Tennessee’s Solar Industry Still Growing
The Tennessean – Posted 4:53 AM, Oct 21, 2012
By G. Chambers Williams III
When the solar station at the new Chattanooga Volkswagen plant is finished in November, it will be able to produce as much as 12.5 percent of the facility’s daily electricity needs.
At 9.5 megawatts, the solar array on 80 acres will be the biggest in Tennessee. But it’s hardly alone.
In the past two years, Tennessee has become 17th in the nation for its solar-power capability, driven by a mix of federal, state and local incentives and a premium price paid by the Tennessee Valley Authority as a way to increase its renewable energy mix.
All of this solar growth is not without its critics.
They complain that government subsidies are costing taxpayers millions of dollars nationwide for power that is more expensive to produce than coal, natural gas or nuclear.
And limitations remain. Solar power is available only when the sun is shining, and the U.S. Energy Department estimates it’s at its best only five hours a day.
Solar proponents, though, say that comparisons between coal and solar power should take into account the health and environmental costs associated with pollution from coal-burning power plants.
And President Barack Obama in last week’s debate defended government investments in solar, wind and biofuels as a way to build new energy sources for the future.
“We’re living like cave men, digging black rocks out of the ground and burning them (to generate power),” said Steve Johnson, vice president of the Tennessee Solar Energy Industries Association and founder of Nashville-based LightWave Solar. “We can do better with solar, which makes much more sense.”
Solar costs high
A recent Pew Charitable Trust report ranked Tennessee as having the third-fastest-growing clean energy economy in the nation, taking into account other parts of the solar industry, such as production of components that go into solar installations.
By the end of 2011, there were about 240 solar businesses in the state employing more than 6,400 people, according to the Tennessee Solar Institute at the University of Tennessee. More jobs are coming as the big solar-industry employers prepare to open new polysilicon plants — Hemlock Semiconductor in Clarksville, with 500 jobs, and Wacker Chemie near Cleveland, Tenn., adding 600 jobs.
And installations of new solar-power generating facilities are continuing at a frenetic pace. The amount of new capacity coming online this year will be double that of last year.
“Tennessee has a good story to tell about solar energy,” said Monique Hanis, spokeswoman for the Washington, D.C.-based Solar Energy Industries Association.
But the critics believe the true cost of solar power will always be much higher than that of coal, natural gas or nuclear generation, even figuring in the expense of fuel — something that solar installations don’t need.
“It’s hard to judge what the real cost is compared to other power plants,” said Daniel Kish, senior vice president for policy at the Washington, D.C.-based Institute for Energy Research, a group that promotes free-market energy policy and has lobbied against the Obama administration’s renewable-energy initiatives.
“Solar installations are very expensive, and we don’t know how long solar panels will last,” Kish said. “If you have to rebuild every 25 years, you have doubled your costs compared with coal plants.”
The federal government is planning new environmental charges on coal-fired plants that will significantly raise their costs, which will then make their power almost as expensive as solar, Kish said.
“Coal, hydro, natural gas and nuclear plants can produce power dirt cheap,” he said. “But proposed ‘carbon taxes’ will make conventional coal generation — the lowest-cost kind of energy — more expensive to allow solar to compete.
“There’s a war (against coal) going on out there,” he said.”
The critics also complain that consumers are being forced to foot the bill for expensive solar power — whether they want it or not.
“Solar mandates, which are akin to the the government telling you that you have to shower in Perrier water, don’t make sense when we have so many people in dire economic straits,” he said.
Former Gov. Mitt Romney’s presidential campaign, in its policy paper on energy, lambasted government subsidies for “uncompetitive technology” such as solar, saying instead that government’s role should be to eliminate barriers that might prevent the best technologies from succeeding on their own.
Solar grows in TN
LightWave Solar, Johnson’s company, has built about a third of the state’s solar installations, most of them small to midsize projects — about 250 total — ranging from about 4-50 kilowatts of capacity, he said. He has even equipped his Antioch home with solar power. Some of his projects have been larger, though.
He joined with Silicon Ranch Corp. for a 1-megawatt system at Agricenter International, an expo center and research center in Memphis. Silicon Ranch is backed by former Democratic Gov. Phil Bredesen and headed by Matt Kisber, Bredesen’s former economic development director.
“It’s unique in that it has a tracking system so it follows the sun during the day, increasing its output about 20 percent over fixed solar systems,” Johnson said.
Many of the state’s recent small and midsize solar power installations received about half of their funding from incentives, including a 30 percent federal tax credit and a grant of 20 percent of the system’s cost from federal stimulus money.
Altogether, about $11.5 million in federal stimulus money helped pay for dozens of small and midsize solar installations in homes and businesses across the state.
TVA offers a $1,000 grant to each new solar installation. And it also pays 22 cents per kilowatt hour for power it buys from solar producers that are connected to its grid. That’s a rate more than double the going retail price of electric power, which is about 10 cents per kilowatt hour in the Nashville area.
The Volkswagen solar installation will provide power to that plant only, and not to TVA. It’s also being built by Silicon Ranch.
In Middle Tennessee, the biggest installation so far is another Silicon Ranch project: the Pulaski Energy Park, which went online earlier this year. It’s capable of producing 1.4 megawatts of solar power at peak sunlight, or about 1,770 megawatt hours of electricity annually, according to a solar-power performance calculator provided by the National Renewable Energy Laboratory, part of the Department of Energy.
The installation is on 20 acres in Giles County’s South Industrial Park. Silicon Ranch also has installed solar power units at the HCA Inc. headquarters and the Second Harvest Food Bank in Nashville, among others.
The company is taking advantage of federal and state solar-power incentives, including one that was put into place by the Bredesen administration: a provision that drastically lowers the property tax rate for solar-power facilities.
Incentives fall off
How much it costs to produce solar power is an elusive figure that varies from installation to installation, depending on the price of land and equipment, including the actual solar panels — whose prices have been cut almost in half over the past year, industry experts say.
A typical $30,000 installation at a home or small business with about 6.25 kilowatts of generating capacity would cost about $20,000 after federal incentives and would produce power at a cost of about 9.5 cents per kilowatt-hour over a 25-year period, Johnson said. This is about what other forms of generated power cost now.
At TVA’s current premium rate for solar power, that’s a hefty profit for the solar producers. But the TVA subsidy is expected to drop by 3 cents in 2013, lowering the rate to 19 cents per kilowatt hour, and it will continue dropping until it is eliminated in a few years, according to the utility’s solar plan.
The solar industry also acknowledges that new installations won’t come as fast when some of the key incentives — such as the TVA subsidy and the 30 percent federal tax credit — are lowered or cut off. Those were put in place to give the industry a jump-start.
Industry may slow
Tennessee politics also might play a role in eliminating some of the breaks.
For instance, Tennessee now gives a massive property-tax break to solar-power facilities by allowing them to be assessed at their salvage value — defined as no more than one-half of 1 percent of their initial investment costs. But companion bills filed by several Republican legislators in the General Assembly earlier this year would eliminate that break so that solar installations would be assessed and taxed based on their real value, just like other business and residential property.
“That has already pretty much shut down any new solar companies coming to Tennessee,” said Ben Macias, vice president of Shoals Technologies Group in Portland, a manufacturer of components for solar systems that has about 500 workers.
“A lot of solar-power manufacturers are coming to the Southeast, but they are on hold as far as relocating in Tennessee is concerned because of the tax question in the legislature,” he said.
For a 50-kilowatt solar system installed at a business, for instance, the change could raise the property tax $1,500 a year, said Billy Gibson, vice president for engineering and development at Integrated Solar, another Nashville company that installs home and business systems.
But the industry says that solar should remain a growing part of the energy mix. While it’s not expected to replace other power sources entirely, it is most-available during the middle of the day when power demand is at its highest, allowing solar to supplement conventional power generation when it’s most needed, proponents say.
“People are trying to throw cold water on the only industry that’s really growing in the state,” Gibson said.