By Don A. Holbrook, Site Location Consultant Managing Partner, Vercitas Group
For the first time ever, more solar was added in the United States than natural gas. By the end of 2015, solar supplied nearly thirty percent of all new electric generating capacity in the U.S. Not only was this good news for the solar industry, but it was good news for anyone who made the investment into solar as it validates the legitimacy of Solar as a staying power that is no longer a fringe and/or environmental prerogative statement, but a bona fide smart investment for financial and business reasons.
2015 now represents a pivotal turning point in the energy economy that was outlined and espoused by so many and the target of ridicule by many more, especially the media and lobbying groups behind big oil. Natural gas and coal still maintaining the lion’s share of electricity generation today, the fastest-growing energy sector is now solar. Not coal, not natural gas, and not nuclear. Even more important the cost to purchase and operate for homeowners is now down below the average length of ownership average of 7.5 years to break even. The average length of time of a new homeowner investment is the same. This now makes the purchase of a solar energy investment and the investment to purchase a home a singularly good financial move by homeowners.1
The three biggest opportunities for solar are at the municipal level, homeowner, and building owner levels.
Small cities and towns are prime off takers for solar power as a second source of energy resilience or redundant energy capacity, a major requirement for most manufacturing and high tech IT driven industries. These businesses want 100 percent uptime capacity and no brown outs from the old grids that are tired and broken down. There are some recently featured great examples of local municipalities creating solar strategies. Located in the northeast of the U.S., Peterborough, New Hampshire took on the title of “The Greenest Town in New Hampshire” in late 2015 after it turned on a 1-MW solar array that will power its townhouse, fire station and library through a group net-metering arrangement. Borrego Solar developed the project and served as the engineering, procurement and construction provider before selling it to Sun Edison with whom Peterborough signed a power purchase agreement (PPA). This wave of smart municipal energy policies is sure to catch hold, as they become subjects of business case studies and conversations at the International City and County Managers associations and the National League of Cities.
Peterborough purchases the solar energy at a rate of US $0.08 per kilowatt-hour, less than what it pays for power from Eversource, the local utility.
“Solar projects like this one save taxpayer’s money and bring new economic activity to the area in the form of construction jobs and land lease payments,” said Sun Edison VP of partner development Tom Leydon in a press release.2
Microgrids Resiliency for Improved Energy Reliability
The memory of Hurricane Sandy in the U.S. Northeast still brings shudders to city and town administrators who watched as their citizens went days, and in some cases weeks, without power, water, and heat after the disaster struck. In all, the storm and its path of destruction affected some eight million households in 17 states. While some buildings and homeowners had back-up generators powered by diesel, as the fuel to power them ran low, anxiety about what could happen next increased.
To help alleviate some of the anxiety and bring more resiliencies to municipalities, Schneider Electric is offering solar-powered microgrids to those cities and towns that may want them.
In the town of Fairfield, Connecticut Schneider Electric built a 300-350 kW microgrid that uses 60 kW of combined heat and power, a 47-kW solar photovoltaic system and a 300-kW natural gas generator along with a control and distribution system, energy efficiency measures and on-grid and island modes to bring peace-of-mind that future storms won’t as heavily impact the town. Most of the time, the microgrid is connected to the larger grid but should disaster strike, the police and fire stations, an emergency communications center, a cell phone tower and a public shelter will remain energized 24/7. If a power outage occurs with the grid the Microgrid then takes over to protect the facility from the disturbance of energy delivery. Examples such as these at the facility level are popping up everywhere. Most Americans have now begun to experience power outages and brown outs, so this solution is very real and very practical to facilities that need uninterrupted and cost-effective energy solutions.
What does this mean for economic development? It means jobs… lots and lots of jobs, not only in the production of all the key components, but in the delivery, installation and service of these systems.
American workers flocking into the solar-energy industry are making it one of the fastest-growing sectors of our nation’s economy. There are so many indicators that this solar boom is far from over and definitely not a fad as many in the oil industry and media have wrongly portrayed. Solar is real and it is the next and most reliable evolution in the energy industry, because it is the easiest to harness with the least visible barriers.
Nationally, solar companies are adding workers nearly 12 times faster than the overall economy, and accounted for more than one percent of all jobs created in 2015, says a new report by the Solar Foundation, a pro-solar industry group. More than 208,000 Americans now work in the solar industry, a 20 percent increase in a single year, and up 123 percent since.
“The U.S. solar power industry continues to grow and create jobs, providing further evidence that promoting economic growth and fighting climate change can go hand-in-hand,” former New York City Mayor Michael Bloomberg, who is also United Nations Secretary General’s Special Envoy for Cities and Climate Change, said in a statement announcing the study.
More workers have produced a lot more solar energy. In 2014, the United States installed as much solar power capacity every three weeks as it did in all of 2008. Utility customers and regulators are increasingly demanding that electricity come from clean sources like solar and wind.
The solar industry’s dependence on tax credits and incentives poses the greatest risk to further and faster smart implementation. A decision by Nevada regulators to reduce the credits paid to homeowners who install solar panels this month prompted two major companies, Solar City and Sunrun, to announce they’re laying off an estimated 750 workers. Nevada, which is considered the mecca of solar potential in the USA and sometime is referred to as the Saudi Arabia of the Solar Industry, couldn’t have done anything more illogical than they did with the reduction of installation credits. This move by many looks and smells like political intervention due to lobbying dollars by traditional energy companies to protect their turf, more than a move that is politically based to protect the interests of taxpayers and homeowners. It has been met with voter outrage in Nevada, who see this decision as a pay-off to companies such as Nevada Energy, now owned by Berkshire Hathaway. In the end, politicians will be forced to reinstate the incentives and this wave will continue across America and the world, because Solar is a very responsible daily form of energy when coupled with other secondary energy systems such as wind and better batteries as Elon Musk is pioneering those type of break-through outcomes and they further support the expansion of Solar simultaneously, which is a very favorable situation.
Solar Power is Charging Ahead in America
Coal, natural gas and nuclear remain the backbone of the nation’s energy sector, providing the bulk of our “always-on” power. Solar power made with photovoltaic cells remains a small portion of the country’s energy portfolio, accounting for about one percent of total generation.3
Solar installations come in many forms, from the small panels installed above streetlights in New Jersey, the backyard panels serving homes in Vermont, to the cooperative solar “farms” built in the desert canyons of Colorado. Solar advocates say tax incentives and government mandates have been highly successful in prompting solar development.
California, for instance, has set a goal of getting 33 percent of its electricity from renewables by 2020 and is also on track with a separate effort to install nearly 2,000 megawatts worth of solar panels on rooftops by the end of this year. President Barack Obama has been a major driver of solar-energy jobs, and last year announced plans to train 75,000 people, many of them veterans, to work in the solar sector.
The boom-and-bust cycle of tax incentives, dating to the Carter and Reagan presidencies, has led to long-term inconsistency in the industry, said Frank Marshall, the director of policy for Asheville, N.C.-based FLS Energy, which builds large solar farms.
“We often call it the solar coaster,” Marshall said.
North Carolina at the end of 2015 halted a tax-inventive program credited with prompting hundreds of millions of dollars worth of solar construction, and Marshall said larger companies like his have finally developed the economies of scale necessary to build and operate solar farms without tax credits. FLS has about 100 direct employees, and then hires subcontractors to build the solar farms, an enterprise that can keep 1,000 people working at a time for several years.
“The people who work in our company are excited to do it because they feel like they’re doing good,” Marshall said. “No matter your politics, everybody here is excited …they’re changing the way Americans view energy.”
Nevada is the Mecca for Solar in USA
In 2008, U.S. Sen. Harry Reid doubled down on Nevada’s solar industry, successfully pushing for the end of a federal moratorium on applications for solar power facilities.
“Nevada is the Saudi Arabia of solar energy and is poised to lead a global clean-energy revolution,” Reid said at the time. “We need to do all we can to encourage public and private investment in projects to develop this amazing potential.”
Since then, commercial and residential projects have led the Silver State closer to the solar state that Reid envisioned. Nevada posted the fastest growth and the largest number of solar jobs per person in the nation last year, according to the Solar Foundation’s annual jobs census. An estimated $569 million also was invested in solar in 2014, five times higher than the previous year, the Solar Energy Industries Association found.
Utilities Under Pressure
In 2013, Edison Electric Institute, an association that represents investor-owned utilities, released a sobering report for electric companies.
In the report, it warned of the financial risk and adverse revenue impact posed by “disruptive challenges” such as distributed energy. Included in the list of disruptive technologies were solar energy and even battery storage. The potential for shareholder loss and the consistency once featured in their dividends that drove their economic stability is intense.
The old energy providers all thought that the solar industry would be small and cute forever and now it’s not and it’s a major threat to their profits, but this is because it is a legitimate energy delivery platform. Many of the energy company executives are scared that Solar is going to move from disruptive to displacement in the energy equation, but none of them I believe felt that Solar was going to be as legitimate (an industry) as they are becoming quickly today. Economic developers need to embrace this new emergent industry for what it is on all fronts, a major job creation source that employs American’s at better wages than most Americans can find in other industries, and in the economic development arena, being politically incorrect to create and nurture a job boom is the right choice!
1. www.wealthydaily.com May 22, 2016 and http://news.energysage.com/understanding-your-solar-panel-payback-period/)
Don A. Holbrook is a 25-year veteran economic development site location and incentive consultant. He and his team have worked on projects across North America and around the globe. His focus is primarily on place-based economic development tourism strategies and designing the team and products that communities’ can use to attract such investments. He lives in Las Vegas, Nevada and has written five best selling books speaking frequently around the world at professional functions. He has been featured on CBS, NBC, Fox, ABC, PBS television and radio networks, and in LA Times, USA Today, New York Times, Washington Post, FDI (the Economist Group) and many local television, print and radio interviews. He has been one of the North American Judges for FDI Magazine for the past six years on The Best Community Economies for Growth & Investment. He is a former board of director of the International Economic Development Council, and Fellow Member of IEDC, as well as Certified Economic Developer.