As so many of us have hoped for years, solar is finally front page news. Unfortunately, not all the news is good; some is downright troubling and leads to more questions than answers.
Let's start with the good news.
The cost of solar is down.
The cost of solar for commercial and residential buildings dropped 17 percent from 2009 to 2010 and an additional 11 percent in the first six months of 2011 according DOE's Lawrence Berkeley National Laboratory. Utility scale projects (very large projects that sell energy to the electricity grid) have also seen a dramatic decrease in price. This means cheaper electricity for all. It also means cleaner electricity as more utilities, businesses and homes install solar. The U.S. currently has 2.7 gigawatts (GW) of solar installed, which is equal to the capacity of almost three nuclear power plants.
There are two main reasons for the decrease in cost of solar. The first is a drastic change in subsidies in Italy. In anticipation of a huge Italian market, solar integrators demanded more panels from manufacturers. When Italy unexpectedly ended its subsidy program, integrators were left holding more panels than they knew what to do with. The law of supply and demand went to work and we have seen a decrease in the cost of solar.
The low cost of solar is spurring industry growth.
According to the 2011 Solar Jobs Census the solar industry is employing 6.8 percent more workers than last year. The industry now supports over 100,000 people. That is great news in a slow economy.
Unfortunately that's not the full picture.
Irresponsible solar manufacturing in China
Some of the low cost solar panels are not from increased supply, but from decreased quality. In those cases, cost savings are coming from decreased quality of the panels (less efficiency) and decreased quality of the manufacturing process. Less efficient panels aren't always a bad thing, but typically these panels are coming from unregulated manufacturing companies that are spewing pollution into our air and water. Stereotypically, these polluting companies are from China, and while there are some responsible companies manufacturing solar in China, there is some truth to the stereotype. Just this week China closed a solar power plant and fined the company after four days of protest by local villagers over dirty air and water. As with most products, cheaper is not always better, so we as consumers must buy our solar from responsible companies.
U.S. renewable energy policy
There is also a lot of noise about the fall and major scale-back of several big solar companies in the U.S. What this will mean to the larger market is yet to be determined, but given the grumblings about Solyndra, a company that received loan guarantees from the federal stimulus, we should take a moment to examine our federal policies on renewable energy.
First and foremost, any investor (including the government) should be careful about how it invests, and CEC supports thorough oversight. At the same time, investing involves some level of risk and we need stimulus on the research and development (R&D) efforts for renewable energy. Government supported R&D is required to keep pace with other countries who are actively trying to catch up to us in the solar market. The U.S. currently has a trade surplus from solar technologies. It will be difficult to maintain this surplus if we depend solely on manufacturing, given the low cost of labor in other countries. To keep the U.S. competitive, there must be continuous development of new technologies and consumers support of responsible manufacturing and development processes.
More importantly, government needs to set a long term price signal for carbon. Renewable energy companies will continue to fail if they do not get to play on an even playing field. Right now fossil fuel companies have direct subsidies from the federal government and indirect subsidies from society. By allowing them to pollute for free, we are lowering the costs of fossil fuels; (this is also applicable to the polluting solar plant mentioned above).
The true cost of fossil fuel dependence
What we aren't paying at the pump or plug, we're paying in disaster relief. We have had ten $1billion natural disasters in the U.S. this year. Most of them can be associated with the changing climate. Society is paying for our dependence on fossil fuels, only it is not directly associated with the fuels themselves, which leads to a false price. If we set a price on carbon either through a carbon tax or a cap and trade system, it will help the price of fossil fuels reflect the true cost. Only when we pay true costs will renewable energy will be able to compete with fossil fuels on an even playing field.