UC Berkeley and UCLA Schools of Law are today releasing a new report, A New Solar Landscape, which identifies key reforms for California to enact at the state, regional, and local level to increase the pace and optimal siting of utility-scale solar photovoltaic (PV) development. With the passage of SB 100 (de León, 2018), California now requires electric utilities to obtain 60 percent of their electricity from renewable sources by 2030 and 100% carbon-free electricity by 2045. To meet these goals, the report recommends that state leaders:
- Encourage development of county-level landscape plans by linking them to incentives like expedited review under the California Environmental Quality Act.
- Ensure that project benefits flow first to communities most immediately affected by development.
- Increase support for transmission infrastructure located in areas appropriate for solar development.
- Create a consolidated, statewide zoning and planning data resource.
The report is sponsored by Bank of America and informed by two expert stakeholder convenings facilitated by the law schools.
Utility-scale solar PV facilities—large panel arrays that generate power to sell into the electrical grid—are the most economical method of delivering the large quantities of power needed to satisfy California’s renewables portfolio standard (RPS). Solar energy is the most significant source of renewable energy in California, accounting for over one-third of all renewable power generated in 2017, and well over half of total generating capacity. As solar prices continue to fall, many experts agree that solar will play an even greater role in California’s achievement of future renewables targets, potentially constituting up to 95 percent of new generation.
But these projects, often located in rural areas, can face significant barriers to obtaining the local approvals necessary to begin development, potentially hindering climate progress. To address issues such as a lack of local buy-in to proposed projects and a lack of coordination among local and state planners, the report proposes policies such as:
- Quantifying the total amount of land needed for solar PV facilities in order to meet the state’s climate goals, and communicating this information to local communities where the facilities might be located;
- Preparing solar PV permitting guidebooks that clarify local requirements for developers and help residents understand the process;
- Increasing coordination between state and utility electrical transmission planners and local governments responsible for project approvals; and
- Encouraging community benefit agreements that guarantee local benefits in connection with new solar PV developments.
These recommendations, among many others described in A New Solar Landscape, can help California’s policymakers, local governments, and solar industry leaders develop a county-level landscape planning system that accounts for and promotes state renewable energy targets, environmental conservation and land preservation goals, and community development needs.
For more details, download the report here.
Solar panel technology is often touted as a solution for rural villagers in developing countries who need access to electricity. And certainly the panels, combined with batteries and energy efficient appliances and lighting, can be a solid, emission-free solution for areas too far away to connect to regional grids.
But what if these villagers don’t actually want the panels? That was the case in rural Rajasthan, India, when the national government tried to introduce subsidized microgrids. UC Berkeley researchers at the Energy Institute at Haas were there to study the program and described the source of the opposition:
Many villagers were holding out for “real” electricity. In some cases, local politicians had made election promises that a connection to the centralized grid was imminent. Legitimately, the Government of India has made truly impressive strides towards its promise to provide electricity access for all. Although the fine print of this pledge leaves many households in the dark, the promise of relatively cheap conventional grid power was enough to dissuade many potential microgrid customers.
Households also balked at the price of the Gram Power system. Recall that the Gram Power connection fee was approximately $20. To put this in perspective, the average income among households in the villages that adopted microgrids was around $110 per month. Also, the subsidized per kWh charge for grid power for poor rural customers is less than 5 INR. To cover expected costs, Gram Power’s per kWh charge was four times as high!
In sum, it proved very hard—and expensive—to compete with the promise of subsidized grid power.
Making matters worse, the microgrids that were deployed were subject to constant theft by villagers, and the people assigned to crack down on the thieves were often reluctant to do so because they lived with these individuals and didn’t want to create bad relations.
It’s a classic example of the common dysfunction with economic assistance. Affluent outsiders believe they already have a solution to meet the needs of the impoverished villager, and then are shocked when the solutions are rejected or don’t work as planned.
While solar technology has clear benefits, a better way to start is to ask locals what they want first, and then work to deliver on those requests. Otherwise, the process is backwards and prone to fail.
With Trump’s 30 percent tariff on foreign solar panels scheduled to last four years from February (decreasing by 5 percent per year), how is the U.S. solar industry faring so far?
First, the good news. As E&E News covered [pay-walled], the Solar Energy Industries Association reported installations of 2.5 gigawatts in the first quarter of 2018, a 13 percent increase over the same period last year.
And due to the tariffs, firms have announced $1 billion in new spending plans to build or expand U.S. solar panel factories to take advantage of the tax on imports.
Overall, the U.S. solar industry employs more than 250,000 people, or roughly three times more than the coal industry, with 40 percent of those workers in installation and 20 percent in manufacturing, per the U.S. Energy Information Administration.
But that’s where the good news stops.
The positive numbers for the first part of this year are in fact the result of most installers delaying their 2017 projects until the tariffs were announced. As E&E News noted, modules for installations that came online this year were ordered prior to the tariffs.
Meanwhile, the tariffs have caused U.S. solar companies to cancel or freeze investments totaling more than $2.5 billion in large installation projects, which will cost thousands of jobs and more than offset any economic gains from domestic investment, per Reuters.
Specifically, the negative impact may be felt the most in the Southeast U.S., where the economics of solar were already borderline, according to MJ Shiao at the Wood Mackenzie consulting firm.
But the long-term trends may not be so bleak. Globally, China cut its subsidies and incentives for solar panels in May, presumably in response to the U.S. tariffs. As a result of that policy shift and the decreased deployment in the U.S., global prices have fallen, possibly as much as much as 35 percent.
As a result, the industry has seen record-low power purchase agreements with recent installations. For example, the Central Arizona Project, a municipal water utility, signed a $24.99-per-megawatt-hour contract with AZ Solar 1 earlier this month, which Greentech Media called the cheapest solar contract ever signed. And NV Energy, Nevada’s main utility, announced a deal for a $23.76-per-MWh contract with Eagle Shadow Mountain’s 300-megawatt development.
So the short-term results are mixed and likely to get worse. But as both the tariffs and prices decline, the U.S. industry may hopefully soon find its way out of the temporary hole created by the tariff policy.
Following up on a campaign promise to crack down on free trade policies, the Trump Administration yesterday announced that they will be imposing tariffs on foreign solar photovoltaic (PV) panels. The tariffs will start at 30 percent in the first year and then decline to 25 percent in year 2, 20 percent in year 3, and 15 percent in year 4.
The move was largely expected. The case originated in May 2017 when two now-bankrupt U.S. solar companies filed for temporary relief from competition from cheaper foreign solar panels, under Section 201 of the 1974 U.S. Trade Act. The law gives the executive branch wide authority as a “global safeguard” to provide temporary relief when foreign imports are causing “serious injury” to a U.S. industry.
In this case, Suniva and SolarWorld, the two failed companies (ironically mostly owned by foreign entities) petitioned the U.S. International Trade Commission (ITC) to investigate whether foreign imports were causing them serious injury and recommend remedies. The ITC last October found for the companies and recommended tariffs as high as 35%.
Under the law, the president then has wide authority to implement tariffs once the ITC has made a finding of injury. In this case, the administration actually did not impose as high a tariff as they could have, given the ITC recommendation up to 35%. But nonetheless, the solar industry was predictably opposed to such tariffs and claim that 23,000 job losses will result in the solar industry, along with a big slowdown in domestic solar PV deployment.
There’s no question the tariffs are a big blow to U.S. solar installers, utilities, clean energy advocates, and consumers, who rely on inexpensive panels as a driver of the ongoing renewables revolution. A slowdown in purchasing seems likely and has probably already occurred as companies were gearing up for this decision. According to some analysts, the tariffs could increase solar panel costs by 10 to 12 cents per watt (for reference, U.S. import prices are currently at 35 to 40 cents per watt), which could slow the market by an estimated 8.3 percent.
But the extent of the damage may not be as severe as industry predicts, for three main reasons:
- U.S. solar manufacturers will greatly benefit from this decision and potentially expand their market share to make up for the lost imports and bring down costs through scale.
- Solar industry predictions may have been overstated to scare the administration from imposing high tariffs. We’ve certainly seen industries issue dire warnings about the effects of various environmental policies on consumer prices, for example, only to have those predictions not come true — indicating that industry is prone to hyperbole to achieve policy aims.
- Foreign manufacturers may respond by locating some of their (mostly automated) solar panel factories here in the U.S. to avoid the tariffs. Due to automation, such moves likely wouldn’t produce a lot of new jobs here, but it would enable the panels to remain inexpensive.
In the long term, this decision is another indication of how the U.S. is ceding ground to other countries on clean technology. Just as the efforts to roll back federal fuel economy standards will push the electric vehicle market to countries like China, this decision on solar panels means the rest of the world will continue to take advantage of the solar PV revolution, leaving the United States as bystanders in this growing industry. Despite the decision though, many U.S. states will continue to invest heavily in solar PV, due to mandates for procurement. But individual home and business owners may have a tougher time getting good deals on rooftop solar.
It’s a cliche, but elections have consequences, and this is a big one from the 2016 presidential election. But it also means that a future election can undo some of the damage to the solar industry from these tariffs. And an affected foreign country can also appeal the tariffs to the World Trade Organization. In the meantime, we’ll have to wait and see how the industry — and consumers — respond to this decision.
Capitol Weekly in Sacramento yesterday ran an op-ed from me and Jim Strittholt of Conservation Biology Institute on our recent solar PV mapping effort. Highlight passage:
When we combined the separate maps, the result was pretty remarkable: Out of the 9.5 million acres in the stakeholder study area, the groups identified 470,000 acres of ideal, non-controversial land for solar PV development, or roughly 5 percent of the Valley study area. At a generic calculation of 1 megawatt of solar PV production from 5 acres of panels, that means the lands identified could provide 94,000 megawatts of renewable power – greater than all combined in-state generation capacity and enough to power as many as 23 million homes in California with low-cost, clean electricity. And that’s just from the San Joaquin Valley.
You can read more about (and access) the report here, and see the joint Berkeley Law and various environmental groups’ press release here. My blog on it from last week is here.
In a revealing piece on how the solar lobby won a big, long-term extension of the investment tax credit in last year’s federal budget deal, Greentech Media traced the political strategy that led to the victory:
SEIA’s planned campaign consisted of five components: hire more lobbyists, grow its political action committee and donate to more candidates, work with state chapters to build local support, sharpen communications, and use research to show lawmakers where installation growth and job creation is occurring….
That last component — jobs and installation data — was critical for building support. It became particularly important after the fall of 2014, when Republicans took control of the Senate.
“When the Senate flipped, we started focusing on leadership. Tapping into that kind of [employment] information was essential for developing strong champions,” said Rhone Resch, SEIA’s president and CEO.
Armed with employment and project data, SEIA targeted Senate Republicans in key committee positions from Georgia, Ohio, Nevada and North Carolina — states where employment numbers had soared in recent years.
The campaign required a sustained focus on getting Republican support, a task made more difficult by the 2012 presidential campaign and the constant invoking on the right of the failed Solyndra federal loan. And that’s where Lott came in to help win back key Republicans, as did one of Paul Ryan’s former aides.
The message here is twofold: first, solar PV is now a mainstream, bipartisan clean technology, which can only bode well as a “gateway drug” to bipartisan acceptance of other clean technologies, from energy storage to electric vehicles.
Second, tallying the economic benefits of these technologies, as the solar lobby did, is clearly a critical strategy to getting Republican support. California clean tech advocates should take note as they gear up for a legislative battle with conservative Democrats and Republicans over in-state 2030 greenhouse gas targets.
Meanwhile, solar industry guru Jigar Shah generally opposes the investment tax credit as (ironically) dampening investment in solar, although he still likes the budget detal. He explains why in a recent interview in PV Magazine:
Now there are those who have no interest in investing in solar, not because they are against it, but just because they don’t really love the tax credit. Because if you are a pension fund, you don’t pay taxes.
And so now we are going to go back to them and say, now there is a phase-down now by 2023, why don’t you go back and do all the work that you need to do, so that by 2022, you are actively able to invest.
But the bottom line is that everyone in the industry is more than pleased with the budget deal, which secured the future of solar PV.
Who would have guessed that a Dixiecrat sympathizer from Mississippi would have helped make it happen?
Happy 2016! With the new year here, I wanted to reflect on some of the big environmental accomplishments of 2015. Here are my top three best pieces of news on climate change:
3. Paris Climate Agreement: Sure, it was mostly political theater, with a non-enforceable international agreement that could be undermined as soon as next year by a Republican U.S. president. But it was necessary theater. No international action can happen without it, and it’s sets the political foundation for domestic action on carbon reduction in countries and states all over the world. It was also an example of how China’s new commitment to reducing greenhouse gas emissions has changed the politics of climate change.
2. U.S. and California’s Continued Commitment to Solar: Solar PV has made huge gains in terms of efficiency and price competitiveness over the past five years. But its progress could have been badly undermined had the U.S. federal government not continued the policy of giving a 30% investment tax credit for solar PV (and other renewable energy) purchases. Meanwhile, California, solar PV’s largest market, could have dramatically killed demand by gutting the rate incentives for homeowners to go solar. Fortunately, both governments backed away from the brink. The new federal budget continues the investment tax credit, while California’s energy regulator appears committed to keeping the current rate incentives intact (although Severin Bornstein offers a compelling case for an alternative approach). The resulting demand will ensure that solar PV is here to stay and will only become more cost-competitive with fossil-fuel sources of power going forward.
1. Tesla’s Increasing Sales Rate: It was a down year for EVs, with cheap gas prices and not a lot of new models to choose from. Tesla vehicles may still be a plaything for the wealthy, but the company’s dominance at the top of the EV market will eventually lead to an energy revolution for all — and that’s no understatement. Encouragingly, Tesla sales were up 60% in 2015 over 2014, to over 50,000 units, blowing by Nissan LEAF’s sales of about 18,000. And with the new all-electric SUV Model X ramping up, we’re starting to see Tesla’s long-range plan take shape: start at the top, and then use the sales to fund a mass-market EV. When that model comes out, we’ll finally get the transition to a low-carbon economy we need: cheap battery electric transportation, coupled with mass energy storage from the batteries, both in and out of the vehicles.
We’ll see what 2016 brings, but for now, we certainly have something to celebrate as 2015 hits the books.
