Barriers to solar energy's blockbuster promise

The potential for U.S. solar energy may look brightest in California, but legal, technological and cost limitations are interfering with big installations.

Elsa Wenzel
5 min read

MENLO PARK, Calif.--Solar power hasn't swept the nation but it must and will, said members of utilities, clean-tech start-ups, venture capital firms, and academia at the Big Solar conference here Wednesday.

California will literally live up to its "Golden State" nickname and shine as a model for the rest of the country thanks to progressive lawmakers, Silicon Valley dealmakers, and innovators at state and university labs, according to the event's many optimists.

"The time has come in the United States for large-scale solar," said Ed Smeloff, senior manager of utility project sales at SunPower, a maker of solar systems including those at the nation's largest plant at Nellis Air Force Base in Nevada. "The wind is to our backs on this."

Among the bright points noted by Smeloff and others, each presidential candidate supports clean energy, of which solar is the best understood.

U.S. photovoltaics account for just 8 percent of the global market totaling 2,826 megawatts, according to a Solarbuzz report.

Demand for electricity will expand one-third by 2030, according to the Energy Information Administration. Solar producers hope their energy product will fill the gap with a minimal carbon footprint.

"The time has come in the United States for large-scale solar."
--Ed Smeloff, senior manager, SunPower

Even in California, however, conference attendees spoke of stunted growth in solar. To start, it's expensive. Laws meant to help the spread of solar and protect ecosystems may also hurt the sector, some argued. And financing plans and tax incentives designed to spur installation may bring unintended negative side effects.

Solar power is recognized as the most expensive form of energy at around 30 cents per kilowatt hour. By comparison, coal costs about 5 cents and natural gas 4 cents per kilowatt hour.

"We're looking for the biggest bang for the buck," Roy Kuga, vice president of Pacific Gas & Electric's energy supplies division, said at the event, which was held by UC Berkeley and Stanford University.

Silicon supply stunts growth
As 26 U.S. states including California are requiring some renewable energy in utilities' portfolios, more utilities are jumping on the solar bandwagon.

The limited availability of silicon has partly stalled the growth of the solar sector.

"We're struggling to provide one-third of what people want from us, and we're No. 1," according to Kristina Peterson, director of structured finance at solar module maker Suntech.

However, supplies could increase by 33 percent this year and 23 percent in 2009, according to research firm Gartner. From the world's modest 8 suppliers of silicon, 100 new providers could emerge by 2009, Peterson said.

No matter how renewables improve in efficiency and price, Kuga of PG&E said he foresees a continued reliance on the grid, especially for peak demand.

Renewables make up less than 3 percent of U.S. energy, according to the Department of Energy. They can be less reliable than tried-and-true yet carbon-intensive sources like coal. Both solar and wind depend upon the whims of weather.

Meanwhile, makers of solar systems are racing to enhance efficiency. Some look at silicon alternatives, copper indium gallium selenide (CIGS), or cadmium telluride. There's even more variety in the forms that solar systems take, from glass-and-metal panels to thin films built into windows to bobbing plastic balloons.

"It's hard to say who will succeed and who will not," Kuga said. "The guy with very little funding may have the home run technology."

Just as the mix of solar technologies continues to shift, the nation's future energy portfolio is likely to be extremely diverse.

The California Solar Initiative calls for 3,000 sun-powered megawatts by 2016. Under the California Renewables Portfolio Standard, electricity providers by 2010 must ramp up renewable sources to 20 percent of sales.

But with the federal renewable energy tax credit ending by January, many solar projects are on hold. The credits expired twice in previous years until Congress retroactively re-established them.

"It's pushed us into looking at programs in Canada and Europe," said Joseph Kastner, vice president of solar operations at MMA Renewable Ventures, which helps to finance clean-energy projects.

Legislative missteps
The West Coast, particularly California, is a stronghold for solar support from policymakers. At the same time, regional missteps are holding back solar development, according to some in the solar industry.

The Clean Energy Initiative on the California ballot this fall would require 50 percent of energy from renewables by 2050. But as it stands it would effectively kill the state's solar sector by disqualifying any project under 30 megawatts, warned Sue Kately, executive director of the California Solar Energy Industries Association.

A regulatory fast track should approve the ecological soundness of large-scale solar plants, said Marc Gottschalk, co-chair in the clean-tech practice of Wilson Sonsini Goodrich & Rosati.

Although solar panels don't create obvious hazards or polluting emissions, large installations may be left in limbo for six months to a year during a review by the California Environmental Quality Act, he explained. The National Environmental Policy Act can add more delays, said Gottschalk, also co-chair of the California Clean Tech Open.

For instance, OptiSolar plans to build the largest U.S. solar farm of 550 megawatts, but it must ensure the safety of endangered species from nearby Carrizo National Monument.

Connecting the many distributed systems to the grid is still a bridge to cross, some mentioned.

Punitive taxes are another barrier, according to Kastner of MMA Renewables, which has 27 megawatts of photovoltaics in 10 states, including the 14-megawatt plant at Nellis Air Force Base. In some cases, property taxes tripled after the solar panels went up, Kastner noted.

Kateley, on the other hand, warned that consumers must check the fine print within the terms of financing plans for solar installations. Residential customers, in particular, should understand they may get help with installation through leases and Power Purchase Agreements, but wouldn't own the panels on their buildings.

She also raised an eyebrow when addressing venture capitalists. "You're flushing a lot of money into these systems and some of you might be a little reckless," she said, adding that because the business world may favor "shiny" photovoltaics, more common-sense solutions such as solar thermal are being overlooked.

Solar may appear the "sexiest" slice of the clean-tech sector, but the number of solar companies has contracted slightly since last year. As the industry matures, the shades come on.

This post has been changed to reflect that the true nickname for California is the "Golden State," not the "Sunshine State." Thanks to the reader who pointed this out./i>