The credit crunch is taking a toll on the United States’ nascent solar industry, scuttling big renewable energy projects and curtailing expansion plans, solar executives said Wednesday as they proposed the inclusion of green incentives in the Obama economic stimulus plan.
Spanish energy giant Abengoa, for instance, has put on hold plans to build its 280-megawatt Solana solar power plant outside Phoenix to supply electricity to utility Arizona Public Service (PNW) in a $4 billion deal, said Fred Morse, senior advisor to Abengoa Solar.
“We have serious issues getting financing,” said Morse during a conference call held by the Solar Energy Industries Association. Congress in October passed a 30% investment tax credit crucial to the solar industry. But Wall Street’s meltdown has scared off investors that normally would finance large solar projects in exchange for the tax credits.
“The investment tax credit was passed but unfortunately there was no ‘I’ in the ITC,” Morse added. “We have trouble finding tax-equity investors, the financing is gone.”
Suntech America president Roger Efird said that after Congress passed the investment tax credit, the Chinese solar cell maker immediately doubled its sales force in the U.S. That expansion has now hit a wall.
“Plans to double our sales force by the end of 2009 are currently on hold, primarily because business has slowed in fourth quarter because of the credit crunch,” he said. “We had been considering establishing manufacturing in the U.S. The timing of those plans depend on the growth of the market in the U.S. and how long it takes to get through this downturn.” Suntech’s (STP) stock – like those of rivals SunPower (SPWRA) and First Solar (FSLR) – has been walloped by the market chaos and is down 94% from its 52-week high.
Ron Kenedi of Sharp Solar said the dealers and installers who buy the Japanese solar module maker’s products have had a hard time securing credit to finance their operations.
In response, the solar industry’s trade group on Wednesday proposed that the federal government cut through the credit crunch by adopting tax and investment policies to stimulate the solar sector and create 1 million jobs.
The centerpiece of the plan is a $10 billion program to install 4,000 megawatts of solar energy on federal buildings and at military installations. “The Department of Defense alone could jump start this industry and it could have widespread impact on the use of solar, similar to what it did for the Internet,” said Nancy Bacon, an executive with Michigan thin-film solar cell maker Energy Conversion Devices (ENER).
Bacon noted that the federal government is the world’s largest utility customer, spending $5.6 billion annually on electricity. “This would create 350,000 sustainable jobs,” she said. “The solar industry is ready to deploy these systems immediately.”
The Solar Energy Industries Association also wants Congress to enact a 30% tax refundable tax credit for the purchase of solar manufacturing equipment to encourage solar companies to build their factories in the U.S. That would result in an estimated 315,000 new jobs. Making the current investment tax credit refundable would also help loosen up financing for solar projects, the association said.
Other policies on the SEIA agenda:
- Establishment of a national Renewable Portfolio Standard that would require states to obtain a minimum of 10% of their electricity from green sources by 2012 and 25% by 2025, with 30% of the total coming from solar.
- Rapid deployment of new transmission lines to connect cities to remote areas where wind and solar power is typically produced.
- Expedited approval of solar power plant projects on federal land in the Southwest.
- Creation of an Office of Renewable Energy in President-elect Obama’s office to coordinate the procurement and permitting of solar power and transmission lines.
“We are working closely with the Obama energy transition team and have been in contact with Congress,” said SEIA president Rhone Resch. “These polices are exactly the kind of shot in the arm our economy needs today.”
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