"The overall federal government support has been hugely valuable to the industry in pushing it forward," said Kevin Smith, SolarReserve's CEO.
While still a minuscule part of total U.S. electricity supply, solar power generation has enjoyed record increases thanks to federal and state backing. The Solar Energy Industries Association and GTM Research estimated late last year that solar energy installations in 2010 would approach or perhaps exceed 1,000 megawatts, well more than double installations in 2009 of 441 megawatts. The pipeline is full of new projects.
First Solar's net annual sales grew from $48 million in 2005 to $2.51 billion in 2010, aided by a once-through manufacturing process that turns out finished modules in two-and-a-half hours. Like other U.S. solar manufacturers, First Solar's search for project investors has benefited from a 30 percent tax credit that was converted to a temporary cash grant by the American Recovery and Reinvestment Act.
The stock price of First Solar jumped more than 3 percent on Dec. 10, after Senate negotiators agreed to extend cash grants to U.S. solar and wind power companies for another year. Several other U.S. solar firms' shares rose even more -- testimony to the importance of the federal support, market reports noted. First Solar's strongest U.S. sales are in California and New Jersey, where state renewable energy goals support solar investment.
In a classic validation of the technology learning curve, increasing production has led to a plunge in First Solar's modules' cost per watt, from $2.94 in 2004 to 77 cents currently, according to its shareholder reports. That brings the wholesale cost of its power down to 14 to 16 cents per kilowatt-hour in sunny regions. "We need to get to 10 to 12 cents," said spokesman Alan Bernheimer. The company is aiming to hit that mark by 2014. Its power will still be more than twice the expected cost of existing coal-fired generation, but competitive with the price of peaking generators on the grid, First Solar says.
SolarReserve's molten salt approach recently won key approvals for utility-scale projects in California and New Mexico.
Nursed along by parenthood, incentives and hope
Both companies are offspring of federal R&D. The thin-film solar technology First Solar developed was born at the DOE National Renewable Energy Laboratory in Colorado. SolarReserve's solar tower and molten salt process grew out of a DOE-backed demonstration project by Rocketdyne, now a division of United Technologies Corp.
SolarReserve will sell its power from the Nevada project for about 13 cents per kilowatt-hour, with annual adjustments for inflation, under a 25-year power purchase contract with NV Energy. Its California installation is also backed by a long-term utility contract, and in both cases, state renewable energy mandates provide the policy foundation for the developments. Solar's expansion today "is either driven by incentives or driven by ideology," said Kevin Book of ClearView Energy Partners LLC in Washington.
The growth of solar power is helping to drive down the cost of installation as well as the cost of solar modules. Several years ago, putting up a 1-megawatt solar system would have cost $8 million and taken six months. Today, it may cost $5 million and be done in six weeks, says Thomas Rooney, who until recently was chief executive of SPG Solar, one of the leading U.S. solar power installers. Creating a steady, stable growth path is key to automating manufacturing and installation, experts agree.
Yet the reality is that solar power producers still cannot compete with conventional electricity generators without state and federal help, particularly in a U.S. energy market dominated by the availability of cheap natural gas. "The combination of weak electricity demand and new natural gas resources has pushed the moment of solar grid parity farther away," Book says.