Solar Gold Rush is Spreading from CA to NJ

October 30, 2008

Dara Colwell

Solar power is exploding in America, particularly in California. San Luis
Obispo's Palm Theatre and Berkeley's Shotgun Players are now the first
solar-powered theaters in the country; FedEx's distribution center in
Fontana has a solar system covering 20,834 square feet; and Google's
Mountain View campus boasts America's largest corporate solar installation.
True to its pioneering spirit, California is leading the way -- but that's
not to say other states aren't tagging quickly behind.

"California has a comprehensive approach to solar. We have an aggressive,
proactive environment that allows legislators to go ahead and do things --
the mentality is definitely here," says Andrew McAllister, director of
programs at the California Center for Sustainable Energy (CCSE), a nonprofit
dedicated to facilitating clean energy technologies and practices.
McAllister muses that the state's energy crisis several years ago, when
deregulation led to unpredictable electricity prices, goaded California into
collective action. "Worldwide, solar is still driven by policy more than any
other factor, and what makes California attractive is its political
commitment to taking the lead."

In America, most of the policies that affect the solar industry are created
at the state level. California, which is now poised to become the world's
second-fastest-growing solar market behind Germany, has a long pioneering
history, which has fueled the solar industry as much as the state's abundant
sunshine.

As proof, in 2005, the California Public Utilities Commission (CPUC)
approved $300 million for statewide solar rebates, tripling the original sum
in order to bolster the market; since its Million Solar Roofs program kicked
off in 2006, California has installed more solar panels than in the previous
10 years combined; and in 2007, the state approved the California Solar
Initiative, the country's largest solar energy policy to date, offering
homeowners a rebate on top of the federal tax credit and plans to provide
$2.8 billion toward solar incentives over the next decade. Says Adam
Browning, co-founder of Vote Solar Initiative, the San Francisco-based
nonprofit established to bring solar energy to the mainstream, "It's a
dynamic race, of course. California is working hard to expand support, and
our utility companies have been much more accommodating and aggressive."

But other states are giving California a run for its money in an
increasingly competitive solar market. Take Oregon, which has been proactive
in welcoming renewable energy business thanks to the state's Business Energy
Tax Credit (nicknamed "Betsy"), which covers 50 percent of all project
costs -- the country's largest solar incentive. In August, Oregon's
Department of Transportation announced plans to build a solar panel
installation along a stretch of interstate, the first such project in the
nation; in October, Germany's SolarWorld opened the largest solar factory in
the Americas in Hillsboro; and in the same month, Sanyo began building its
$80 million, 70-megawatt solar manufacturing facility in Salem.

Oregon isn't alone. There's New Mexico, with an abundance of arid land and
sunlight, offering the perfect platform for large-scale solar thermal
installation projects. New Mexico recently welcomed a project from Germany's
Schott Solar, one of the world's leading solar companies, which has invested
$100 million to build a solar equipment manufacturing plant outside
Albuquerque. And Arizona, Colorado, Michigan, Massachusetts, Pennsylvania
and New Jersey (which, according to solar energy research company Solarbuzz,
is emerging as America's next solar-friendly state) are all heavily
recruiting solar manufacturers, not to mention creating attractive
incentives.

As proof of the industry's vitality, in October San Diego hosted the
industry's largest event, Solar Power International, boasting its greatest
turnout ever -- from a few hundred attendees in 2001 to 23,000 this year.
"The buzz created in San Diego is highly indicative," says Vote Solar's
Browning. "This is a dynamic time for the industry as a whole right now."

Much of the excitement was triggered by the renewal of the federal Incentive
Tax Credit (ITC) bill on Oct. 3, which beefed up and extended an expiring
tax credit for renewable energy projects. The ITC, tacked on to the larger
$700 billion Wall Street bailout plan, allowed for an eight-year extension
and 30 percent tax credit, "which is a big deal," says Browning. "That's
going to impact the dynamic going forward because we finally have a stable
policy in place that will allow businesses to make long-term decisions."

ITC's passage couldn't have come at a better time, injecting new life into
the industry when America's stock market credit turmoil has created
widespread economic uncertainty. While no industry is immune and solar may
face a degree of consolidation, the mood is upbeat -- because the bill could
provide billions in future funding and accelerate the market's expansion.
"In San Diego we had back-to-back meetings with investors and buyers, with
definite confirmation that prices are coming down," says Arno Harris, CEO of
Recurrent Energy, based in San Francisco. Recurrent, a solar power developer
focused on promoting large-scale projects, was recently chosen by the City
of San Francisco to develop a 5-megawatt photovoltaic project providing
electricity for city-owned facilities, such as schools. "Lower prices will
grow the market substantially, and all this is happening within the context
of an intense financial crisis. Long term, the fundamentals are fantastic."

"We're looking at an industry growing 60 percent a year worldwide -- it's no
longer a niche market. If I were a betting man, I'd put more capital in this
industry than General Motors," says Jim Harding, western regional director
at Solar Electric Power Association, which comprises 375 solar industry and
utility members, making reference to the Bush administration's recent $25
billion loan to the struggling auto industry. "It's difficult to see a
negative impact when the market opportunity is so great."

Why is that? First are the combined threats of peak oil and global warming.
And as China and India, both saddled with enormous populations, continue to
increase their demands for fossil fuels, future competition will be fierce.
Also, the need to curb greenhouse gases is moving beyond a vigorous debate
about whether climate change is actually happening to vigorous legislation
aimed at reducing carbon emissions. "The stock market is one thing, but the
carbon issue is largely independent of prices or the business environment.
It's not going away, no matter what the economic cycle does," says CCSE's
McAllister.

Second, solar is ready -- because it's hardly new. In the 1950s, the U.S.
Navy used solar cells to power satellites, though the technology wasn't
brought down to Earth until the 1970s, when Exxon Corporation funded further
research to develop solar-powered navigation warning lights for its offshore
rigs. While solar enjoyed great popularity in the late 1970s and into the
1980s due to the energy crisis, interest tanked in the following decades,
marked by artificially low oil prices -- and, surprising given today's
perspective, energy just wasn't considered as significant as crime or
inflation.

But today, solar is ready to compete. The technology has naturally evolved,
becoming increasingly cost-effective, and it promises tremendous capacity
because the resource is unlimited. It's no accident that last year,
green-crazed venture firms invested $1 billion into solar start-ups,
according to the research firm Cleantech.

As the renewable energy sector continues to grow, so does its need for
workers. New technology creates new industries, which then create new
markets requiring a new workforce. With solar, as well as other renewables,
the potential for job creation -- or green jobs, an area gaining increasing
visibility -- is huge. And green leaders are already picking up on it.

Recently, the Environmental Defense Fund published a "Green Jobs Guidebook"
for job seekers, and Van Jones, founder of the Oakland-based organization
Green for All, published The Green Collar Economy, advocating a green
pathway out of poverty, which has become a New York Times best-seller. In
terms of the scope of jobs, in California, according to a recent solar
industry survey, solar companies employ roughly 17,500 people and aim to
hire 5,000 more next year. And according to McAllister, "There's already a
bottleneck for qualified solar installers."

"Everyone's seeing the need to transition the economy in a new direction, so
the job opportunities are there," says Orion Walker, events coordinator at
Solar Living Institute, based in Hopland, Calif., which has offered solar
training such as "Advanced Photovoltaics" and "Intro to Off Grid Systems" to
the public for 10 years. Walker is currently organizing a green career
conference, to be hosted by UC Berkeley. "As the solar industry and other
green industries expand, the numbers being tossed around are half a million
jobs -- even more now, due to the passage of tax credits. Just about every
company (in the renewable sector) I've talked to says they're hiring."

"Solar is a huge economic multiplier," says Recurrent's Harris, to underline
the point. "Any work we do touches a number of industries, and every $10
million project we undertake initiates job creation." With green jobs, says
Browning, "we have the great potential to get the economy going again and
change course. It's a wonderful opportunity to solve two problems with one
solution -- which should be tremendously appealing to any policy maker."

As the solar industry continues to swell, is there actually a foreseeable
downside? Those in the industry say rooftop photovoltaic panels won't be
enough to combat climate change; the need is for larger solar thermal
systems like Nevada Solar One, the world's third-largest solar power plant,
located just south of Boulder City, Nev., which went online in 2007. But big
plants, usually built in the desert where the sun shines the brightest,
require high-voltage transmission power lines to reach customers in the
cities, and where those power lines are supposed to go is a divisive
environmental issue. For example, in San Diego, the local utility company
has faced opposition to building a power line through Anza-Borrego Desert
State Park, California's largest state park and a vulnerable wilderness that
environmentalists have vowed to protect. Similar battles might break out in
the future as the need for renewable energy projects conflicts with where,
exactly, to put them. "(Desert development) is highly controversial, but the
alternative -- wide-scale climate change -- will do far greater damage,"
says Browning, who believes further research and policy need to be put in
place in the future. "We need to do this in a way that is socially
acceptable."

According to Recurrent's Harris, current transaction barriers are also a
hindrance. Harris explains that in tenant-leased buildings where the tenant
pays the utility bills, the owner has little financial incentive to lower
energy costs. Because renters tend to move, they don't invest in solar in
places they don't own. Recurrent's solution is to lease rooftop space from
the owner, then sell it to the renter. "We're trying to move the ball
forward in policy and focus on financial innovations to tap demand," he
says.

Clearly, much lies ahead as each state seeks to increase clean renewable
energy production and modernize its energy infrastructure. Says Solar Living
Institute's Walker, "One thing to keep in mind is there's no real silver
bullet in regards to solving our larger energy challenges. Solar plays a
significant part in that solution, but if you look at total global demand
for energy, it's quite staggering. There are many pieces to the larger
puzzle." But with continued technological development, solar still appears
bright