After the Paris COP21: how much longer will the industry continue to rely on incentives?

As negotiators in Paris worked into the weekend finalizing a historic climate deal, one item on the agenda remained clear: […]


As negotiators in Paris worked into the weekend finalizing a historic climate deal, one item on the agenda remained clear: renewable energy will drive the world’s transition to a low carbon economy.​

Even with so much going on at COP21, renewable energy remained the focal point during the discussions. Seemingly every speech touted the many benefits of renewables, and how solar and wind are already achieving grid parity with fossil fuels in an increasing amount of markets.

Among clean energy technologies, solar offers the greatest hope for disrupting the traditional energy grid. As a low cost and low maintenance source of power, it is easily deployable in many locations around the world.

At the start of COP21 India and France announced the mobilization of $1 trillion from a coalition of 200 countries to deploy solar around the world, the International Solar Alliance (ISA), with a particular focus on scaling projects in Latin America and Sub-Saharan Africa.



Indian Prime Minister Narendra Modi put forth nearly $30 million to build the ISA headquarters in New Delhi. The organization seeks more than $400 million in initial pledges from committed countries, driving an increase in harnessing the sun for electricity in the places that need it the most.

The private sector also made big moves, with names like Gates and Zuckerberg joining forces with other major players in the business world. Through their newly-formed Breakthrough Energy Coalition, 28 leaders from around the globe have committed to invest $2 billion over the next five years to ramp up the research and development of renewable energy.

But with costs for solar down more than 70% since 2009 alone, how much longer will the industry continue need to rely on incentives?

In the United States, concerns over the expiration of the federal Investment Tax Credit seem to loom over the entire industry. Opinions about what should happen at the end of 2016 have evoked a wide range of responses. While most support an extension of some kind, Sunnova CEO John Burger has broken away from the pack by calling on legislators to effectively end all subsidies. It’s a vision shared by some other experts, most notably Jigar Shah, who feel that incentives distort markets when the economics and technology can stand on their own.

However, the concern over the pending ITC “cliff” is not without merit. The Solar Energy Industry Association (SEIA) projects the expiration of the ITC would cost the industry up to 100,000 jobs. SEIA President Rhone Resch has warned that while larger companies may be able to remain competitive, small companies will suffer.

The best approach is for the federal government to put in place a program that ramps down the ITC over the next 3 – 5 years. While solar can survive without incentives, the market is bigger when they’re available, which makes rapid expansion possible. And this is exactly the kind of expansion we need to see in a warming world.

Letting the ITC drop off a cliff would do even more damage than the 100,000 lost jobs. Just imagine working in a company that’s just lost half its employees? While some companies would cut especially hard and fast, and survive, many others would move to slow and fail.

The entire industry would be in turmoil, and all the progress made over these last eight years, driven in no small part by the ITC, would be erased.

However the ITC plays out, we’re confident that solar will compromise the backbone of our new energy infrastructure in the 21st Century. Solar is simply the cheapest form of energy available in many places around the world, even without incentives, and the economics become more compelling every year.

From our experiences developing projects on every continent, we’ve seen first-hand how this works. Whether it involves taking advantage of the abundant solar resources in Panama, or using innovative financing for Fortune 500 companies in Beijing, the solutions already exist. From here, we just need to scale them.

This article has been published here with permission by the PVBuzz Media team from the original article. It was edited for publication on Solar Power World Online by Kathie Zipp.

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