Incentives and Financing for Renewables Spawn Growth

The Solar Expansion Project is funded by the American Recovery and Reinvestment Act (ARRA) of 2009. In March, the Forest was given $400,000 to add 250 additional solar panels to a facility that already had 50 previously installed. D.J. Group from Beverly, Ohio was awarded the contract. Photo by Alex Snyder

According to the New York Times, the Indian government approved a plan last week that aims to increase energy production from solar technology to 20 gigawatts (20 million kilowatts) by 2022, up from six megawatts (6,000 kilowatts) today.  Compare that with 530,000 kilowatts of direct current solar (kWdc) connected to the grid in California and you begin to understand where India stands in the world and where it wants to go.  The Indian government will spend about 43 billion rupees ($922 million) in the first of three phases of the program, and the total cost for all three phases could approach $20 billion.  Moreover, India isn’t just setting goals, but taking action on the ground.  As I wrote in a previous post, Indian cities are partnering with U.S. cities to bring more solar power online.

While all of this seems to point to major progress in solar adoption, government officials in India estimate that they will fall 20% short of their target for new power capacity for the five years that end in 2012, according to the New York Times.  Much of the country does not have an electrical grid, so one of the first applications of solar power has been for water pumping, to begin replacing India’s four to five million diesel powered water pumps, each consuming about 3.5 kilowatts, and off-grid lighting. Some large projects have been proposed, and a 35,000 km² area of the Thar Desert has been set aside for solar power projects, enough to generate 700 to 2,100 gigawatts.  However, Indian policy makers are adamant that they will not agree to any mandated reductions in emissions.

So what determines if countries and regions will be able to meet their goals for renewable energy?

According to a new report (pdf, 4.2 MB) from the National Renewable Energy Laboratory, U.S. states with strong renewable energy portfolio standards or goals tend to outperform other states in adding solar, wind, biomass and other renewable energy production facilities.

Some statistics from Environmental Leader:

• Standards: To date, 36 U.S. states have renewable energy portfolio standards or goals, and 43 have net-metering laws.
• Solar: California has close to 530,000 kilowatts of direct current solar (kWdc) connected to the grid, followed by New Jersey (70,000 kWdc), Colorado (35,000 kWdc), and Nevada (34,000 kWdc).  All these states have renewable energy portfolio standards goals of at least 20% renewables by 2021.
• Non-hydro Renewables: Excluding hydroelectric renewable energy, California leads at 24 million MWh, followed by Texas (10.2 million), Florida (4.3 million), Maine (4.2 million) and Minnesota (3.9 million).  All of these states have goals of at least 20% renewable energy by 2025, with Maine already at 30% (since 2000) and aiming for an additional 10% by 2017.

Incentives in other countries may also be driving solar installations.  Germany and Spain – where solar has been booming in recent years – now have “feed-in tariffs” that allow property owners that are producing solar power to sell it back to the grid.  Spain goes even a step further by offering the option of incentives for sales into the wholesale electricity spot market as well as fixed incentives.

In addition to other incentives, financing mechanisms are a key component of getting more solar online.  As noted in a previous post, U.S. Vice President Joe Biden recently announced that the solar financing plan that was inaugurated in Berkeley in 2007 will become a national model. The program, called Recovery Through Retrofit, creates a framework for cities, counties and states to set up tax districts that allow residential and business property owners to install solar panels and make other energy efficiency improvements. The investment will be paid off over a 20-year property tax assessment.  Moreover, the economic stimulus in the U.S. is playing its part in stimulating the solar market.  According to Reuters, the U.S. federal government this month fast-tracked more than 2.4 gigawatts of renewable energy projects in California, which may help them clear regulatory hurdles in time to qualify for stimulus funds.

Incentives, renewable portfolio standards, and financing mechanisms are proving crucial to the growth of the renewable energy market.  If nations and states don’t create standards as well as financing mechanisms for the local level, they may see their lofty goals in powerpoint presentations at UN gatherings, but they will not see the corresponding solar panels, wind turbines, etc. in the cities on the ground.