It didn’t quite work out that way. Yet the current chaotic state of the solar power market in the United States may, some suggest, represent a segue into a stable solar industry at last.
A snapshot of the solar power business on the Front Range offers a glimpse into what’s happening nationally.
A passel of small-to-mid-sized businesses that sprung up to mine the consumer side of solar is waiting for a new boom that has yet to materialize.
Equipment manufacturers have had even less luck; most notably, Loveland-based Abound Solar was forced to file for Chapter 7 bankruptcy earlier this year.
The industry’s tougher times in part are a result of the politics that gave birth to solar, and then abruptly abandoned it.
Environmentalists and their political allies around the U.S. fought for and won various incentives for solar equipment manufacturers and solar power consumers that led to an explosion on both the supply and demand side of the business.
But when the economy tanked, so did solar incentives. Consumers who had been used to generous up-front payments to install solar panels, for instance, disappeared once the payments did. Manufacturers saw their margins plunge. The end result has been a marketplace in disarray for the last several years.
When things might change is anyone’s guess. Solar’s fortunes have been made even dimmer because of the nation’s swelling debt. Yet an analysis done by DBL Investors, a group that backs clean energy ventures, reported last year that more than 1 percent of the federal budget went toward nuclear power for the 15 years following World War II. In that same time, oil and gas received 0.5 percent of the federal budget. By comparison, all renewable energy sources combined have received around 0.1 percent of the federal budget.
Despite all of the negative news, Neal Lurie, executive director of the Colorado Solar Energy Industries Association, remains optimistic.
“There are more than 400 solar manufacturers worldwide,” Lurie notes. “Solar has grown to be a $100 billion global industry. It’s to be expected that some organizations in a competitive landscape will differentiate their products and have a price advantage and others may not. The massive amount of competition creates challenges for manufacturers. One thing most people don’t know is that solar cost for photovoltaic technology now cost 75 percent less than three years ago.”
Lurie says that as coal becomes more difficult to harvest and hydropower feels the impact of the state’s water shortage, energy sources like solar and wind inevitably will begin to supply more of the world’s energy.
“Our goal in Colorado is to make sure we can keep working together to promote economic development here and throughout the state,” he says. “Colorado has grown to be the No. 1 state in the nation for solar jobs per capita. That reinforces how far we’ve come — we’re a national leader in solar.”
The politics of energy continue to play a significant role in solar’s evolution — or stall, depending on your viewpoint.
A recent Colorado Public Utilities Commission decision that granted the utility company Xcel certain concessions for its solar production requirements led to an unsuccessful attempt by COSEIA to fight the decision.
Xcel had requested that the PUC amend its compliance plan with the state to essentially reduce requirements for solar power production. The PUC agreed.
Concerned about the impact on the state’s solar industry, COSEIA appealed. In July, the PUC rejected the appeal.
In a statement issued at the time, Lurie said, “Given the economic and environmental benefits solar offers to the state, we are surprised that the PUC summarily dismissed our application. Our suggestions would have been easily implemented, with little to no ratepayer impact, and would have improved the business climate for the Colorado solar industry, while also providing a greater opportunity for Coloradans to go solar. It was a ‘win-win’ proposal for Colorado, and we are baffled by the PUC’s decision to deny our request.”
Looking ahead, Lurie says his association is doing what it can to advocate for the best interests of the solar industry and of energy consumers in the region.
“Every industry needs to see a sense of market stability to attract new investments and create jobs. There are many utilities that are great partners in the effort to transition to cleaner forms of energy,” he says. “But we’re also seeing that some utilities have initiated efforts to be able to have less stability, so it’s not surprising that businesses raise concerns when efforts they view as anti-competitive are initiated by a monopoly utility.”
Those issues aside, Colorado is well positioned to continue to be a solar-energy leader, says industry analyst Paula Mints.
The director of the energy division of Palo Alto, Calif.-based Navigant, a consulting firm, Mints argues that the highly fragmented and decentralized structure of the U.S. industry offers hope for a relatively healthy market in the not-too-distant future.
And while Colorado may not be leading the way in solar at present because of political decisions that have hampered growth, she believes the state will benefit when the industry stabilizes nationwide.
Mints bases her outlook on the incentive-driven history of solar power.
European nations embraced incentives to help spur the industry’s development and encourage power users to adopt solar. But as imbalance and gaps emerged in the production and delivery system, most European nations yanked the incentive rug out from under solar, causing demand to crash and manufacturers to go bust.
In the U.S., Mints says, the decentralized approach to solar policy and regulation has actually been a positive factor, though one that is currently difficult for those in the thick of it to see.
“The U.S. market is looking quite positive compared to other markets,” she says. “It is growing and becoming stable, and all because of our wacky system of incentives.”
In Colorado and other states, lawmakers and regulators have crafted complex incentive packages that vary from county to county and state to state.
While this makes it initially more difficult for both solar companies and consumers to do the math on whether the systems make economic sense, these incentive packages are more thoughtfully created than the European-style mass incentive and hence lead to more stable margins and costs.
That said, Mints acknowledges that solar still has some dark days ahead.
“Right now, prices for the technology are artificially low, so manufacturers can’t be profitable. They’re going under,” she says. “And while lower prices for the technology are great for the demand side (retailers and installers), if all the manufacturers go out of business due to low prices, the demand side won’t have anything to sell.”
As for Colorado, she says that the political climate for solar isn’t the best in the nation (she thinks California’s is). “It doesn’t promote a strong market at present,” she says.
On the other hand, it’s far from the worst. As regulators and lawmakers refine the various incentives — taxes credits, rebates, permitting costs and the such — industry will inevitably stabilize and begin to prosper.
Part of the problem with requiring the large utilities to invest in and offer customers a certain percentage of solar power is that these major players essentially have no competition and can’t be forced to abide by the regulatory requirements, says an industry source who asked not to be quoted by name.
As with other non-traditional energy sources, such as wind power, solar isn’t as predictable or readily available as coal and water generated power, and utilities that are public companies are reluctant to make huge investments that might not reward their investors.
If Colorado’s solar future seems cloudy right now, Mints fully expects the clouds to part — perhaps not immediately but soon.
Colorado’s political climate for solar “doesn’t promote a strong market at present,” she says. But it’s evolving and headed in the right direction.
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