Air Date: Week of January 20, 2006

California regulators have just approved incentives that could give homeowners and businesses a third off the expense of installing solar systems. They want to install seven times the total solar megawattage currently installed today in the United States over the next decade. Living on Earth's Ingrid Lobet speaks with two experts about the prospects.

Transcript

CURWOOD: California regulators are moving ahead with the nation's largest-ever solar energy subsidy program. A hearing to approve the measure attracted more than 200 people and its share of high color.

SHELDON: California is the fifth largest economy in the world. We led the world in gold. We led the world in agriculture, we led the world in the entertainment industry. We led the dot com revolution into the information age. Now we have an opportunity to lead the world into the solar age. I urge your unanimous vote today

[WOMAN]: Commissioner Grueneich…yes. Commissioner Chong…yes. President Peevey…yes.

PEEVEY: So, it's adopted, three to one. [APPLAUSE]

CURWOOD: For the next eleven years, homeowners and businesses in the state will be eligible for more than three billion dollars in rebates if they install solar energy systems. Roberta Gamble is an energy research manager for the consultants Frost & Sullivan in Palo Alto, California. Julie Blunden, is vice president of the Sunpower Corporation, a solar energy manufacturer who worked on the measure.

Living on Earth’s Ingrid Lobet recently spoke with them, first asking Ms. Blunden how much it costs to install solar and how much the new rebates will help consumers and the solar industry.

BLUNDEN: Right now if you put in a three kilowatt system, kind of an average-size residential system in California, you might spend between $20,000 and $25,000; you might get $8,000 or $9,000 of that back from the state. As a result, you’re likely to spend about $15,000 for a system.

LOBET: And how is the state going to pay for the rebates?

BLUNDEN: The solar funding will be taken out of electric rates, as with a lot of other public purpose programs, and it comes out as really a sliver on your monthly bill, under a buck a month.

LOBET: Now, my understanding is that consumers in Japan and Germany have been able to buy solar systems at quite favorable prices for a while. How much will this even up the situation for residents of California?

BLUNDEN: Well, both Germany and Japan have demonstrated that a long-term policy commitment to solar can provide a tremendous business platform for companies like mine, Sunpower, to invest. In California, we’ve had rebates now since 1998, but the rebates have always been kind of on an annual basis. So the confidence level people have had to invest in California hasn’t been very good; so now we have the confidence to invest and bring solar mainstream, not just for California, but actually for the rest of the country.

GAMBLE: I agree with Julie that it’s certainly going to make a difference, but we do have to keep in mind that in terms of being on par with Germany and Japan, they’re very much more advanced than the United States with federal government-level incentives that have brought their installed capacity to three times what we have in all of the U.S., not just in California. So I think it’s a positive move towards something that, such as Japan or Germany have, but I think we’re still quite a ways away.

LOBET: Roberta, let me ask you, the California Public Utility Commission – that’s the commission that just passed this program – it hopes that these rebates will put up enough rooftop solar to equal six power plants worth, enough to serve 2.3 million people over the 11 years. Sounds like a lot. Can that happen?

GAMBLE: It is a lot. To be perfectly honest, I would be a bit surprised if it did happen. I would be pleasantly surprised. The amount of solar, about 3 million megawatts – I’m sorry, 3,000 megawatts – is quite a lot. We have only about 408 installed in the U.S. so far. It’s about twice what we estimate the market will grow without such incentives; so it is possible.

BLUNDEN: I think it’s not only possible, I think it is entirely achievable. We’ve seen the solar markets grow in jurisdictions like Germany and Japan, where you have long-term incentives, at somewhere between 30 and 60 percent a year.

LOBET: And when we talk about growth in the solar industry, really a major factor is the cost, and the cost has always been the bane of the existence of solar advocates. And the cost of solar has been going down, but solar boosters have always said they want something that looks a lot like this to help force the price of production lower. So to what extent now do they have what they’ve been asking for to get prices down faster?

GAMBLE: I think they very much have what they’ve been looking for to get these prices lower. We’ve seen overall in the market that prices have been stable to slightly high in recent years, due to a very healthy industry in Europe that U.S. companies have been selling to. And it’s true that the prices have gone down by about half from what they were in the 1970s. So this could be the impetus to reduce prices further. I think this will go relatively far to reducing prices for solar over to the long term.

BLUNDEN: One of the things that’s important to recognize is that today solar is already cost-effective for a lot of customers.

LOBET: So this subsidy – or support, depending on your point of view – for solar comes at an interesting time, because my understanding is the industry is sold out, and it’s been that way for a couple of years. There are new manufacturing plants cropping up all over the world; I think production increased 33 percent last year. But still suppliers can’t meet demand. So is it ill-advised to do something like this, to get people asking for solar more, when there’s a shortage?

GAMBLE: It’s not necessarily a bad time simply because there is an apparent shortage. There is globally a lot of increase in production capacity going on. We’ll see producers be able to keep up with capacity. Even if there is a slight shortage I don’t think that would hinder the market, I think that will just make solar that much more appealing.

LOBET: What about this shortage of solar-grade silicon? To what degree is that related to the tight market for the supply of modules themselves?

BLUNDEN: It’s directly related. The constraint to growth in the market today is polysilicon supply, which is the feed stock to the silicon solar industry. Beautifully, we actually have cataclysm at work here; what we do expect to see is in late 2007 quite a bit of polysilicon capacity come on board. And basically the price signals have already gone out to the market, and people are already responding, and there are polysilicon plants under construction. It’s exactly what should happen in a market.

LOBET: So it’s not going to be like the Prius, you have to wait six months?

BLUNDEN: No, fortunately today you can get a solar system in probably less time than it takes you to get a Prius.

CURWOOD: Julie Blunden, vice president of solar manufacturer Sunpower Corporation, speaking with Living on Earth’s Ingrid Lobet. We also hear from Roberta Gamble, an energy research manager at the consulting firm of Frost & Sullivan in Palo Alto, California.