Thursday, May 28, 2009

Solar Advocacy Group Says Climate Bill Will Fail to Make Solar Energy Cheap

Originally posted at the Breakthrough Institute

The solar energy advocacy organization VoteSolar issued a pretty clear verdict on whether or not the Waxman-Markey American Clean Energy and Security Act will effectively make solar energy cheap and abundant: "The accurate answer is nuanced, but the short answer is no."

Here's their take on the Renewable Electricity Standard, which Breakthrough digs into in a detailed analysis here:

The Solar Energy Industries Association spent the last six months urging Congress to add solar specific provisions to the draft RES [Renewable Electricity Standard] bills, namely a distributed generation carve-out to support rooftop solar, inclusion of solar hot water among the qualifying technologies and accomodations (sic) for utility-scale solar. The solar set-aside is a policy mechanism in use today in fifteen states, and one that has proven effective in kick-starting robust new solar markets.

Instead, a "REC multiplier" for distributed generation is emerging as the favored solar mechanism in the federal bills under consideration. With a three times multiplier, one megawatt hour of distributed solar would be treated as three megawatts of wind, biomass, geothermal or hydro in the REC market. If past experience at the state level proves anything (think Arizona and New Mexico), the multiplier will do little to encourage distributed solar as there's still little incentive to invest in the early-market, higher-cost energy option. Without a direct carve out to encourage this initial investment in distributed solar, it will take much longer to realize the economies of scale cost reductions projected for this valuable energy resource. A further downside to credit multipliers is that they dilute the goal, an outcome that undermines the original intent of the policy. One megawatt counting as three reduces the total amount of renewable energy in the mix, an outcome that undermines the original intent of the policy.
And here's their take on the cap and trade title of the bill, which Breakthrough has also dissected in several posts here:
The Waxman-Markey energy bill also includes a carbon reduction plan. ...

The climate plan in the Waxman-Markey Discussion Draft is the result of years of negotiations and vetting. More than 300 people have testified at over 40 days of hearings in the E&C Committee alone on this plan over the past two Congresses. Even with all of the coalition building of the last decade, Waxman faces a serious challenge just to move the bill out of the E&C Committee. If the skeptics are wrong and this plan passes through Committee and becomes law, will it help deploy solar? Unlikely.

Much like the RES, the carbon cap and trade will encourage short-term, least-cost implementation mechanisms, ignoring the other tremendous benefits solar offers....

If there is an auction of any allowances by the time the bill is passed into law, the solar community is asking that 5 percent of the auction proceeds be set-aside into a solar technology deployment fund. It remains to be seen whether this provision will be contained in the Waxman-Markey draft. But one thing is certain, giving credits away for free means fewer federal dollars to be invested in efficiency, transmission and renewable energy programs.

The role that solar and renewable energy generation plays in the new carbon market also remains in question. Solar advocates assert that solar generators, whether roof-top solar owners or large-scale concentrating solar power plants, should either receive some portion of the carbon credits allotted, or the overall cap should be lowered to account for renewable energy projects.

Both options are designed to ensure real reduction in overall GHG levels from investment in solar generation. Unless we account for renewable energy generation when implementing the program, carbon-emitting generators could meet their requirements by taking credit for emission reductions from renewable energy projects that are already developed. A situation that amounts to zero progress on carbon reduction.
VoteSolar's conclusion:
[W]e remain skeptical that current versions of either the RES or a carbon cap and trade policy will lead to significant solar deployment. The pending bill has proven that a new, cleaner energy future is a national priority. That in itself is progress. But a "sweeping" federal energy bill that fails to deploy a portfolio of renewable energy options is an underwhelming outcome, ill-equipped to help us meet the challenges at hand.

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