It hasn’t happened yet, but it’s a distinct possibility: in a recent report, analysts have predicted that China’s solar market will experience a glut in late 2009. In light of the sky-high prices of imported polysilicon, Chinese manufacturers such as LDK Solar and Suntech (Suntech is China’s largest solar cell producer, and the world’s third-largest) are gearing up for polysilicon production in order to lower costs both for themselves and presumably for consumers as well.

Thomas Weisel Partners, the firm issuing the aforementioned report, predicts an oversupply situation resulting from the increased availability of polysilicon from Asian producers, the “fast pace of ingot to module capacity” and the shakiness of capital markets in solar causing nascent polysilicon producers to sign contracts for “larger amounts than will likely be delivered.” The first two reasons are not necessarily bad news to consumers, considering how subsidies for solar across the globe are either nonexistent or diminishing in number, but combined with the third, spell trouble for solar manufacturers.

The Thomas Weisel Partners report is in tune with a doomsday statement from Kyocera, the world’s fourth-largest solar cell manufacturer: Tatsumi Maeda, the managing executive officer of the company’s solar operations, says he expects the bubble surrounding the solar power sector to burst, resulting in 80 percent of solar cell manufacturers to “fail” and prices for solar panels to plummet. On a more positive note, he also hopes to achieve grid parity in or six years. While the consumer is the main beneficiary of such economic events, if they come to pass, (cheaper, more efficient solar cells? Grid parity? Yes please!) if producers are hurt enough, the ramifications for consumers could be unpleasant as well. Although I’m loath to predict the formation of a “solar cartel” or anything equally ludicrous, I think that heavily slashed prices of solar—and decreased competition among manufacturers—can help consumers only up to a certain point.

Still, let’s hope that grid parity isn’t too far away, for China and for other countries going solar, like the United States.

With the credit crunch exploding into full-on crisis mode, it has been a busy (and expensive) week for Congress. Most of the attention has fallen on the Fed’s plan to have the federal government buy up distressed mortgage-backed securities in the hope of avoiding broader failures in the financial system. Amid the ensuing hullabaloo, lawmakers’ efforts to extend tax credits for renewable energy were, by and large, relegated to the background. Various drafts of the legislation have languished for months between the House and Senate, making 2008 an anxious year for the renewable energy sector.

Of greatest interest to solar enthusiasts is the federal Investment Tax Credit (ITC), which grants a 30 percent tax credit to individuals who install a renewable energy system, up to $2,000. The same 30 percent credit is available to businesses, but there is no absolute monetary cap. As you’ll see below, the ITC has been prone to fits and starts. In 2007, Congress was only able to muster a one-year extension for 2008. If the relevant bill fails to pass before the last session of 2008, the ITC will revert to 10 percent – an outcome that would make it more expensive for individuals and businesses to purchase solar energy technologies.

Extending the credit has support both within the renewable energy sector and among the public at large. In the face of rising energy costs and environemntal considerations, only 8 percent of Americans believe the credit should NOT be extended, according to a survey conducted by Kelton Research. Furthermore, industry estimates emphasize that the ITC has been key in supporting demand and stimulating investment in solar technologies. As relayed by the Solar Energy Industries Association (SEIA), for instance, a new study by Navigant Consulting finds that the ITC has considerable positive knock-on effects in the broader economy. Specifically, the group predicts that extending the ITC by eight years, through 2016, would create 1.2 million job opportunities, including 440,000 permanent positions, and stimulate $232 billion in investment in the U.S. Obviously, both SEIA and Navigent have a pro-solar agenda, and thus probably paint a fairly rosy picture of what’s possible for the future. Existing figures do suggest, however, don’t lie: the first two year of the credit coincided with a 45-percent expansion in the U.S. solar market (PDF).

For solar enthusiasts, the ideal outcome would include the extension of the ITC through 2016 and the elimination of the $2,000 cap for individuals. On Tuesday (Sept 23), the Senate passed the renewable energy amendment to HR 6049 (PDF), with a vote of 93-2. On Friday (Sept 26), the House passed HR 7060 (PDF), The Renewable Energy and Job Creation Tax Act of 2008, by a vote of 257-166. The problem? The House version differs from the Senate version, raising questions about the prospects of a finalized bill. The biggest differences relate to (surprise, surprise) how to fund the extension. Let’s hope that Congress can get it’s act together and, once and for all, provide some longer-term support for renewable energy.

Background:

The Energy Tax Act of 1978 established a 15 percent tax credit for solar energy. Eight years later, in 1986, the Tax Reform Act reduced the credit to 12 percent, and then to 10 percent in 1988. It remained at this level until 2005.

The Energy Policy Act of 2005 set up a new commercial and residential investment tax credit (ITC) for solar-energy systems (and a few other technologies). The original credits were valid for 2006 and 2007, and were subsequently extended for an additional year by the Tax Relief and Health Care Act of 2007. As noted above, if the ITC is not renewed by Congress, the credit amount will revert back to the pre-2005 level of ten percent.

For a bit more background on the ITC, see Eric’s September post and Eric’s August post. For more information on how businesses can apply the 30 percent credit to solar energy systems, be sure to see our commercial solar section.

While solar power has proven to be profitable and easily adopted in developed nations, it is also one of the renewable energies most suitable for the developing world. Countries such as India, Brazil, and Nigeria, where sunlight is plentiful and the costs of climate change are likely to be high, are well suited to adopting measures such as solar-powered water pumps and street lamps. However, projects involving photovoltaic panels, the most popular form of solar technology, don’t come cheap. This is where the Solar Electric Light Fund (SELF) steps in.

SELF is a Washington, D.C.-based non-profit organization that provides technical and financial assistance for solar energy and wireless communication systems in the developing world. It was founded in 1990 by Neville Williams, a former journalist who used to work as a consultant to the U.S. Department of Energy during the Carter Administration, and its current Executive Director is Robert Freling. With solar electrification and enterprise programs in China, Bhutan, and Tanzania, and other countries, SELF aims to help rural communities obtain electricity and connect to the Web—without plugging into an electric grid, which carries significant environmental and financial costs. This is particularly true for remote, rural villages, where it would be costly and impractical to construct high-voltage lines that would ultimately only serve a few communities.

Seventy percent of the developing world lack electricity. Most of these two billion people rely largely on kerosene for light and on dry-cell batteries for power. Productivity is low, as it is difficult for them to study or work solely by candlelight or by lantern. What’s more, the use of kerosene in enclosed places has been linked to persistent respiratory problems. SELF provides villagers with sun-powered facilities, funded in large part with donations and with microcredit options—small loans acquired for part of a larger payment, which are typically made over short periods. The organization financed and installed water purification facilities, and has helped bring electricity to health clinics and small businesses. While considerable challenges remain at both the local and global scale, SELF’s work is evidence that development goals aren’t necessarily incompatible with efforts to mitigate climate change.

In the face of 391 power outages in its main power lines during the first half of 2008 and an estimated national energy shortage of 1,000 to 2,000 megawatts, Venezuela is expanding its energy production with various renewable energy projects, one of which incorporates solar.

Through its Energy Revolution Mission, the South American nation has launched a project called “Sowing Light,” which installs solar panels in small towns removed from the large electricity generators of the country’s major cities. The government has already installed solar panels in 550 households across the country, as well as 81 solar-powered water treatment plants in several communities. While the panels are not homegrown—they originate from Spain, are assembled in Cuba, and ultimately exchanged for Venezuelan oil—it’s a crucial first step for a country rich in oil and largely dependent (perhaps overly so, according to the link in paragraph one) on hydroelectricity. The program may be in its nascent stages, but with a 10 million bolivar ($4.65 million US) government investment, there’s a lot of room for growth.

The project may sound humble, but, as China has proven, rural solar electrification can come a long way.

The financial market’s turbulent week is certainly going to have an impact upon the energy sector, and we will get to that soon. Right now the main line of journalists and financial analysts are focusing on the extent and nature of the troubles with a focus on New York financial circles, but the shock waves are going to travel outward and when they do we’ll be sure to keep you posted.

For now, a smaller-scale piece of news with some big implications. Hoping to accelerate the pace of local adoption, Berkeley, CA will now offer loans from the city to locals who want to install solar on their rooftops. This is a fantastic step and should help out the city almost as much as it will the solar adopters, as it will allow for some additional energy to back up the city’s dependence on the often over-taxed California power network.

If this program works out, then other cities across the country, particularly in similarly green-conscious areas, could follow Berekeley’s lead. If that happens, we could be looking at a wave of local measures intended to accelerate solar and other renewables, as a precursor to more comprehensive federal legislation.

Great news in an otherwise unsetlling week…

As recent years have shown, social entrepreneurship in the developing world doesn’t have to come from philanthropic behemoths such as Google or Microsoft—they can start right at home in the grassy steppes, rainy jungles or dusty cities. Case in point: Sunlabob’s solar initiative in Laos, which has brought solar lanterns, panels and even entire grids to villages that have never before seen electricity.

Sunlabob Rural Energy Systems wasn’t always a supplier of electricity to the disadvantaged poor. The Laos-based company started out in 2001 supplying solar panels and electricity equipment to corporations and off-grid development projects. But somewhere along the way the company realized that, with more than 50 percent of Laotians living off the grid, the market for reliable electrical services in the rural villages was much larger than the market for the commercial projects they had initially focused on.

Indeed, the rural villagers cannot afford Sunlabob’s solar systems, most of which cost at least $500 (if only solar systems were so cheap here!). Instead of donating or selling their products, however, Sunlabob leases them out to households or groups of households. That way, the villagers can enjoy using electricity in their homes and walking around at night with the aid of solar-powered lanterns, with rental fee—in some cases as low as $3-5/month—being distributed among several people. As 74 percent of the Laotian population lives on less than $2 a day, these households’ newly-obtained electricity becomes not only affordable, but also a great step up from the kerosene or wood they used to use—if they could afford it.

To date, Sunlabob operates over 3,400 household systems, with 17 leasing franchises—which are composed of technicians who market, install and repair the solar systems—in eight of Laos’ 17 provinces. It started out with a $150,000 grant from the World Bank in 2005 to essentially subsidize 120 solar equipment units and train franchises in one province. Now, Sunlabob needs no outside subsidies to provide electrical services to rural Laotians.

I can’t tell you how profitable the venture is, but if you have more than 3,400 household systems running, with 17 franchises, then you’re probably doing something right. Of course, this model isn’t entirely feasible in the developed world—costs are higher, systems are bigger (we, dependent as we are on technology, need electricity to do more than just light our homes—we demand a lot of electricity to live happily) and infrastructures are different. If taking exams has taught me anything, it’s that it’s a easier to go from bad to good than it is to go from good to great.

It appears as if the solar tax credit may not be doomed, after all. The Wall Street Journal reports that a bi-partisan effort is underway to push the credit in as part of a wider suite of legislation.

This credit is crucial to nurturing the solar industry and allowing it to strengthen and expand itself enough to reach a competitive balance with established carbon-based energy sources. It has also, dishearteningly, not received the care and attention it needs from Congressional leaders. If this push succeeds it would be a great indication that energy policy and priorities in America may not be hopeless heading further into the century.

CQ Politics also has a choice energy quote that deserves mention. Montana Democrat Max Baucus noted that “Here we are again. I’m starting to feel like Don Quixote, except I’m not jousting at windmills. I’m jousting for windmills.”

And for solar too, Senator, and thank you for that.

With the ever-increasing interest in residential photovoltaics (solar electric systems), more and more people come to sites like GetSolar.com to figure out what all the fuss is about, and how these things actually work. Even homeowners who have progressed to the stage of figuring out the pitch of their roof and talking about budget — even homeowners who already have a system! — can be vague on the details of how these beautiful little systems do what they do.

Read here for a quick GetSolar.com crash course in how PV technologies work.

Let us rejoice as India cements the beginning of a (hopefully) long relationship with solar with plans for its first polysilicon solar project, its largest solar thermal plant and the world’s largest solar farm. Not bad for a country just recently getting into the game—and perhaps expected, for a country with a potential generation capacity of 5,000 trillion kilowatt-hours a year from the sun alone.

The polysilicon project is slated to be a part of the aforementioned solar farm and estimated to produce 2,500 tons of polysilicon a year during its “first phase” and 5,000 tons annually after two years. Indian officials expect the solar farm—the “integrated solar power complex”—to reach a power generation capacity of 5 GW, and the solar thermal plant to reach 10 MW. While India’s solar market is still developing, these are all projects that represent significant steps.

Producing some polysilicon domestically reduces material costs and partly protects fledgling Indian solar industries from the effects of importing expensive foreign silicon—rattled by the soaring silicon prices, China has only recently launched several polysilicon projects of its own, with very high hopes for them. Furthermore, in light of solar thermal’s tremendous success in China over the past decade, both economically/commercially and as an agent of change toward a more environmentally-friendly lifestyle, the advancement brought about by India’s new solar thermal plant, as well as further solar thermal incentives, will perhaps be as dramatic for Indians as Chinese solar thermal was for the Chinese.

It’s evident Florida lawmakers and regulators are taking steps to ensure that the Sunshine State lives up to its nickname. As reported by the Miami Herald, the Public Service Commission (PSC) will increase the rate paid to owners of renewable-energy systems. At issue is net metering, the process by which excess electricity from such systems—called net excess generation (NEG)—is fed back into the grid and credited to the customer’s utility account.

Under the old net-metering rules, utilities were only required to pay 3 or 4 cents per kWh. This was a criminally low rate, one that benefited the state’s investor-owned utilities while providing little incentive for residents and businesses to install renewable-energy systems. Under the new rules, customers with renewable-energy systems will have their accounts credited at the same retail rate at which they purchase electricity from Florida Power Cooperation, Florida Power & Light, and others.

There is a minor catch, however. While owners of small systems (less than 10kW in size) won’t be charged to set up a net-metering agreement, owners of medium-size systems (up to 100kW) and large systems (100kW to 2mW in size) will have to pay $400 and $1,000 applications fees, respectively. It’s rare to see residential systems over 5kW, so if you’re a resident, you’ll simply have to sign up for net metering with your utility. For more information, see the Florida PSC website.

There’s no doubt that the new rules are a step in the right direction. Under the Florida Energy Act of 2006, lawmakers set up the Solar Energy Incentives Program. The program provides a super generous rebate of $4 per watt rebate for solar PV panels, capped at $20,000 for residential systems and $100,000 for commerical systems. To put this in perspective, a typical 3.5kW residential system would be eligible for $14,000 in money from the state, an amount that would easily cut your total costs in half.

Funded at $3.5 million for 2007-08, and at $5 million for 2008-09, the program has been a victim of its own success: so many people have applied that all approved funding has been exhausted. This shouldn’t deter you from applying, however, as all approved applications will be placed in a waiting line for future disbursements. Hopefully the 2009-2010 funding cycle will be even larger. Coupled with the revised net-metering rules, a well funded incentives program would go a long way to promote the adoption of solar energy in the Sunshine State.

For more information on Florida rebates, tax incentives and other programs, check out our Florida page.