Commercializing Photovoltaic Solar-Electric Power... Ensuring Our Arrival

Photovoltaic solar-electric technology uniquely satisfies the requirements of the
three drivers of the new power-generation landscape: premium power for high
reliability, distributed generation for point-of-use economics, and renewable energy
for environmental value and energy security.

Despite these attributes, the value of this enabling technology is not fully
appreciated in the United States. Thus, our industry's commercialization plan will
rely on market-driven incentives in federal procurement, tax, deregulation, pollution
prevention, and research, development, and deployment. With ever-growing
pressures — of energy imports, energy price volatility, power outages, and energy
shortages — solar technologies represent a technological safety valve for
American home and business owners. We in the solar industry urge that these
cutting-edge technologies receive increased attention and that this attention be at
least equal to that given by our industrialized competitors in Germany, Japan, and
other countries around the globe.

Our Main Focus

Our PV industry, seeking to address vital energy issues, endorses a roadmap that:

• Tailors research and development programs to address market solutions
• Enhances pollution prevention approaches to focus on clean alternatives
• Ensures customer choice
• Provides targeted tax incentives that seed the market without distorting it

To achieve these goals, we are pursuing the following five strategies:

Develop Opportunities Based on Electric Utility Deregulation — Rational
deregulation leads to customer choice. Photovoltaic solar-electric power adds
unique value in alleviating the problems of supply shortages, price volatility, random
and planned power outages, and constraints in transmission and distribution.
Required actions involve work in the areas of net metering, consumer education,
renewable energy portfolio standards, and system benefits trust funds.

Establish Tax Equity — National and state tax incentives, whether investment
or production credits or property and sales taxes waivers, must be prioritized for
emerging technologies in less mature markets. At the federal level, most energy
tax benefits focus on mature energy technologies in mature markets, with
estimated federal subsidies ranging from $2 to $8 billion per year. As a whole,
renewable energy technologies receive only a small share of these energy
subsidies — about $100 million per year of federal tax subsidy — with more than
80 percent of this amount going to wind and geothermal.

We recommend the following tax incentives:

• Legislatively establish a 15% residential tax credit for solar-thermal and
  solar-electric installation. This residential tax credit — as proposed under S.
  1634 and H. R. 1465 — has been scored by the Joint Tax Committee at $92
  million over 5 years. This modest tax credit becomes effective if coupled with
  a system benefits charge for electricity at the state level.
• Institute an alternative minimum tax (AMT) waiver similar to that currently
  enjoyed by domestic oil producers. Oil producers receive a waiver from the
  AMT because the national interest is served by sustaining a domestic energy
  industry, albeit a very small one. The same justification should apply to
  domestic producers of solar energy.
• Further expand state incentives. Currently, 35 states have some type of solar
  incentive — from investment credits to sales tax and property tax waivers.
  Such programs help establish tax equity for capital-intensive, fuel-free energy
  technologies. Also, if adequately promoted to the public, these programs will
  establish key market-driven incentives for allowing solar technologies to reach
  a critical market share for sustained growth.

Increase Funding of Research, Development, and Deployment (RD&D)—
The United States' investment in photovoltaic RD&D has been in the range of
$50 to $75 million per year, significantly less than the government's investment in
conventional energy technologies. A sufficient baseline investment for federal
solar-electric RD&D must be established. In addition, existing programs in other
agencies should co-invest in the development and demonstration (deployment)
portion of the PV RD&D budget.

Specifically, we recommend the following:

• Consistent funding levels of the next 5-year period for photovoltaic RD&D
  programs through the U. S. Department of Energy of at least $100 million per
  year, to maintain technical leadership, which includes the ownership of
  next-generation technologies.
• Support for validation for PV technology development and deployment by
  other federal agencies — including the Department of Defense, Environmental
  Protection Agency, Housing and Urban Development, National Institute of
  Science and Technology, and other DOE programs. Specifically, these funds
  should support other government agencies to continue to expand the use of
  solar-electric power for their own power needs.

Establish Procurement Incentives for Federal Agencies — The nation's
energy procurement budget should include capital expenditures by federal
agencies for cost-effective uses of photovoltaics in four categories: uninterruptible
power supplies, lighting, off-grid power systems, and diesel generator replacement.

Target Pollution Prevention and Emissions Reduction — The extraction,
conversion, and use of energy is the single largest cause of air and water pollution,
as well as of emissions that may lead to global climate change. Solar-electric
power technologies are now available that can cost-effectively provide clean, safe,
reliable power.

*Estimated emissions related only to the gathering and processing of fuel, and to
the building and decommissioning of the generation plants. Based on calculations
derived from R. Dones and R. Frischknecht, "Life Cycle Assessment of
Photovoltaic Systems: Results of Swiss Studies on Energy Chains,"
Environmental Aspects of PV Power Systems: Report on the IEA PVPS Task
1, Report No. 97072, December 1997. Emission factors for fossil fuel from The
American Gas Association; emission factors for nuclear and renewable energy
sources from the Council for Renewable Energy Education (as reported by SEIA,
ref. 7).

Figure 10 - Pollutant emission factors for the total and non-generating
portion of the fuel cycle.

However, traditional "command and control" regulatory strategies do not promote
market-driven approaches to emissions reductions. Newer "allowance trading"
programs, whether for clean air or climate change, do not reward the cleanest
technologies. Thus, they have not fostered the use of solar and other zero-emission
technologies. To this end, we recommend the following initiatives as a fresh
approach to solving this problem:

• RD&D programs, particularly at the Environmental Protection Agency,
  should provide analytical tools for federal and state environmental
  regulators and program implementers. These tools should provide "rules
  of thumb" for quantifying emissions and pollution-prevention attributes of
  solar energy — both on a project level and consolidated.
• Trading programs for clean air and climate-change emissions should
  reward zero-emissions technologies, rather than least-cost options that
  provide purely short-term incremental reductions. The goal for U. S.
  environmental regulation should be to promote market-driven solutions that
  translate into the cleanest available technologies and installations.
• Federal and state promotional and RD&D programs should be
  leveraged, aggregated, and implemented through states toward
  technology validation (demonstration) and deployment. Aggregating the
  use of solar technologies is the only way to demonstrate and validate
  significant emissions reductions. To achieve this result, federal and state
  governments should focus on projects that can be replicated.
• Government agencies should increase consumer awareness of the
  cost-effective uses of solar technologies. EPA's and DOE's Energy Star
  program — which places public service ads and provides logos and consumer
  awareness — should be broadened for zero-emissions technologies such as
  solar. National recognition programs, such as that employed by Energy Star,
  must also be used to acknowledge early significant users of replicable
  projects.
• More aggressive funding should be made available for programs that
  not only promote solar technologies in schools to reduce energy, but
  also, as an integral part of the curriculum from elementary through
  college levels. According to the Department of Energy, energy is the third
  highest cost of education after teacher salaries and benefits. Solar energy will
  offset energy costs and potentially limit increases in property taxes;
  additionally, though, it will provide future consumers with some "first-hand"
  experience in clean technologies. Student involvement has made paper and
  plastic recycling a universal practice over the last 25 years — and such
  involvement could do the same for solar technologies over the next two
  decades.

Industry must embark immediately on a more proactive and coordinated program
of analysis, market aggregation, consumer awareness and education, and
deployment. This effort will significantly reduce pollution through a broad portfolio
of solar technologies and applications. Our national goal should go beyond simply
cleaning up dirtier fuels and processes. Indeed, our goal should be to enhance the
use of the cleanest technologies as a way to drive pollution reduction in a more
comprehensive and fundamental way.

In Conclusion

If we are successful in pursuing our overall commercialization strategy, we will
create thousands of new, high-value jobs. We will reduce energy imports. We will
displace pollution equal to the emissions of one million vehicles. We will provide a
more stable energy environment. We will provide energy choice to our citizens.
And we will lessen the pressure on energy rates and supply, making sure that the
lights will stay on for all Americans.

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