The US president of the world’s largest PV manufacturer said this week that he was more concerned about a change of administration in the White House that could revoke incentives for solar than he was about controversial trade tariffs on Chinese suppliers.
John Lefebvre, the president of Suntech America, said that he was especially concerned about potential Republican attempts to revoke the Investment Tax Credit, which returns 30% of the cost of a solar project, and state-level renewable goals.
“There are currently threats against the ITC, the ITC being extended or perhaps being revoked. State Renewable Portfolio Standards are under attack in a lot of different markets that will certainly impact the utility business potentially in a large way.”
In exclusive comments to Breaking Energy, Lefebvre said that he there would be increasing pressure on extending the ITC beyond its current expiration in 2016.
“I have concerns about the ITC regardless of administration – more so if the Republicans are in the administration. But regardless it’s an issue that needs to be represented and discussed. It’s so important for the industry.
Making a Case for Incentives
“We’re simply asking for solar to get off the ground, a nascent industry needs to become a larger player and nascent industries need the type of market structure like incentives to get them to certain volumes so they are competitive.”
RPS goals could also be in the frame as states attempt to reduce financial burdens on utilities and ratepayers.
“The RPS creates probably one of the best incentives for utilities to really look at these investments. In different states, there’s always constant discussions around RPS standards – whether to increase them or to continue them. Making everyone aware that those debates are continually happening in every legislative cycle that we all need to be involved to represent why the RPS is important for energy diversification and jobs in the US.”
In remarks at last week’s Intersolar North America conference in San Francisco, he told delegates that May’s ruling from the Commerce Department, which set tariffs of around 30% on imports from China, would have no discernible impact on Suntech.
The company’s global supply chain would allow it to source silicon cells from other countries such as Taiwan, he said. Other companies that were less well resourced would struggle to compete and the industry would continue to see large-scale consolidation from hundreds of companies to just a handful as happened in the early part of the 1900s in the automobile industry.
In later comments, he said: “There’s room for quite a bit more consolidation and if you look at global supply and demand what will happen like other industries before us is that large-scale players who can reduce costs and have large supply chains and access to the best technologies are the ones that will be stronger to make it through this consolidation those companies who don’t have that capability are going to struggle.
“There’s nothing new here in solar that other industries haven’t been through. So it’s the same market mechanisms and forces at play here and non-market structures or influences are not going to change that dynamic in the long term.”
Suntech’s stock price has dropped 76% over the past year as all other publicly listed solar companies on Nasdaq have also suffered. But shares rose on the launch this month of Japan’s feed in tariff at .52c/kwh designed to accelerate adoption of renewables in the the wake of the Fukushima disaster.
Coal and Natural Gas Developments Offer Solar Opportunities
Lefebvre said that a large opportunity for US solar – currently only 0.4% of the country’s energy mix – would arise from the retirement of coal plants under new Environmental Protection Agency regulations. Twenty-six GW of coal-fired power stations would have to be closed, he said.
Potential opportunities for solar at the “end of the coal age” in the US could also be complemented by partnering with natural gas.
“There’s a lot of optimism around the 100 year supply of shale gas in the US and it comes with a lot of unknowns and an opportunity for solar to partner with natural gas to really address some peak power issues that we have in the country.
“Looking at long term fuel price volatility for natural gas, for the past 30 years you’ve seen massive spikes in natural gas and instability in the pricing of natural gas. Who’s to say this won’t continue into the future with the unknowns of shale gas production.”
He also said that although natural gas prices were low, infrastructure investment could reach $200 billion based on 2009 figures.
“Everyone is discussing the low cost per million Btu but no one is discussing the massive cost of infrastructure. That cost needs to be taken into account when you’re looking at natural gas.
“You get contracts in solar for 20-25 years and those contracts the pricing is understood that pricing is often fixed or has a very low escalator you know what to expect over the next 25 years. Natural gas contracts are typically less than 5 years. So there is a lot of uncertainty over the price of natural gas. Solar can offer as a partner to natural gas, a hedge against the cost of natural gas.”
