In recent years, promising technological advances and an expanding array of potential applications for photovoltaic (PV) systems have bolstered the prospects for a thriving solar energy industry in New England. However, progress has been hindered by ongoing financial barriers, regulatory hurdles, and the high cost of solar power. The Massachusetts Technology Collaborative’s Renewable Energy Trust has therefore designed an innovative new program to provide financial and technical assistance that should help develop a sustainable, competitive PV industry in the Commonwealth.
Trends in the Solar Industry
Photovoltaic systems are used in a broad range of applications, including consumer products, grid-connected, and stand-alone applications. Worldwide demand has been growing at about 25% a year. In 2000, almost 300 megawatts of new generating capacity was installed throughout the world with 30% of this new capacity in Japan, 20% in Germany, and 10% in the United States. However, the fastest growing markets are in the developing world, where PV is used as an alternative to extending the electricity grid.
Because of the robust international markets, American PV companies’ sales are primarily oversees and they are increasing. Sales by Massachusetts companies sales exceeded $43 million in 2000. More than three-quarters (78%) of these sales were in international markets, with the rest in the US and less than 2% of the total in Massachusetts. However, because 70% of the companies’ expenditures were in Massachusetts, the industry has an important economic and job-creation impact in the Commonwealth. It therefore makes sense to promote the development of the industry, even if most of the companies’ production continues to be exported.
At the same time, there is considerable potential to increase the use of PV within the Commonwealth. At the moment, the total installed capacity of PV systems in Massachusetts is under 500 kilowatts, much less than a single typical fossil fuel power plant. Many of the existing PV systems were installed in the 1980s, including a 100 kilowatt system at Beverly High School.
To substantially increase the number of systems in place, the industry needs help in overcoming some significant financial and regulatory barriers. Although PV is cost-effective in off-grid applications in the Northeast , the cost of PV-generated electricity in grid-connected applications is substantially higher than fossil fuel and other renewable energy alternatives.
Of course, PV has other valuable attributes—it does not produce air emissions, it is a distributed resource than can avoid distribution system investments, its generation is highest at peak times when the value of generation is highest, and it has broad public support. But, under current regulatory and market conditions, consumers installing PV systems can capture only some of the potential value.
Developing the Industry
MTC’s Renewable Energy Trust’s "Solar-to-Market Initiative" is designed both to encourage greater use of PV systems in Massachusetts and to promote the development of the Commonwealth’s PV industry, so that it can compete effectively in the global marketplace. To assist the industry, the Trust provided financial support for establishing the Solar Energy Business Association of New England (SEBANE). SEBANE supports the development of PV-powered energy systems through regulatory policy advocacy, public awareness, and legal efforts to enable solar resources to compete fairly in the power market. SEBANE provides PV businesses with a cohesive voice in breaking down the barriers -- including high capital costs and regulatory constraints – that have hindered the full realization of solar technology’s potential in this region.
Since the opening of the "Solar Energy Lab" at the Massachusetts Institute of Technology more than 20 years ago, the PV industry has grown steadily in New England. In Massachusetts alone, an estimated 50 or more companies are active in PV equipment manufacturing, system design, financing and project development.
By supporting the formation of a professionally managed association, the Trust has established a conduit for tapping the expertise within this major segment of the renewable energy industry. Together, the Trust and SEBANE are aggressively working to identify the best strategies for leveraging Trust investments.
Supporting SEBANE and eliminating market barriers are only the first steps in accomplishing this objective. With SEBANE’s assistance, the Trust is working to define a comprehensive $10 million initiative for expanding the production and use of PV technologies and to develop the cluster of firms that produce products and services within the solar energy industry in the Commonwealth.
Program concepts currently under development include a PV business development program to provide loans and other business financing opportunities to Massachusetts PV companies. The loan fund would help these companies expand by offering loan products, with terms that are better than those available from commercial lenders, and by supporting activities that may not qualify for a commercial loan. The business development program would also examine the need for training and certification of PV system installers in Massachusetts and the region.
Installing Systems
The Trust and SEBANE are also working together to develop a program to increase the installation of PV systems in the Commonwealth. A key objective is to minimize the installed cost of systems by encouraging geographic clusters of systems and bulk purchasing. A second objective is to integrate PV into the building and trades industries in Massachusetts by providing incentives for the installation of PV systems in new buildings. The PV installation programs will foster the expansion of the Massachusetts PV industry and create opportunities for increasing overall consumer awareness about renewable energy.
This solar energy initiative is emblematic of the Renewable Energy Trust’s collaborative approach to working with companies involved in the renewable energy industry. Rather than creating a temporary, artificial market through a government subsidy program, the organization is utilizing its resources to foster sustainability in the highly competitive energy market.
The goals of this initiative are ambitious: an abundant supply of clean, affordable electricity from renewable solar energy and a growing PV industry that produces jobs and tax benefits for the Commonwealth. Look for the collaborative approach to shorten the timeframe needed to achieve these important objectives.
Greg Watson is Vice President of Renewable Energy at the Massachusetts Technology Collaborative. He has nearly 25 years of high- level experience in environmentally sound agricultural and community planning.
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