US President sets lofty clean energy goal27. January 2011 | Top News, Markets & Trends | By: Ucilia Wang
In his State of the Union address this week, U.S. President Barack Obama said he was counting on solar energy as a key resource for the nation’s energy supply.
His Energy Secretary, Steve Chu, held a Q&A with the public and media a day later to explain the President’s plan. But it remains unclear whether the new goal will translate into more government support than before for the solar sector.
Obama also wants to see one million electric cars on the road by 2015. The President mentioned solar three times in his speech. That was quite a lot for a speech that also tackled a variety of weighty issues, from healthcare to defense.
"Some folks want wind and solar. Others want nuclear, clean coal and natural gas. To meet this goal, we will need them all - and I urge Democrats and Republicans to work together to make it happen," Obama said during his speech Tuesday night.
While setting an ambitious clean energy goal appeals to solar company executives, many are no doubt wondering what specific plans will get the country there. And, specifically, how will the plans benefit the solar industry. Doug May, CEO of Unirac, a racking system manufacturer in New Mexico, said he was pleased to hear the President’s message, but the message hardly affects what he must do to ensure the company’s growth this year and next.
"We are concentrating on hiring and executing and taking costs out in the near term," May said during an interview on Wednesday. The company added 40 new jobs in 2010 and plans to add the same number this year, he added.
In his public forum on Wednesday, Chu said his department is tracking closely the innovations and business plans of solar companies to figure out what the government can do to reduce the price of solar electricity. He believes the government, including researchers at national laboratories, can slash solar electricity rates so that they are comparable with power from fossil fuels by the end of this decade (without subsidies).
"This will be a huge worldwide market, and it will just take off. It will be a race to see which country and which company will develop this technology," he said.
That was pretty much the extent of his discussion on solar. It was short not because he didn’t have much more to offer, but because many of the other questions posed to him had to do with nuclear power, energy efficiency, job creation and the environmental impact of extracting natural gas.
Natural gas, in particular, has taken on a somewhat eco-friendly persona lately because using it to generate electricity emits about half the carbon emissions as burning coal. Price for natural gas also has become so cheap because of its abundant supply lately that the chief economist of the International Energy Agency, Fatih Birol, warns that natural gas is gaining popularity at the expense of renewable energy.
"This might be the golden age for natural gas," Birol said at an energy conference in Abu Dhabi last week. "If natural gas market continues to follow its path, then life for renewable energy may be tougher than we think."
Chu spoke in general terms about the importance of investing research and development and commercializing discoveries from labs. With money from the American Recovery and Reinvestment Act, a 2009 legislation to stimulate the economy, the Department of Energy (DOE) created ARPA-E, a program to fund early-stage and promising research. The DOE has been working on three so-called "Energy Innovation Hubs" to hopefully speed up research and development of a wide range of projects.
Obama plans to ask Congress to boost energy research and will send his 2012 budget request in a few weeks. He wants more money for new energy innovation hubs and ARPA-E. Congress might not grant his wish, however. And Chu conceded during the public forum that the DOE won’t have as much money as it had from the stimulus package for funding public and private efforts in research, manufacturing and power generation projects.
The stimulus package provided billions of dollars in grants, loan guarantees and tax credits available to solar power equipment makers and project developers in the past two years.
The popular grant program that covers 30 percent of an energy generation’s cost has provided $472.5 million to solar project owners so far, according to data compiled by the Solar Energy Industries Association. Last week, the DOE announced $967 million in loan guarantees to First Solar’s 290 megawatt project in Arizona. Abound Solar, another cadmium-telluride solar panel maker, snagged a $400 million loan guarantee last year to expand manufacturing while Solyndra, a maker of copper-indium-gallium-selenide panels, won $535 million in loan guarantees.
The loan guarantees for Abound and Solyndra have turned into actual loans from the Federal Financing Bank. First Solar is doing final negotiations of the loan guarantee, which will likely enable it to borrow money from the government-run bank as well.
The success of these government funds have yet to be determined, and the efforts may well contribute to the goal of lowering solar electricity pricing to the level of coal-based power by 2020. That would certainly be a nice legacy for Chu, who is casting the challenge of crafting a clean energy future as a big race among nations.
"We watch countries like China that say every energy efficiency and energy generation sector is a key industry, and we want to do it ourselves and we want to export it," he said.
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