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(originally published by Booz & Company)


Can the U.S. Learn to Love Renewables?

Thin-film solar is aimed more at utilities than at residences. It is less efficient so it takes up more space than higher-cost crystalline or other types of solar technologies, but it is much cheaper. Government subsidies in Europe make thin-film even more cost-effective in that market. That’s a key role for government — to help these technologies achieve volume and industrial scale so that the cost can come down. Our experience shows that every time the volume of solar electricity generation doubles, the cost per watt comes down by 20 percent. Today, solar is only a tenth of a percent of the world’s total electricity generation, so it can double many times.

S+B: You recently met with President Obama. Are you encouraged by the policies that the government is pursuing involving solar energy?
SPLINTER: There’s been a good start. The incentive tax credit in the first TARP bill [2008’s toxic asset legislation], which gives a 30 percent tax break for renewable energy investments, is helpful, and it was extended so that it could be used by solar project developers and utilities. But in this current environment, where it is very difficult to get financing, it’s hard to see the impact.

In the energy bill now being discussed in Congress, a critical element involves setting a goal for renewable electricity as a percentage of all electrical transmission with an incentive for distributed generation. I think we all understand the difficulty with the grid and electricity transmission in the United States today. The system is old and needs to be overhauled. Distributed generation, as a concept, would create electricity close to where it will be used, to avoid suffering the losses caused by transmitting electricity over long distances. It deserves the accelerator or extra incentive that the energy bill provides. And that’s where solar comes in, because by its very nature it is local and, hence, distributed.

The other element is that the renewable electricity standard needs to be progressive. The government needs to set goals that we have to reach every two years. If the goal is that 20 percent of all electricity should be from renewable sources by 2020, we have to start on that path today and create real urgency to make progress in the next two years and in the two years after that. And there has to be enough incentive to compel the power companies to engage. I think that’s absolutely critical.

S+B: What should Americans do to catch up with other nations around the world in solar technology?
SPLINTER: In the production of solar, the United States is far behind the Chinese and the Europeans. The Europeans are achieving high volume. In particular, the Germans have built an industry by providing feed-in tariffs [which require public utilities to buy solar-generated electricity at above market rates, with the additional costs being spread over the utilities’ customer bases] and incentives that foster manufacturing in their country. They’ve created hundreds of thousands of manufacturing and installer jobs. Now, in Spain, Italy, and France similar gains are also being made. Solar would get going very quickly if the United States had the same feed-in tariff as Europe. There would be an explosion in the industry. A feed-in tariff basically guarantees anyone who creates renewable electricity that they will be paid roughly between 30 and 40 euro cents [42 to 56 U.S. cents] per kilowatt-hour. That has allowed many projects to be financeable.

The Japanese have several big companies that have been focusing on solar for some time, like Kyocera Corporation, which exports solar panels to the United States and Europe. Japan is reconsidering its feed-in tariff. They went away from it for a number of years, but are now considering implementing it again as they consider what to do about global warming. And there are many Chinese players. Suntech Power Company is a major exporter to Europe and the United States. They are one of the largest solar companies in the world and they have been very successful in driving down the cost of solar modules. We are one of their suppliers.

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  1. Adam Aston, “Can China Go Green?BusinessWeek, May 14, 2009: An examination of Suntech Power, Himin Solar Energy Group, and other companies attempting to help China clean up its environment.
  2. David Biello, “Solar Power Lightens Up with Thin-Film Technology,” Scientific American, April 25, 2008: A detailed look at various forms of thin-film solar systems.
  3. Yuliya Chernova, “Applying Moore’s Law to Solar,” Venture Capital Dispatch blog, April 22, 2009: Applied Materials CEO Michael Splinter explains why he thinks Moore’s Law can be applied to solar energy.
  4. Peter Farley, “Thin Film’s Time in the Sun,” Technology Review, July 27, 2007: A look at the technologies that seek to challenge solar panels built on silicon. 
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