A Stateside Solar Industry is the Way to Go
by Tom Dotan and Emily Frost | 4:00 p.m. May 8, 2012
The Obama administration has made it no secret that green energy is the heart of its economic plan, not to mention its re-election bid.
The Commerce Department's announcement in late March that it will levy tariffs against Chinese solar panels in an effort to buoy US production -- which was met with derision by Republicans -- is only the latest salvo in the ongoing battle of government fueled energy program.
We now live in a post-Solyndra world, where government incentives for alternative energy are under greater scrutiny than ever before. The solar panel manufacturer that consumed $535 million dollars in Department of Energy loans before going bust this past August has become a lightening rod of partisan criticism.
Unfortunately, both sides have it wrong when it comes to solar. The Republican case against any and all government subsidies for green energy is willfully ignorant. Most other industrialized nations recognize that solar and wind are going to play a significant role in our energy future and they've been willing to give those industries a boost with government help.
But the Democrats' overwhelming focus on immediate green-job creation creates an illusory sense of progress that hampers true innovation.
The debate the two sides are stuck in over whether or not to publicly fund green energy is a distraction that threatens to hamper America's presence in the world's burgeoning green economy.
The inconvenient truth for Democrats is that the most common kind of government incentive -- tax breaks to homes or business that install solar panels -- are incredibly effective at creating jobs... in China.
By subsidizing the purchase of solar panels, these policies have boosted demand from the Chinese factories that churn them out most efficiently. Even with these new, modest tariffs, China's stranglehold on the market -- more than 50 percent of all panels installed in the U.S.-- will be difficult to loosen.
The Obama administration must face the fact that building a thriving renewable energy industry won't mean election-year jobs. Instead, it means nurturing innovation in solar technology, an arena where the U.S. can still lead the world.
Just as Apple Inc. has created the world's largest company through domestic innovation and foreign manufacturing, so too can U.S. solar become a stateside engineering giant.
Right now, the priorities are backward; the Department of Energy's loan guarantee program has doled out nearly $40 billion to alternative energy efforts around the country.
But the vast majority has gone either toward funding the construction of manufacturing facilities that make panels or toward building large-scale solar power generation facilities. Since the loan guarantee program began in 2009, 16 solar projects have taken government funds totaling $13.25 billion. But only 4 of the companies were solar manufacturers, one of which was Solyndra, which misused its funding to expand their output rather than perfect its technology.
This construction-centric mindset creates short-term jobs but doesn't do much to provide a long-term competitive edge for the U.S. solar market.
Better examples are companies like Massachusetts-based 1366 Technologies, one of the four DOE-funded panel manufacturers. It emerged from the work of MIT scientists who forged a new way to create silicon wafers for panels that cut costs in half. The company received $150 million in loan guarantees.
The government has, through the Sunshot initiative, provided funding targeted for solar technology. But Sunshot's $145 million is dwarfed by the loan guarantee program, which was engineered to create attractive looking employment figures.
Jim Nelson, the chief executive of Santa Barbara-based Solar3D, Inc., believes that technological hurdles are holding the industry back. His company has devised a three-dimensional panel that boosts the surface area for sunlight to reach more panels with less space.
These and a few other tweaks to the solar panel design are part of the company's goal of dramatically increasing the efficiency of solar power.
"Right now [the solar industry] is eating crumbs when they could be having a feast with better technology," Nelson said.
Nelson argues that the country's sole focus should be on innovation. The industry is full of uncompetitive panel manufacturers and solar-panel installation companies, both living off of government subsidies. Solyndra was one of these.
When fueled by subsidies, these companies have less urgency and motivation to invest in newsolar technology. Thus far, Solar3D hasn't received any government investment or tax relief.
Plenty of other areas in solar technology beyond panels, such as battery storage, energy current inversion, and architectural flexibility, have room for improvement. Engineering breakthroughs in all these fields will help bring down the price of producing solar and keep the U.S. as the apogee of the industry.
The window for this clarity in national focus is closing fast. As natural gas prices continue to drop, falling by 40 percent in the past three years, the quest for an even playing field with traditional energy sources could fade out as a priority.
There are reasonable arguments for helping the consumer-end side of the spectrum, which say that funding consumers, through tax breaks and other incentives, creates a mature market of people ready to embrace the new technology.
Of course, it would still be best if these users were purchasing innovative, U.S.-designed panels.
Still, the sooner these kinds of discussions are taking place on a national level and the distractions of political partisan bickering are taken off the grid, the better the U.S. will be able to take the lead in creating the energy of the future.
Emily Frost and Tom Dotan have written about the business of energy and the environment for LA Weekly, The Sacramento Bee, and Marketplace. They are both graduate student journalists at USC's Annenberg School for Communication.
