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Executive roundtable

Incentives present opportunities, challenges for renewable energy industry

Incentives are a mixed bag for the renewable energy industry. While they generate interest in sustainable technologies, business tends to drop off when incentives dry up, experts said Tuesday during a Daily Transcript Executive Roundtable.

Programs such as the California Solar Initiative have been successful in encouraging renewable energy installations in the state. California is the renewable energy leader and is responsible for 70 percent of all solar installations in the United States, said Irene Stillings, executive director of the California Center for Sustainable Energy.

The solar market is well balanced with half of the installations on the commercial side and the other half on homes and apartments, said James Avery, senior vice president of power supply with San Diego Gas & Electric.

“Ultimately, incentives are a good way to get people interested in emerging technologies,” Avery said.

However, incentives have also created problems for the industry.

“You cannot expect the government to continue to pay these incentives,” Stillings said.

Though overall incentives remain constant, the California Solar Initiative fund is dropping quickly, said Stillings, whose organization manages the program in SDG&E territory.

Incentives make investors hesitant to invest in renewable technologies because their sales appear to be dependent upon them, Stillings said.

Solar energy installations are currently only profitable in five states. New Jersey is the most attractive market, due to state incentives, not abundant sunlight, said Dave Gralnik, senior vice president of alternative energy at Jones Lang LaSalle.

“If there are no incentives in Montana, there isn’t going to be any solar in Montana,” said Scott Anders, director of the Energy Policy Initiatives Center.

Barry Toyonga, chief business officer of Kent BioEnergy Corp., disagreed. The pharmaceutical industry developed without such incentives, he said. The problem lies in the nation’s new conservative financial attitude.

“The great challenge is the hesitancy on the part of investors,” Toyonaga said.

Passage of a federal energy policy would encourage investment in the U.S. renewable energy market, Anders said. The policy should include a federal renewable portfolio standard and a mechanism to price carbon, such as a carbon tax or cap-and-trade policy.

Such a policy would also resolve the state’s problems surrounding Assembly Bill 32, Avery said. An initiative to repeal the state’s comprehensive global warming legislation will be present on the November ballot.

Enforcing the legislation in California alone may cause the state to lose a large number of jobs, Avery said. If the policy is not enforced nationwide, many businesses will likely move out of state.

“Why should we continue to carry the burden from the rest of the nation?” Avery said.

Enforcing the Renewable Portfolio Standard alone will bring California near achieving its emissions goal, Avery said. The legislation requires utilities generate 20 percent of their energy from renewable sources by 2020.

AB 32 is emblematic of the state’s disregard for the business community, Stillings said.

“California is a horrible state to do business in,” Stillings said.

The state could encourage investment in renewable energy by instituting a policy that allowed energy generated in one place to be applied against other meters, said Gralnik.

For example, a company may have a lot of room atop a warehouse to install solar panels, but doing so does not pencil out because consumption is low. However, if the company could apply the energy generated against meters at its retail stores where consumption is greater, there would be a cost benefit.

Assembly Bill 2466 allows a public agency to apply one of its meters against another meter against another, said Sophie Akins, a partner at law firm Best Best & Krieger, which sponsored the roundtable.

“The problem with that, as I understand, is it just hasn’t penciled out for solar projects,” Akins said.

SDG&E has submitted an application to the California Public Utility Commission to allow the utility to buy excess power generated at sites where consumption is low, Avery said.

However, the policy may discourage some companies from installing renewable energy systems, Anders said. Under the scheme, SDG&E would own the power generated and the company could not take credit for going green -- the motivation for many to install solar.

Currently, most businesses and homeowners right-size their solar energy systems, or configure them not to generate more power than needed at the site, Anders said.

Solar energy is the most popular source of renewable energy in California, however consumers need to look at their overall energy portfolio. A smaller investment can increase the efficiency of a building by more than 20 percent, said Nathalie Osborn, business development manager at McKinstry.

A solution that meets the nation’s energy needs will incorporate an array of energy generation technologies, said Bruce Rogow, chair of the San Diego Renewable Energy Society.

“Renewable energy is beginning to be viewed by the general public as a solution to a larger problem,” Rogow said.

*****

ROUNDTABLE PARTICIPANTS

* Sophie Akins, Partner, BB&K (sponsor);

* Dave Gralnik, Senior VP, Alternative Energy, Jones Lang LaSalle;

* Scott Anders, Director, Energy Policy Initiatives Center;

* Peter Meisen, Founder, President, Global Energy Network Institute;

* Bruce Rogow, Chair, San Diego Renewable Energy Society;

* Barry Toyonaga, Chief Business Officer, Kent BioEnergy Corp.;

* Irene Stillings, Executive Director, Center for Sustainable Energy California; and,

* Nathalie Osborn, Business Development, McKinstry;

* Jim Avery, Senior Vice President of Power Supply, San Diego Gas & Electric.

*****

Related article: The legal side of renewable energy

Video: Interview with Jim Avery


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