The potential of solar energy to help solve many of America`s energy woes is real, but its success hinges on establishing long-term incentives, industry advocates say.
'The only risk posed by solar is not going forward rapidly,' Michael Splinter, chief executive officer of Silicon Valley-based Applied Materials, said this week at a briefing sponsored by the New America Foundation on the potential for the technology to meet global energy demand.
Solar is a viable way to meet much of U.S. and world energy needs -- and to reduce carbon emissions, Splinter said.
Solar represents one-tenth of 1 percent of the 5,000 gigawatts of electricity produced globally each year, Splinter said. The global solar industry is a $15 billion market expected to grow to $50 billion by 2010, he said.
So far, most of Allied Material`s business is overseas, particularly Germany, where the industry is further developed in part because there are strong incentives both for consumers and industry to use solar, Splinter said. Most production is also happening overseas, he said, including new solar production lines Allied Materials is building in Germany, Spain, China and India.
Applied Materials, a semiconductor equipment manufacturer, began creating photovoltaics capacity for solar panels several years ago and is now producing thin-film machines for use in solar panel production. Since signing its first contracts just a year ago, the company has seen a huge increase in demand, Splinter said.
'We`ve exceeded our first year forecast by 50 percent and are raising our projection to $400 million this year ... we`re adding jobs ... and racing to meet demand,' he said.
A key to moving the nascent industry forward in the United States is an eight-year extension on tax incentives that would provide certainty for investors and companies -- in contrast to the two-year incentives included in the 2005 energy bill, Splinter said. His company, along with numerous others, has urged the U.S. Congress to take on the issue.
A new energy bill, which will be introduced by Senate Majority Leader Harry Reid, D-Nev., in the Senate next week, combines broad energy-related legislation including energy efficiency, renewable energy and foreign-relations aspects, said a spokesman on energy issues in the office of Sen. Jeff Bingaman, D-N.M., chair of the Senate Committee on Energy and Natural Resources.
When asked about the difference between today`s efforts and the numerous solar initiatives that began in the 1970s, Splinter said it`s much cheaper today to produce solar panels and people are increasingly recognizing the need to diminish use of fossil fuels. A silicon shortage, which drove up prices for the material (because silicon producers weren`t prepared for the additional demand from the solar industry), is also changing, he said.
Rhone Resch, president of the Solar Energy Industries Association, said silicon production was expanding and that when prices were high the industry learned to use silicon more efficiently, such as with thin-film applications.
Splinter emphasized that increasing economies of scale are essential for bringing down costs and urged businesses and anyone with a big rooftop to get involved: 'Every large rooftop in the U.S. should be a candidate for solar' and 'as taxpayers we own a lot of government rooftops ... certainly there are plenty here in Washington.'
Splinter earlier said that while the United States is the biggest energy consumer in the world, the U.S. government is the biggest electricity consumer. He praised companies like Wal-Mart and Google that have announced plans to incorporate solar installations, which will, in turn, increase demand.
'Congress has historically jump-started emerging industries,' said Resch, making the case for longer tax incentives. He said 'a cap-and-trade system is going to take a long time to develop, but at the end of the eight years, we`ll have a mature cap-and-trade system and markets will do the work.'
Proposed legislation would also allow utility companies to take advantage of tax incentives, which was previously not allowed, and that -- along with new renewable energy portfolio standards -- will push utility companies toward solar, Resch said.
'Solar is an asset to the grid,' he said. 'It provides energy at the time of use and at peak use times. It shaves off peak demand and that helps stabilize the grid.'
Resch said he thinks utilities will eventually adopt a distributive business model and offer solar to customers, which will save both utilities and customers money.
by Megan Harris