Chapter 4 Policies Affecting Solar Energy in the United States
4.1 Federal Initiatives Supporting Solar PV
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Chapter 4
Policies Affecting Solar Energy in the United States
Government policies in the United States that have provided financial incentives for investment in PV systems have been successful in stimulating domestic PV market growth. A combination of policy incentives, including federal tax credits, subsidies and rebates, net metering, and renewable energy certificates have largely contributed to the fast growth rate of solar PV. Policies offered by the federal government have been important for the PV market in the United States; however, each state has their own policies that influence their particular PV market, and within states some municipalities and regions have differentiated policies that create sub-markets.
4.1 Federal Initiatives Supporting Solar PV
There are several reasons why the U.S. federal government would impose policies to encourage the propagation of renewable energies such as solar PV. Conventional forms of electricity generation using fossil fuels contributes to air and water pollution, greenhouse gas emissions linked to climate change, the need for mining and wells to secure fuel sources, as well as hazardous waste byproducts. In the cause of nuclear power, expensive large-term storage of dangerous radioactive waste is needed and carries the potential risks of more substantial threats to environment and human health in the event of structural failure. There have been several federally sponsored programs and initiatives aimed at supporting both the supply and demand side of solar PV energy in the United States. The three most important federal programs that were designed for solar PV include the Million Solar Roofs Initiative (MSR), the Solar America Initiative (SAI), and the SunShot Initiative.
The first significant government policy that supported the solar PV market in the United States was enacted in the year 1978. The Public Utility Regulatory Policies Act (PURPA) of 1978, enacted by the federal government, required investor-owned utilities to sign long-term electricity purchase agreements with renewable energy providers. This helped cause the PV solar market in the United States grow significantly and played a large role in the PV market multiplying in total capacity many times from the mid-1970s
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to mid-1980s. However, PURPA contracts were allowed to expire as the cost for fossil fuels subsided (Heiman and Solomon, 2004).
A major government policy that supported the PV market worth noting was enacted in the year 1997. The federal Million Solar Roofs Initiative (MSR) was enacted in the year 1997 and expired in the year 2005. Between those years it formed official partnerships with 94 coalitions and 971 private firms, electric utilities, building contractors, property developers, as well as both nonprofit and governmental organizations. The primary focuses of the Million Solar Roofs Initiative included: best practices for market transformation and distributed technology diffusion, addressing barriers to technology acceptance, market expansion efforts, partnerships, and best programmatic practices (Strahs and Tombari, 2006). The areas related to stimulating the use of solar PV that the MSR made the most significant contributions to were reducing barriers to technology acceptance, expanding the solar market, and developing the best practices for transforming the solar market.
The focus on transformation and technology by the MSR addressed key issues such as net metering rules and standards, incentive funding for solar installations, the need for stability of solar programs, and regulation requirements. In addressing barriers to technology acceptance efforts were made to resolve the high cost of solar PV, increase customer awareness and knowledge of PV systems, pass new net metering laws, and support training for PV installers, inspectors, and manufacturers. Efforts were also made to educate property developers on solar-friendly building practices and integrating solar PV systems in building designs.
In an effort to expand the solar market, the Million Solar Roofs Initiative encouraged building codes for solar installations and called on property developers to voluntarily incorporate solar power into their productions. The MSR also worked towards greater use of solar power for public buildings. Solar PV systems were also installed at high profile public areas to garner higher awareness and interest in solar power by the community. The MSR had six regional offices that were used to enroll partnerships, issue competitive grants, and address the needs of partners for technical and analytical support.
“Over the years, grants totaling $9.2 million were awarded to partnerships, accounting for an estimated 68% of MSR funds disbursed.” The “MSR’s program design provided
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opportunity for feedback from the real world of solar technology users, marketers and installers back to laboratory scientists and program professionals at the Department of Energy (DOE)” (Strahs and Tombari, 2006).
The Million Solar Roofs Initiative was remarkable in how much it was able to assist in developing the solar market in the United States despite having a total budget of just $16 million for the duration of the program.
The participants of MSR partnerships included (Strahs and Tombari, 2006):
• Electric and gas utilities;
• Architects;
• Builders;
• Developers;
• Solar equipment manufacturers (including inverters);
• Aggregators, retailers, and distributors;
• Banks and financiers;
• A labor union;
• Municipalities and their associations, as well as mayors’ offices; government agencies such as housing authorities and planning departments;
• State energy offices, environmental regulators and economic development agencies;
• Federal government agencies;
• Non-governmental organizations; and
• Agricultural agencies and associations.
In the year 2006, the U.S. federal government launched a major policy to further advance the PV market in the United States, the Solar America Initiative (SAI). This initiative served as a continuation of the Million Solar Roofs Initiative that expired at the end of 2005. In line with the U.S. Department of Energy’s (DOE) Solar Energy Technology Program (SETP) under the Million Solar Roofs Initiative, its objectives also included the directives “to make photovoltaic technologies (solar electricity) cost-competitive with conventional forms of electricity from the utility grid by 2015.”
Like the MSR, the SAI approached its goals for the solar PV market by working with key partnerships with governmental and nongovernmental organizations, national laboratories,
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universities, and different groups within the industry. The U.S. Department of Energy has taken credit for much of the technology advancements in PV modules that led to a tenfold drop in PV electricity cost from the year 1976 to 2008 (EERE, 2008).
In February of 2011, the U.S. Department of Energy (DOE) launched the SunShot Initiative, which was another important program designed to support the growth of the solar energy market. Also similar to the Million Solar Roofs Initiative, the Sunshot Initiative is focused on supporting research that leads to progress and solutions for manufacturing and PV system costs improvements in order to make PV solar more accessible and cost-effective for a greater number of people. It has been responsible for funding over 150 projects related to solar PV and concentrated solar power, reducing balance of systems costs, and systems integration (EERE, 2013b).
Some of the strategies of the SunShot Initiative to make solar power more affordable include: reducing the time gap between when a new technology is first developed and when it is incorporated in commercial production, increasing the efficiency and costs of production, creating new markets for solar energy, gaining greater cooperation with utilities for higher market penetration, achieving improved supply chains and superior technology for use in solar manufacturing, increasing the size of a well-trained solar power workforce, investigating approaches to further remove barriers to the growth of the solar market, and investment in policy analysis (EERE, 2013c).
Competitive grants are also awarded to companies and researchers in order to support creative solutions toward achieving these goals and making solar PV a bigger part of meeting the United State’s energy needs.