CLOUDS AHEAD?: The American solar industry is dependent upon a fragile matrix of government support -- state renewable portfolio standards and federal tax credits, grants and construction loan guarantees. Image: Fieldsken via WikiMedia Commons
First of a four-part series.
"This is our generation's Sputnik moment," President Obama said at the top of his State of the Union address to Congress last week. He was expressing a vision of his administration's high-stakes campaign to help American companies claim leadership in future clean energy technologies.
Behind the rhetoric is a thrust by the administration to target federal investments in technology on ways to dramatically change energy use across the economy -- in transportation, electricity generation, industrial processes and building design. It is a bet that spending taxpayer dollars today can lead to better jobs and more secure, cleaner energy for tomorrow's economy.
It marks a fault line between the president's goals and those of a resurgent Republican Party in Congress. "Government cannot force the people to innovate, but if we can get government out of the way, American ingenuity will emerge every time," responded Rep. Fred Upton (R-Mich.), the new chairman of the House Energy and Commerce Committee.
On two very competitive fronts -- advanced solar power and advanced automotive batteries -- the Department of Energy has already mounted a double-edged campaign. Through awards of loan guarantees, DOE is trying to shore up U.S. companies with today's technology at the same time that it targets R&D funds from the stimulus program toward "game changing" technology breakthroughs for the future. What is happening in the solar power industry offers one telling example.
First Solar, based in Tempe, Ariz., and SolarReserve, headquartered in Santa Monica, Calif., are two bright hopes engaged in the process of building a more competitive solar power industry, where the United States is a decided underdog.
Their technologies could hardly be more different. First Solar's solar cells -- the U.S. best seller -- produce electricity when sunlight strikes a thin film of cadmium telluride sandwiched between glass. SolarReserve uses solar energy reflected and focused by ground mirrors to heat molten salt to 1,000 degrees Fahrenheit. The salt is stored in Thermos-like reservoirs and then is used to create steam to generate electricity hours after sundown, making it a leader in the budding field of renewable energy storage, industry analysts say.
They have this in common: Like the rest of the American solar industry, the growth of their U.S. operations is vitally dependent upon a fragile matrix of government support -- state renewable portfolio standards and federal tax credits, grants and construction loan guarantees.
These lifelines, created by state and federal actions of past years, have been strongly promoted as a key element of the president's strategy to hasten the conversion to clean energy technologies that can expand jobs and exports and reduce greenhouse gas emissions.
But at a time of growing concern about federal spending and deficits, U.S. solar firms may be racing the clock to prove their viability.
"While proponents argue that wind is free, harnessing it into useful electricity certainly is not," said a report last year by the conservative Heritage Foundation Center for Data Analysis. "Mandating that an ever-increasing fraction of electrical power must be generated from renewable sources will raise the cost of electricity, force inconvenient and painful cuts in electricity use, and damage the economy," the report said.
Dependent on the kindness of governments
Industry leaders are frank to state their life support comes from taxpayers.
"Although the projects are economically and environmentally viable, we believe that these DOE programs are a necessary financing bridge until the financial markets in the U.S. are prepared to fund solar projects at this scale without risk-sharing with the DOE," said First Solar senior executive Jens Meyerhoff.