November 30, 2008 – Vol.13 No.37
JUMP-STARTING A GREEN ECONOMY WITH SOLAR UTILITIES.
President-elect Obama wants to create 5 million new “Green Energy” jobs. The sooner the better, but how? What incentive or government program will create these jobs? Which sector of green energy will be targeted for job growth? Further, and importantly as unemployment rises, how soon will these new jobs appear in the help wanted section?
The economy needs jobs as soon as possible. If Obama wants to use green energy as an engine of growth, how can he jump start it to get it running?
The most direct and focused effort with the shortest route to new job creation could be in solar energy. One possibility (and the only one I’ll focus on in this article) could be a government-led effort to expand existing solar energy utilities as well as open the doors for the creation of new ones. Solar energy utilities could be described as companies that generate and sell energy derived from solar resources. (The word “energy” is used to include both solar generated electricity or solar thermal energy.) These companies, like conventional utilities, sell energy, they don’t sell solar systems.
There are a number of companies that could already fit the description of “solar energy utility.” In one model the companies build solar facilities that sell energy to the power grid or to specific customers. In another model the solar utility offers to design, build and maintain – without any upfront costs – solar systems for customers who are willing to host those systems on their property. The customer pays these solar utilities for the power used, just as if the power came off the grid. The customer does not pay for the solar system nor does it own it.
The solar utility sells the solar energy for more than the cost of building and maintaining the system, thus makes a profit. The customer can get environmentally friendly power at a fixed rate for an extended period. In some markets the solar energy may be competitive with energy from other sources. Eventually, to a greater degree now possible, government mandated carbon emissions trading will factor into the revenue and cost equation for solar energy utilities.
Obviously, for these solar utilities to operate they need capital to design and build solar systems. One source of capital for solar utilities could be low interest, government guaranteed loans. That’s where the Obama administration could come in.
There are, of course, some points that should be considered:
--- Solar energy is a good bet for this first effort to create green energy jobs for a number of reasons. The technology is mature (though still improving) and products employed to generate power or heat are readily available. The time required to receive appropriate permitting to build a large solar array, whether ground mounted or roof top, can be very short, possibly little more than obtaining a building permit. Installation time is also very short. Altogether, the time between the injection of capital and the construction of facilities can be relatively brief. (The shorter the period between capital infusion and building facilities, the better, when a goal of the program is creating new jobs ASAP)
--- If government backed loans are a source of capital (and not necessarily the only source) the funds should be available only for existing solar utilities or for solar utility startups. The idea here is to keep the moneys focused on job-creating solar. If the capital were available for existing conventional utilities or power-generating companies, then the temptation might be there to funnel the cash into other projects or operations. That is not to say conventional utilities can’t be involved; they can always start new companies specializing in solar.
--- There is a high likelihood that some solar products used by these new utilities might be imported. As much as it would be nice to use only domestically made products, thus create more jobs, those from overseas are OK too. If the U.S. is going to be borrowing money from abroad (for decades) to pay its bills, then it should help in the creation of jobs overseas as well;
--- In recent years there have been some supply constraints to solar energy, particularly the availability of solar photovoltaic cells and modules. Those constraints have apparently been resolved. However, if this new program created a boom in solar, would new constraints arise? It could happen. However, provided raw materials are available adding new solar production capacity is often as easy as ordering new production equipment. There are a number of companies that specialize in turnkey production lines for solar photovoltaic products. For solar manufacturers new production capacity is available as soon as production equipment is installed.
Further, solar energy is growing rapidly beyond silicon-based products. Concentrated solar thermal energy power generation is growing as is concentrated photovoltaics. Concentrated solar thermal power uses basic materials and time-tested processes to build equipment, thus it’s easy to ramp up production. Concentrated solar photovoltaics use significantly fewer solar cells than traditional flat plate solar products and basic materials used to focus sunlight on those cells. Other types of solar photovoltaics, too, such as thin-film CIGS (copper indium gallium selenide) cells and modules are moving towards greater availability in the solar marketplace.
You have to spend money to make money and more money needs to be made right now. An injection of cash into one sector of the green energy industry will help. As with the series of bailouts for financial institutions, cash injection into the economy will help it recover. Government-backed loans will have to be repaid by the borrower, so the government would have to be choosy whom it lends to.