Congress Needs to Take a Shine to Solar

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Monopoly-as-Usual?

The best way to create cheaper and cleaner domestic power is to facilitate competition from renewable energy sources. To do this, we must address some structural issues revealed during the energy bill debate. For starters, we need to decide who should be allowed to provide renewable energy solutions to U.S. citizens and businesses. The current setup threatens to enable only traditional utilities to deploy new technologies rather than opening the way for new providers and even users themselves to become power suppliers. Are we interested in creating energy competition, or are we satisfied with monopoly-as-usual?

In the failed Senate bill, Congress was on the verge of putting real meaning to renewable energy competition with the proposed extension of the federal tax incentives for solar energy. Set to expire at the end of 2008, the 30% tax credit would have been extended to the end of 2016 and modified to allow electric utilities themselves to claim the credit, opening the door for them to participate in the commercial deployment of solar energy.

Best Practices

Yet even if it had passed into law, that provision would not have been sufficient to break down barriers to creating real market competition from solar energy. The reason: Today, many traditional utilities would still be able to exploit regulatory and structural obstacles that slow or block third-party providers of solar energy from selling their excess electricity. These include inconsistent, state-by-state rules governing how solar producers can connect to the traditional grid, as well as the varying limits on the solar capacity. The result is that Staples (SPLS), Wal-Mart (WMT), and other companies are deploying solar rooftop systems in California and New Jersey, where the rules are favorable, but won't do the same in Arizona.

In other words, when a state gives its traditional utilities an unambiguous signal about the need for more solar energy, such as it has in California and Colorado, the result is aggressive deployment. In such states, traditional energy providers are setting a strong example by adopting best practices for interconnection and metering with solar energy. Notably, by 2008, Xcel Energy will actually purchase power from an 8.22-megawatt solar plant being built in Alamosa, Colo.

But when the rules are not clear, as in Arizona and even Florida (the Sunshine State), very little solar generating capacity is deployed. Should utilities be allowed to take advantage of tax credits for deploying their own solar capacity while this regulatory patchwork remains in place, the effect would be to empower them to capture market share with one hand while keeping competition out with the other.

To avert such an outcome, Congress needs to adopt national best practices for interconnection, metering, and rates similar to those implemented in Colorado, New Jersey, Maryland, and California. In short, if utilities are going to be allowed federal tax incentives to enter the solar market, then that market should be open to anyone else wanting to serve it. Let's get on with using this moment in history to create an energy policy that promotes competition and speeds the deployment of clean, cheap, local sources of energy rather than encouraging more of the same from last century's lobbyists.

Travis Bradford, author of Solar Revolution (MIT Press, 2006), is the founder and president of the Prometheus Institute for Sustainable Development in Cambridge, Mass.