Saturday, April 25, 2015

Unpacking the State House's Willingness to Inject Uncertainty into the Solar Market

Why would a State House Committee which includes the term “job growth” in its title declare an all-out sabotage of a newly booming solar industry that now employs twice as many jobs as coal? 

If the committee's Omnibus Energy bill that passed the full State House on Earth Day were to become actual law it would halt new applications for the Made-In-Minnesota Solar and Solar Rewards incentive programs, would repeal the value of solar tariff for community solar gardens, would gut the 2013 solar standards and would change net metering programs in a way that so that people making huge private investments in solar energy can be denied adequate compensation for the electricity they provide to the grid which benefits all customers.  

Lynn Hinkle, policy director for the Minnesota Solar Energy Industries Association, stated at the April 8th, 2015 public hearing that if even one of these solar-related policies passes, “every segment of Minnesota solar market would be damaged.” 

David Streier, company director of Silicon Energy a solar panel manufacturing plant in Mountain Iron, Minn warned at a public hearing for the Committee’s Omnibus bill., that his company would be shut down if the bill becomes law because it repeals the Minnesota-made solar subsidy. That is what protects domestic manufacturers from being undercut by Chinese solar manufacturers.  

For a political party that continually evokes a good point that "uncertainty" is “bad for business”, this omnibus bill injects a poison pill of uncertainty into tens of thousands of small-business clean energy jobs.
I heard a legislator say these proposals send a “we don’t care about, we don’t need you, or you are not welcome anymore” message from the perspective of anyone making an honest effort forming a successful businesses building and installing solar systems in MN,  But perhaps the committee chair and Bill's Sponsor Pat Garofalo has a more tactful explanation for subjecting solar to a steeper climb.  

In a Star Tribune interview last January, Garofalo stated concern about the “excessive” subsidies for solar energy that passed in the previous legislative session because “there are more cost-effective ways to reduce pollution than to incentivize solar, especially rooftop solar.”  But speaking of cost-effectiveness, he called nuclear power “one of the most cost-effective ways to achieve” carbon emissions goals. I’d be interested to hear how the nuclear industry could survive if put to the same rigorous standard of little to no government subsidy. If the solar subsidies are excessive, then how about ending subsidies currently given to the coal, gas and nuclear industries and using the money to advance the technologies of power storage that will actually make solar power more cost effective? How about we work together on a plan to convert dirty diesel school bus fleets to electric powered by solar (rather than natural gas) since that would provide energy storage capacity to the grid?

Toward the end of the April 22nd session on the House Energy Omnibus bill, Garofalo admitted wind energy is the cheapest form of new generation and that therefore smart actors in the energy market don’t need government mandates get them to deploy wind. So the idea he stated is “not to put a gun to utilities heads” but to invest in energy storage and so many awesome things in technology. Then he then gave the fracking revolution as an examples of that optimism in technology. 

At the CEE Energy Policy Forum on Jan 27th, 2015 the chair of the MN State House “Job Growth and Energy Affordability Policy and Finance” committee Pat Garofalo spoke these words in good-humored and optimism about innovative technology being part of the solution for energy: I don’t understand how anyone can be pessimistic about energy policy right now…I can’t be anything but happy about where our energy is going now.” Yes there is a grain of truth that technological breakthroughs providing high hope. But the issue is which set of decision makers has the power to decide which technologies get deployed and which technologies gather dust sitting on the shelf?

The typical reasoning of “letting the market decide does not apply to the energy world as it stands. First of all, there is no market price for electricity since energy utilities are monopolies within their service territories, particularly in regulated states like Minnesota. Second of all, so many utilities (including the rural co-ops) are locked into decades-long contacts for coal. Most utilities have already sunk a huge amount of capital into coal plants. The typical rule for market competition is businesses deploying the technology that is most competitive from a consumers’ standpoint. But why does that not apply in this case of energy? Unless they are required to do otherwise by the state, the energy monopolies are still going to opt to feed us dirty energy even though wind power is at a competitive price with coal, and even though solar energy is cost-competitive with nuclear. They are primarily motivated to protect these sunken costs into coal and nuclear from turning into stranded assets. That is the real source of utilities anxiety over net metering for example.

Where the market does apply is in reaction to policy. Policies that actually help the solar market grow will only serve to drive down the prices of solar energy even more. That in turn upends the “solar is less cost-effective” justification for injecting uncertainty into the solar jobs market.

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