Tuesday, August 21, 2007

What is the proper incentive structure for PV in MA?

Dave raised some pretty interesting points in his comment to the previous post, as well as an interesting question: "what is the proper incentive for PV?" There are some pretty strong opinions out there on this subject, but before we jump into those, let's point out that Gov. Deval Patrick made it very clear, that he would like to see MA not only develop technology, but also build and apply it locally (i.e., capture a larger percentage of the entire knowledge-based economy value chain).

Now incentives: On one hand, the “Hermann Scheer fans” like the concept of a “market pull” feed-in tariff, and they tout the several distinct advantages: no need for pouring money into a "CEC module rating" structure, less bureaucracy for the consumer, greater transparency... On the other hand, you have others who favor tax breaks and buy-downs, which don't show up as line items on a utility bill. The debate has raged in CA for some time... and one may wonder if their legislation is more shaped by political realities than by socio-enviro-economic ones.

Looking at MA, you see features of these two different types of incentive mechanism: The incentives for a consumer to purchase a renewable energy system comes in the form of a tax credit and buy-down (flat tax credit of ~$1000 for medium sized systems, and up to $2.75/Wp buy-down incentive, depending on whether some of the main components are made in MA and if the purchase price of home is below a certain low level), and we do pay a line item in our electricity bill (~$6/yr) to fund renewable energy projects around the state (via the Renewable Energy Trust).

I can assure you that folks in high places in the MA state gov't are doing their homework right now, taking several factors (incl. our energy situation at the end of the natural gas pipeline, vision for socioeconomic growth, emissions targets, and historical political baggage) into consideration in order to draft an appropriate and results-producing incentive plan for our beloved MA. Stay tuned, or get involved.

Btw, this topic might make an interesting discussion session during the Energy Conference 3.0, or/and an Energy Club sponsored discussion session... we might even consider distilling and compiling the ideas and recommendations and reporting on them to the appropriate individuals...


Nikhil Garg said...

Tonio and Dave,

Thanks for starting this blog, great idea! With all the resources and brainpower at MIT focused on solar, I am sure this will quickly become a must-read! Look forward to catching up this Fall back on campus.


Barry said...

Great blog.

As someone who's considered re-starting a solar business in MA again (I was there in 1908), the state should understand that a free market approach is best.

Providing an additional incentive for MA manufactured solar panels (which are really a commodity building product) is a bad idea. Professional installers want to work wtih the best and most cost effective products -- and those are unlikely to come from domestic manufacturers.

Tonio Buonassisi said...

Thanks a bunch for your comments.

Concerning the subsidy for MA-produced components (inverter or modules): While one can debate the spirit of the proposal, its practical impact is almost symbolic: it only tallies up to $0.25/Wp - almost in the noise of module supply contract variability. Consequently, it can be cheaper, or almost the same price, to install a system comprised solely of foreign or out-of-state components. (I learned this while evaluating systems for my house.)

Regarding quality concerns: during my time at Evergreen Solar (10/05, 1/06 - 4/07), module reliability and careful packaging & shipping were taken very seriously. A glimmer of this can be gleaned from Evergreen's patents, and the paper by Dr. Andrew Gabor at the last European photovoltaics conference (21st EU-PVSEC) in Dresden.