, remove the cap on residential installations
and extend it to utilities.
- Congress should pass a renewable electricity standard with a solar set-aside.
- Congress should step up funding for energy R&D.
- Congress, regulators and stakeholders should carry out limited power industry reform that, among other
goals, requires decoupling of power profits from production.
- Congress should require net metering and what we call net billing for electricity.
- Congress and state and local governments should create incentives for homebuyers to more readily finance
homes with solar power or install solar power, reflecting the lower cost of ownership of energy producing
homes.
- Because renewable power will require better switching and efficiency to move power to where it is needed,
government, utilities and other stakeholders should work together to modernize the grid.
