What I'm reading - Subsidies, Solar, Manufacturing, and FITs

In an effort to get more posts up (and appease my long-suffering supervisor), I'm going to try to start blogging more short pieces on recent clean-energy related reads that I think are relevant and of interest in the current political climate. Let's see how long this initiative lasts...

SUBSIDIES: There was an interesting article a couple weeks ago from Washington Monthly that I meant to blog on, but, as is the case 99% of the time I think that, didn’t.  I don’t agree with much of the analysis, but think it’s a good faith effort to explore the issue.  More broadly, the “subsidy conversation" is gaining more traction politically and in the media – but as expected, has quickly become partisan, polemic and overly simplistic on all sides (for just one example, check out the comments thread at this article).  It’s a much, much bigger and more nuanced conversation that I’ve tried to touch on in several blogs, and through fact sheets on innovation and deployment.  I find that certain questions tend to go unanswered, which is unfortunate, as addressing them could really illuminate the debate: 1) why do we have subsidies in the first place (IMO: to address market failures and barriers that are stifling socially optimal levels of investment) 2) how can they be most effective (IMO: by providing clear and stable support mechanisms that encourage diversity in innovation) and, 3) importantly, when should they end (IMO: when technologies mature and a level-playing field exists in a competitive marketplace).  Much more stuff is available on this topic (see my previous post for a dozen links) and more wonky but still awesome (alright to some) academic literature here, here, here and here.  I really should write more on this topic.

SOLAR DEPLOYMENT: Building on the points above, SunRun’s recent report on solar permitting challenges is a great example of how an obsession with subsidies can obscure other, still difficult, "non-cost" barriers to rapid and large-scale deployment of energy technologies in the short-term.  Although certainly positioned on one side of the issue (given the source), the report points out the expenses and challenges from a wide-ranging set of permitting processes for residential PV solar.  According to the study, $2,000 per installation can be saved by improving the residential solar process.  At 5kW average system size, that’s about a 5%-10% reduction in total system costs for solar with very limited costs to the government (e.g. mainly program admin costs and some grants), that more importantly, can phase out with the program’s success and improve the overall competitiveness of an emerging clean energy technology. The “simplicity” of these reforms might be questioned by others, but it’s an excellent outside-the-box report that could get some traction at DOE.

CLEAN ENERGY MANUFACTURING: Greentech offered an interesting and candid interview with a  solar manufacturer, on the benefits of manufacturing in China.  It builds on other reports (and Congressional Hearings) that are looking at US clean energy production and tracking the direct financial incentives and other support from foreign governments, but this piece provides an on-the-ground China perspective.  (also worth noting are the fact that similar industrial policy strategies exist in Germany, Japan, South Korea and many other countries). US states and the federal government have attempted to provide benefits to manufacturers (for example, the manufacturing tax credit and Manufacturing Extension Partnership on the federal level, reduced taxes/grants/subsidized loans on the state/local level) but there’s a much bigger ongoing discussion about how America can most effectively compete in the global clean energy economy.  For one perspective, see GE’s Jeff Immelt’s recent op-ed.  Lots more perspective on China and U.S. investment from colleagues Jake Schmidt and Barbara Finamore.

FEED-IN-TARIFFS: Finally, our friends at CAP are out with a report looking at FITs (or “CLEAN” contracts as they term them, one of several efforts to rebrand them).  In it, they take a broad look at some of the opportunities and benefits of FITs, and provides some advocacy tactics for those interested in promoting them.  The perspective that FITs could be useful to munis and rural coops is interesting, although it’s a more optimistic and aggressive take on FITs than we might advocate for, and I do think they minimize some of the bigger challenges associated with U.S. FITs (e.g. informed siting, cost recovery, non-price barriers, state regulatory and electricity market  dynamics, political landscape).  Still, CAP always puts out insightful and informed work (see this and this for most recent examples) that can help to set the tone of the clean energy policy conversation, so worth a read.  My colleagues and I will be publishing a lengthier piece on FITs soon.


I guess that wasn't too painful.  Still wasn't very quick though.