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Amid Boom, U.S. Solar Industry Fears End of Government Incentives

Recent gains in the U.S. solar market are due largely to support from two federal funding programs that are set to expire this year and next

Jun 20, 2011
solar thermal

"1603 is one of the linchpins of continuing the growth of the solar market at the rate it is growing today in the United States ... and is one of the critical bridges toward getting us across this lack of tax equity that we have in the market today," Kimbis said.

The DOE's Section 1705 loan guarantee program helps solar developers to secure funding by promising to pay back loans if borrowers default. Using stimulus dollars, the DOE so far has offered a total of $10.4 billion in loan guarantees to 11 solar projects. The program is set to end on Sept. 30 this year if it is not renewed.

"We are working with the administration and Congress to make sure that with the expiration of the stimulus [funding], the loan guarantee program will be able to roll over," Kimbis said.

However, he added: "We are certainly facing a tough environment within Congress to get anything extended that has a cost associated with it in this period of cutting the budget and our deficit."

Solar Growth to Slow in Top States

As funding uncertainty reigns at the federal level, growth in the nation's top two solar states — California and New Jersey — is expected to lose some steam.

Kann of GTM Research said that while California's residential solar market continues to expand, commercial-scale projects are increasingly harder to pencil out since the state's California Solar Initiative stopped doling out rebates for projects over 30 megawatts in two of three utility territories.

Although New Jersey was the fastest-growing market for solar energy in the first quarter of 2011, clean energy advocates have cautioned that Gov. Chris Christie's proposed Energy Master Plan could greatly curb the state's leadership in the sector.

Christie proposed to scale renewable energy goals to 22.5 percent of all electricity generation by 2020, down from the 30 percent renewables goal set by an earlier version of the energy plan. The draft also suggests eliminating certain solar energy incentive programs and lowering statewide targets for the clean energy resource.

Kimbis said that SEIA would join industry group SolarAlliance in commenting on the plan at three public hearings scheduled for this summer.

"Essentially we saw that there were some inaccuracies in the draft report in regard to the number of jobs that were being created in New Jersey from solar, as well as the value of solar to the New Jersey economy," he said.

Still On Track to Overtake Europe

Despite the potential impact of losing federal and even state incentives, Kann said the United States is still on track to surpass major European markets such as Germany and Italy within the next five years as growth in those nations continues to slow.

The U.S. global market share will likely increase to 9 percent in 2011, a meaningful rise from the 5 to 7 percent share the country has held since 2005, he said.

"It is clear that the U.S. market is going to be much more important on a global scale in a short period of time," Kann said. That potential growth is already attracting global solar manufacturers and suppliers to increase production here.

U.S. production on PV modules rose by 17 percent to 348 megawatts in the first quarter of 2011, compared to the fourth quarter of 2010, according to the SEIA-GTM Research report. Overall, manufacturing in the U.S. grew by less than 4 percent.

Kann noted that the United States has 55 active PV manufacturing facilities across the component value chain in 19 states, with more factories underway this year.

General Electric is building the nation's largest thin-film solar factory to produce up to 400 megawatts worth of solar cells per year. First Solar is also building a 250-megawatt thin-film solar plant in Arizona to complement its existing plant of similar size in Ohio.

Kimbis said that the vastness of the U.S. market is particularly enticing to solar firms seeking to expand their operations.

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