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The Solar Challenge In Texas: Lessons learned from Arizona & California

TO GO WITH STORY by Virginie MONTET, USA

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University of Texas at Austin student Alex Miller works on the solar components for a solar home on The Mall in Washington, DC, 04 October 2007, as part of the "Solar Decathalon," which takes place every two years.

Texas is an energy superpower, and not just because of all that oil. Texas produces more natural gas than any other state, and it also leads the nation in wind energy production. But solar? Not so much. From the Fronteras Desk, Lorne Matalon has this look at the economics of solar in the Lone Star State.

Three attempts by the Texas state legislature to give incentives to solar have failed. The economics of solar in Texas stand in contrast to the rest of the southwest. And a prominent Texas regulator says solar should not receive any government assistance to expand its footprint.

The United States Department of Energy says Texas represents 20 per cent of the country’s potential solar output. So why is solar sluggish in Texas? Blame it on mix of policy choices and economics.

“The situation in Texas is quite different,” said Varun Rai, an assistant professor and solar expert at the University of Texas in Austin.

“If you want to compare with with California or Arizona, they have renewable portfolio standards that require a certain amount of electricity to be generated from solar or other renewables.”

That means every year, California and Arizona use more and more solar as demand for electricity rises. But like Rai said, it’s different here.

“In Texas, we do have a renewable portfolio standard. The goal is 10 gigawatts of power by 2025. But that was met in 2010.”

And Rai says little’s taken place since.

"So the overall regulatory context is actually not very strong here," he said.

Although opponents have asked the U.S. Supreme Court to review them, Texas and 29 other states have renewable energy mandates.

But the mandate in Texas doesn’t specifically promote solar. The goal is met principally by wind. And developers are far more attracted to wind where startup costs are significantly less.

The Environmental Defense Fund’s Marita Mirzatuny says that lack of a state solar mandate is stunting solar’s development.

“It creates an air of uncertainty in terms of financing," she said.

And unlike California and Arizona, Texas lacks what’s called net-metering. A net meter spins both forward and backward---recording power produced and power used.

Electricity produced by solar is subtracted from the customer’s monthly bill. Net metering has allowed solar to expand in Arizona and California.

And now the head of the Texas Public Utilities Commission is calling for an end to all energy subsidies. If you install solar, you receive a 30 per cent federal tax credit to defray installation costs.

Larry Perea heads a small, 8-person company called Solar Smart Living. Perea serves Texas and New Mexico.

“Solar needs some incentives still. That 30 per cent tax credit is very important,” said Perea.

But he says the industry will one day not need subsidies.

“As equipment cost goes down, installation costs go down, and energy prices go up, it’s likely to sustain itself without that kind of incentive.”

Despite a lack of state incentives, two Texas towns have embraced solar. Municipally-owned utilities in Austin and San Antonio offer customer rebates.

And they’ve signed long-term contracts with solar producers. California’s Recurrent Energy hascommitted to send even more solar to Austin. First Solar of Arizona has broken ground on a utility-grade solar farm in west Texas.

I spoke with Raymond Rapisand, head of business development at the University of Texas, El Paso’s,Regional Cyber and Energy Security Center. He says several southwest towns aren't waiting for government incentives to forge ahead.

“I’ve seen it happening from El Paso to California where that’s happening now,” he said brimming with enthusiasm.

Rapisand says there are other hopeful signs. In the last legislative session in Texas, businesses were granted the option of paying for solar equipment installation through their property tax. There’s no upfront cost and like a mortgage, it’s paid out over decades.

“Once more people in the business community are aware that, ‘hey I can put solar on my business and put it on my property taxes and I don’t tie up my cash flow, I could get solar,’ “ he concluded.

But the reality is that solar is hampered by deep reserves of cheap natural gas. Oil and gas might give Texas a sense of complacency.

Other states, notably Arizona and California, don’t have that option.


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