Clouds on the horizon as Solar Power International opens in Southern California

This year's Solar Power International trade show got off to a strong start. Based on registration numbers, organizers are expecting 15,000 visitors, a 25% increase over the 12,000 who attended the previous year.

 

The mood at the opening day of the show was doubtless influenced by developments in the prior week. First, U.S. Vice President Joseph Biden confirmed that he will speak at the conference. Second, on the last day of the session, California's legislature passed a bill to require that the state's utilities procure 50% of their electricity from renewable energy sources by 2030 – the second-strongest mandate in the nation.

 

The show also comes during a boom time for U.S. solar, particularly in the utility-scale segment. In its latest quarterly report, GTM Research estimates that over 5 GW of solar is currently under construction in the United States, driven by a rush to complete projects before the drop-down of the investment tax credit (ITC).

 

However, this boom is inseparable from a pending collapse in the market come 2017 if the ITC is not extended. In the conference's opening session, Solar Energy Industries Association (SEIA) spoke in no uncertain terms about the danger that the industry was facing, calling ITC extension the industry's “biggest policy challenge yet.”

 

“I think you need to look at the wind industry to know what a dramatic impact this can have,” warned SEIA CEO Rhone Resch, referring to the multiple times that the Production Tax Credit has expired.

 

Resch cited numbers from a new report by Bloomberg New Energy Finance, which predicts that U.S. installed solar capacity will fall from over 11 GW in 2016 to 3.4 GW in 2017 if the ITC is not extended. With a five year extension, the report finds a much less severe impact from a similar drop-down of tax credit levels in 2022.

 

The report also finds that the pending decline in the ITC in 2017 will be accompanied by the loss of 80,000 jobs, or more than half the current total. With fallout from related industries, this number would be more than 100,000 jobs.

 

During the conference's opening session, SEIA officials called on those in the audience to get active in the campaign for ITC extension, including by joining the organization. Resch also revealed that there is currently a bill in the U.S. House to extend the ITC for five years and allow projects under construction by the end of the term to access the credit, with 40 co-signers.

 

However, he notes that this legislation is unlikely to pass on its own, and will probably be incorporated into either an extenders package or an omnibus bill, subject to the political uncertainties of congressional horse-trading.

 

In the opening session SEIA also spoke to the Obama Administration's Clean Power Plan. The organization notes that while the plan is a very positive step for solar, that the real test will be implementation at the state level.

 

“There's 50 states worth of work to make that a reality,” noted SEIA Board Chair Nat Kreamer, who also serves as CEO of Clean Power Finance.

 

Furthermore, the effects of the Clean Power Plan will not be immediate. “You're really not looking at anything until 2020, 2022 or beyond,” explained Kreamer.

 

These warnings did little to dampen the crowd's enthusiasm. It is still boom time in the U.S. solar industry, even if clock is ticking. Resch also notes that the ITC extension is already starting to affect the industry, as no one is planning larger solar projects that cannot be completed in sixteen months' time.

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