Stanford University is world-renowned for its research. The school’s location on the edge of Silicon Valley and its connection to the world of technology gives it an edge over other elite universities in this field, and its work in clean power includes Mark Z. Jacobson’s somewhat academic plan to power the United States entirely with renewable energy.
This makes the report The New Solar System, by a team led by scholar-in-residence and former Wall Street Journal editor Jeffrey Ball, all the more of a disappointment. The report, released this week, offers national policy advice that runs along a fairly conventional line, mixing market fundamentalism with an approach that was standard in the U.S. Department of Energy under President Obama.
The report also makes rather sensationalistic claims to bust myths, but in many cases does not convincingly do so, by failing to back it up this up with irrefutable evidence that such beliefs actually are myths. And most damningly, it relies on a central claim regarding costs that will appear odd to many following the progress of solar.
Internationalism in the age of Trump
The New Solar System looks at the development of solar in China as the center of the global solar industry, as its basis for giving policy advice to the United States. In what is largely unsurprising in a report written by a former Wall Street Journal editor and funded by a U.S. Department of Energy (DOE) grant under the Obama Administration, the report argues against existing import duties on Chinese PV cells and modules, stating that “U.S. policy bearing on solar should reorient fundamentally so that it seeks to leverage, not defeat, China”.
This point is well supported by the argument that the solar industries in the United States and China are “intertwined”. “Shareholders across the globe invest in both of them, capital moves between them, many of the same companies are active in both of them, and market dynamics in one influence fortunes in the other,” notes the report’s executive summary.
In a related point, the report also recommends orienting U.S. federal support for solar primarily on research and development and only secondarily on manufacturing, and in manufacturing only for strategic products for niche markets. This recommendation is hardly surprising, as in both our reporting on funding rounds and in interviews with DOE SunShot Director Charlie Gay pv magazine has observed that this is very close to the existing policy approach in the agency.
However, this recommendation appears likely to fall on deaf ears politically. The presidential candidate offering an internationalist approach, support for R&D and a concession that U.S. manufacturing was on the decline lost the 2016 presidential election. Instead, the White House is currently occupied by a Populist that blames China for lost U.S. jobs and at least pretends to support U.S. manufacturing, while slashing R&D budgets. As such, it is unlikely that Stanford’s advice is going to go anywhere under the new administration.
Myths or facts?
Underlying these arguments is the report’s claim that it “busts myths”, including that China is simply improving on Western technology developments and does not innovate. To counter this, the report points to increased R&D spending in China, and Trina Solar’s recent record multicrystalline solar module.
However, while there are signs that Chinese solar R&D is making strong progress, it must be noted that the country’s program is only in its early stages and lags significantly behind that of pioneering Western nations. While remaining the world’s solar workshop, Chinese PV makers are using technologies such as passivated emitter rear contact (PERC) that were developed in the West to achieve many of its recent technological milestones.
In the thin film segment, China’s recent wave of investment in CIGS technology has shown a strong preference for Western equipment providers, although R&D programs are being established alongside them, such as with the Manz, Shanghai Electric and Shenhua deal.
The claim that China is open to foreign investment also needs a significant caveat. While the Chinese solar industry is largely happy to be funded by Western investors, for Western manufacturers the details are different. Such companies increasingly partnering to make polysilicon and solar in China – including SunPower’s recent agreement to build a 5 GW solar cell and panel factory. However, they have only been able to do so by partnering with Chinese companies, which often includes sharing valuable intellectual property.
Mixed deployment policy advice
But where the report skirts difficult realities about China, a larger failing is its advice for deployment policies. Some of these are sound if conventional, such as the advice to “achieve an equitable outcome to intensifying disputes” over net metering. This is easier said than done, and the report points to time-of-use rates and Value of Solar Tariff policies as potential solutions. Similarly uncontroversial is the advice to support state-level renewable portfolio standards, and to extend Master Limited Partnership tax structures to solar.
However, the report’s first two points for deployment are not well supported by evidence. The first recommendation is to establish a significant U.S. price on carbon, and as many prices on carbon applied elsewhere have been too low to have an effect, there is little data today to back up the assertion that this is an effective policy.
The second recommendation is to continue the Clean Power Plan, however as revealed in an interview with Bloomberg New Energy Finance, the CPP may have little impact on solar deployment in the United States. Regardless, neither of these things, particularly the latter, is likely to happen under a Trump Administration, making such advice moot as well as somewhat disconnected from reality.
Misapplied market fundamentalism
Underscoring the strange policy advice proffered by New Solar System is a claim made early in the report, that solar “remains too expensive to scale to the level that would make a meaningful environmental difference”. Here, the biggest problem is a failure to disaggregate, and that failure makes this assessment outdated for some sectors.
While the need to cut costs for rooftop PV in the United States is real, utility-scale solar is showing its own unstoppable market momentum that will continue with or without Stanford’s advice. As has been documented by pv magazine, solar is currently the most widely deployed source of new electricity generation in the United States, and utility-scale PV power purchase agreements are low enough that they are undercutting natural gas prices in many parts of the country, while offering a price stability that gas cannot.
A larger point is that as solar is scaling, costs continue to fall, such that solar is becoming increasingly competitive in more areas. What is needed to continue to grow deployment of utility-scale solar is a stable policy environment, including the continued availability of long-term contracts under federal law, and it is disappointing that the authors did not mention PURPA in their policy section.
The solar industry is moving and evolving at a rapid pace, and it takes real vision to see where it is going and give meaningful advice for the future. As such, it appears to have left the authors of this report behind.
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