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Renewable Energy Incentives vs. Funding Manufacturers


renewable energy money resized 600I keep hearing about U.S. solar manufacturers going under from time to time and I find it upsetting.  In my opinion, the U.S. Department of Energy (DOE) needs to slow down the funding of domestic widget manufacturers and start creating incentives for end users so that consumers and companies will want to purchase and install clean energy solutions.  We need to first boost the demand and then manufacturing will fall into place, even if we begin using imported hardware.

The latest to fall, Solyndra, a designer and manufacturer of solar photovoltaic (PV) systems for commercial rooftops announced earlier this week that they will be filing for Chapter 11 bankruptcy protection, divesting its assets and laying off all its 1,100 workers.  This will likely result in a loss to taxpayers of the $535 million in federal loan guarantees.  Once again, this is an appalling example of how policy makers don't seem to understand how to fix the economic situation in the United States.

If the demand is there the markets will figure it out.  As demand increases, production increases.  As production increases, costs decrease.  As costs decrease, price decreases, which in turn helps further increase demand.  It is a wonderful cycle that feeds itself until you have a balanced thriving market.

In a statement released by a spokesman for the Energy Department, Dan Leistikow said:  “Congress recognized the risks inherent in such an effort and wisely set aside funding to offset any potential defaults or losses.”  According to the DOE's website on September 1st, $38.7 billion in loans have been guaranteed.  How much money has been set aside for losses?

So how do you boost demand?  Make Americans want renewable energy products, like solar, by making it cheaper to own or at least buy the power from renewable energy systems.  Instead of these complicated incentives like SRECs and loan guarantees for domestic manufacters who cannot compete with hardware made in China and elsewhere in Asia, why not take simple steps to promote the mass deployment and use of renewable energy systems. 

How about a straight forward rebate on a solar production per Kwh or a feed-in tariff?  Just keep it simple such as an additional credit on your electric bill. It comes down to making solar cheaper for the consumer which is much better than maintaining the status quo of relying on burning dirty coal for domestic energy generation.  You can give all the money you want to manufacturers, but if demand for their product is not there, they won't sell a thing.  In the States that have good incentive programs, solar is growing quickly.  This growth has lead to cheaper production costs over time but more importantly it creates local jobs to sell and install these products.  

We live in America, which is supposedly the best free market economy in the world.  Why don't we set up our incentive programs to use our best assets?  The capitalistic free market is full of eager entreprenuers and capital rich venture funds that are searching for places to deploy money. 

I work with several companies that have more money then they know what to do with, ready to deploy into renewable energy projects and they struggle to find projects that can meet their reasonable required return on investment. 

Don't get me wrong, the DOE's loan guarantee program is not all bad.  It is helping to get many projects off the ground.  But with many of the State solar incentive programs oversubcribed and with eager private capital available in the marketplace ready to deploy, I think that helping domestic manufacturers is the wrong move at this time. 

Besides, as long as the deployment of solar grows in this country, even if the solar panels are ultimately not made by a U.S. company, you can guarantee they will be installed by a U.S. based company through a domestic workforce.