Investing in Solar: An Interview with Amit Ronen

Video by Joey Rabinowitz

I met with Amit Ronen, director of the GW Solar Institute, in his office on the south side of 22nd Street. He sat across from a map showing the range of solar resources across the United States. Seattle hid away in small pocket of deep purple, denoting little annual sunlight. The Southwest burned bright red, a rich well of solar energy waiting to be tapped. I asked him how we get to all that energy.

Making Solar A Worthwhile Investment

Recent years have seen a small boom in solar power. Countries around the world are building factories to churn out photovoltaic (PV) technology, and the resultant glut of manufacturing capacity is part of the reason PV panel prices have dropped 80 percent in the last five years. “China alone could supply the world demand right now,” said Amit.

Two Types of Power

Photovoltaic solar power (PV) works by converting sunlight into electricity using light-sensitive semiconductors. The tiny panels powering your ten key calculator are photovoltaic cells.

Concentrated solar power (CSP) works by using mirrors or lenses to concentrate sunlight onto a small area to generate heat to make steam that can then be used to generate electricity. If you’ve ever used a magnifying glass to start a fire, you’re familiar with concentrated solar power.

Concentrated solar power (CSP) is also taking off. Several systems are also coming online in the United States thanks in part to an eight-year Investment Tax Credit (ITC) passed in 2008. The certainty of the ITC is important, explained Amit, because these are “big, multi-billion dollar facilities. They take several years to plan, permit and build.” Unfortunately, the ITC is set to expire in 2016, and it’s unclear whether or not it will be renewed. The uncertainty has harmed investment in future CSP systems.

The Investment Tax Credit passed only with some difficulty in 2008. At the time, Amit served as deputy chief of staff to Senator Maria Cantwell (D-WA) who joined with Senator John Ensign (R-NV) to propose a bill containing a series of energy tax credits including the ITC. Amit explained that members of both parties supported the bill, but Democrats wanted to pay for the tax credit by reducing subsidies for the oil and gas industries while Republicans opposed any such measure. Eventually, the Senate approved the tax credit without paying for it. “It ended up passing 93 to 2,” said Amit, “but it took us 16 months and 10 Senate floor votes to pass.” Harry Reid forced the measure through the House by attaching it to the TARP bill.

The future of the ITC remains uncertain. “For solar and geothermal there is a ten percent permanent investment tax credit,” Amit explained. “So, in theory, if Congress doesn’t act… it goes down to 10 percent permanently. I think more likely tax reform will happen before then, and there will be a rethinking of all these tax credits.”

Amit cited contention in Congress as a major obstacle to progress on energy tax credits. “There are 42 separate energy tax credits right now, and if nothing is agreed upon, they could get wiped out.”

The Opposition

Special interests will oppose extending the ITC as alternative energies penetrate markets long served by fossil fuels. According to the Union of Concerned Scientists, wind power is now cheaper than oil and coal in some parts of the country. PV power also threatens fossil fuels by offering a decentralized power source, giving people a way to disconnect from the grid entirely.

"Solar typically polls at 90 plus percent in terms of people wanting more of it." - Amit Ronen

“What happens to the whole grid system if five percent of customers disconnect?” posed Amit, in reference to an ongoing research initiative at the Solar Institute. He explained the remaining customers may see their power bill rise to support the cost of maintaining the grid, thus driving more people to switch to solar.

Right now, power companies are buying power from individuals with solar panels, but power companies typically make money by selling electricity, not taking on solar power. “You’re seeing push-backs all across the country,” said Amit. “In Arizona, the Arizona Public Service Commission –they’re the largest utility– went to their regulators last year and said, ‘We want to charge people who have solar panels 50 to 100 dollars a month for maintaining the grid that they use.’ There was a big public outcry. APS and their allies spent an estimated $9 million on anti-solar commercials.” Amit added, “Solar typically polls at 90 plus percent in terms of people wanting more of it, so that’s a challenge for them.”

The Future of Solar

Amit is optimistic about the future of solar power. Solar, he explained, is “probably the most scalable of renewable energy technologies in terms of having such wide range of applications… Think of how many rooftops there are in our country, and parking lots and open spaces.” Unfortunately, it’s not a fair fight as long as the price of fossil fuel fails to reflect its true costs in terms of pollution, effects on public health and climate change.

That’s too bad because embracing solar may motivate the economy. The Solar Institute recently partnered with the Solar Foundation to survey the American solar industry. “Overall, we found there were 24,000 new jobs created in the solar industry in the last year,” said Amit. “That’s ten times the national average.” Most of those were installing solar panels, work that can’t be outsourced.

Despite that, the US constitutes only 13 percent of the world solar market and remains third in installations after China and Japan, Amit explained. “We have 13 gigawatts in the US right now. China’s goal is 40 gigawatts by 2015.”

For now, the United States is playing catchup, even among some unlikely competitors. “Saudi Arabia is planning on 16 gigawatts of solar power in the next 20 years,” said Amit. “They have wide open, very sunny deserts, and they want jobs for their people. They want to sell that natural gas and oil to the laggards that are still using it instead of solar.”

Jeremy Deaton is an M.A. candidate in Media and Public Affairs at The George Washington University.

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