The solar sector received its Christmas present a few days early this year when President Obama signed into law a one-year extension of the U.S. Department of Treasury's Section 1603 program, also known as the cash-grant program or the TGP.
Heralded as a financial lifeline for the industry, the program's extension followed a long, intense lobbying effort from solar stakeholders. But beyond the sighs of relief that, as expected, echoed across the industry last Friday, what does extending the TGP truly mean for solar project finance? How big an influence is the program? What effects has it had so far?
As of Nov. 22, the Treasury had doled out a grand total of $416,184,641 in grants for solar energy projects in the U.S., according to data from the Solar Energy Industries Association (SEIA). The corresponding minimum total investment (the basis upon which the grants were claimed) reached $1,387,282,137.
It is also worth noting that all but eight states received at least one solar grant. Not surprisingly, California took the No. 1 spot, with $143,651,129 in solar-related grants received for 178 projects. The Golden State was followed by East Coast solar powerhouse New Jersey, with $72,183,816 received for 164 projects, and Florida, with $70,710,898 received for 112 projects.
Nationwide, the TGP provided funding to 1,179 solar projects – far more than in any other renewable energy sector. (In comparison, a total of 209 wind energy projects in the U.S. took advantage of the TGP, according to SEIA's data, and 77 projects using other types of renewable energy received funding.)
The data provide sound confirmation of one of the key points stressed by Rhone Resch, president and CEO of SEIA, during a conference call held earlier this month, when the fate of the TGP was still uncertain. ‘2010 is going to be a record year of growth for solar, and it's due in large part to the Treasury grant program,’ Resch said.
Sheer project numbers may provide sufficient evidence of the TGP's worth for members of the solar sector, but at a time when the U.S. economy has yet to fully right itself after the extended recession, the notion of funding a selected industry without offering broader benefits remains largely publicly unacceptable.
Earlier this year, research firm EuPD Research commissioned a study examining the economic impact of the TGP and tax credits for renewable energy equipment manufacturing. (For the purposes of analysis, it should be noted that EuPD Research's study focused on a hypothetical two-year extension of the TGP, rather than the one-year extension that was ultimately signed into law.)
For those who like numbers to back up vague promises of job creation, the research delivered. ‘The baseline scenario is expected to generate a total of 463,000 jobs in 2016, including 113,000 direct solar jobs,’ EuPD Research explained in its report. ‘If the TGP is extended, these numbers will grow to 521,500 and 127,000, respectively.’
In its state-by-state analysis, the company concluded that extending the TGP ‘will spur additional employment growth in most states.’ States that deploy concentrating solar power plants or host factories that build components for these plants stand to benefit the most. Accordingly, New Mexico showed the greatest number of jobs gained over the baseline scenario, although California was demonstrated to remain the No. 1 state for solar jobs.
No single federal incentive program, of course, is an industry panacea, and solar stakeholders can point to a number of additional high-level legislative priorities for 2011 – namely, a national renewable energy standard. But for now, the data on the TGP's past impact and future potential soundly support cause for celebration.