First Solar is a developer of photovoltaic (PV) modules used in grid-connected, commercial power plants, and sold to leading system integrators, independent power project developers, and utility companies. Currently the market for PV modules in the United States is policy-driven, relying on incentives from the Federal Investment Tax Credit (ITC) to attract customers to this newer technology. As of the writing of this paper, the ITC is set to expire on January 1, 2009 unless Congress extends the credit. On behalf of the US solar energy industry, First Solar would like to petition Congress to extend the ITC to prevent major disruptions to the blossoming industry, create more jobs in the US, and take steps towards energy independence.
Delaying the extension of the ITC or not renewing the ITC will have a paralyzing effect on the solar industry in the US. The lack of market certainty is detrimental to overall market development, disrupting investment cycles which lead to employment loss and a talent drain from the industry previously built by a combination of public and private investment. Market disruptions are extremely inefficient, leading to duplicate investments to rebuild market functionality after disruptions are resolved. At a time when solar companies like First Solar are beginning to increase production, a lapse in support from the government would cause many companies to look overseas for countries that are more supportive.
However, if Congress extends the solar investment tax credit (ITC) for eight years, the U.S. solar energy sector could produce more than 1.2 million employment opportunities and $232 billion in investment according to a recent study by Navigant Consulting. According to this study, by 2016, the solar energy industry would create 440,000 permanent US jobs with much of the growth occurring in domestic manufacturing, construction and the trades. “This figure reveals the strength of the solar job creation engine when compared to the current 79,000 direct employees of the coal mining industry and the 136,000 direct employees in oil and gas extraction.” (Runyon, 1) As the economy is experiencing increased unemployment, renewal of this credit would create high quality domestic jobs in all 50 states since many solar energy components are manufactured near the markets the industry serves.
In addition to adding jobs, the Navigant study estimated that if Congress were to pass an 8-year extension of the ITC, solar energy could produce 28 gigawatts (GW) of power by 2016, which is 19 GW more than is expected to be installed should the ITC not pass. While this amount would still account for less than 1% of total, it could reduce the need for burning fossil fuels by 2% a year, creating a significant reduction in carbon emissions and dependence on foreign oil. Incentivizing citizens to purchase PV modules for their homes would also give American’s a feeling of greater independence from power companies and their highly volatile energy prices.
While First Solar believes renewing the ITC is essential to US prosperity, the solar industry and its customers would also like to see a push for new market development mechanisms to encourage the use of renewable energy sources. For example, several states have adopted renewable portfolio standards which require a portion of electricity come from renewable energy sources. In addition, the US does not have national uniform net metering and interconnection policies. Currently, these policies are established on a state-by-state basis, making it difficult for utility multi-state companies to implement clean energy programs.
Work Cited
Runyon, Jennifer. “If Congress Extends ITC, 440,000 Solar Jobs Will Be Created, Study Says.” Renewable Energy World. Sept 17, 2008.
