Obama stimulus impact on US and Arizona solar industry

Implications

President Obama’s American Reinvestment and Recovery Act has been making an impact in the short-term; however, it will take several years for the funding initiatives to mature due to the time-consuming nature of solar research and its transfer to the commercial market.

Analysis

President Barack Obama announced recently that more than US $467 million from the American Reinvestment and Recovery Act will be allocated to expand development, deployment and use of geothermal ($350 million) and solar energy ($117 million) throughout the United States. Solar technology development will reap the benefit of $51.5 million, while $40.5 million will be applied to deployment. Projects in this area will address non-technical barriers to solar energy deployment, including grid connection, market barriers and incentives for solar energy adoption in cities, and the shortage of trained solar panel installers. In addition, concentrated solar power technology research and development will get $25.6 million. This funding initiative will focus on improving the reliability of concentrating solar power technologies and enhancing the capabilities of U.S. Department of Energy National Laboratories to provide fundamental test and evaluation support to the solar industry. Independent of federal economic stimulus support, SOLID, an Austrian company (having U.S. and Asian subsidiaries) specializing in large-scale solar installations for a range of applications, recently unveiled its plan for building an plant industrial process hot water plant in Phoenix, Arizona. Since 1992, SOLID has been planning, building, delivering, assembling and operating solar plants in excess of 100 m² around the world, providing hot water, heating rooms and supplying process heat, including district heating. SOLID also designs and constructs solar-chilled water plants, including one of the largest commercial solar cooling projects currently in operation world-wide.  The new plant will be providing hot water for a leading sports drink manufacturing plant that produces a well-known sports drink. The solar plant in Phoenix, which will be completed in mid 2010, is expected to supply over a million kilowatt-hours (kWh) per year of heat energy to the soft drinks factory , as each one of the 892.5 square meters (9605 ft²) of panels will produce 1200 kWh/year. The drink manufacturer also installed a 500-kW solar PV plant on its distribution plant at Tolleson, Arizona at the start of this year and now the two solar plants combined will eventually be generating significant energy conservation and make a case for integrating renewables in the brand’s production processes. It is an interesting concept overall, as most solar energy plans have been directed towards utilities, as opposed to industrial plant operations and power efficiency in that realm. Additional local solar developments are emerging from Arizona Public Service (APS) and Starwood Energy Group Global LLC, who just announced plans to build a 290-megawatt concentrating solar power (CSP) plant in the Harquahala Valley, 75 miles west of Phoenix. Scheduled for completion in 2013, Starwood Solar (I) will be owned by an affiliate of Starwood Energy having all the electricity generated by the facility provided to APS through a long-term purchase power agreement (PPA). Interestingly enough, the nation’s leading defense contractor Lockheed Martin, who owns an image process center in Goodyear, AZ, will design, build and operate the facility. Starwood Solar (I) will be constructed on approximately 1,900 acres and include 3,500 parabolic mirrors that will concentrate solar thermal energy onto a heat transfer fluid. The hot fluid will convert water into steam, which will then turn the plant’s turbines to harness electricity, similar to a traditional power plant. The plant will also use molten salt to store solar energy and continue producing electricity for at least six hours after the sun sets, which coincides with the period of maximal electricity demand, during hot Arizona evenings. Power storage has always been a critical component in solar power plant development efforts. Moreover, this is the second PPA by APS for energy from a concentrating solar plant. In February 2008, APS signed an agreement with one of the world leaders in solar power plants, Abengoa Solar of Spain, for the creation of a 280 megawatt plant, which would collectively generate 800 megawatts of energy for APS and its customers by 2014.  Since APS is a government regulated power provider, it is inclined to emphasize cleaner, green energy technology over unregulated counterpart, Salt River Project (SRP) Electric. On the customer side of the Arizona solar industry, APS also launched an incentive program for home builders to add solar power systems to homes, as either standard or optional equipment. The concept, introduced in April 2009, is tied to the utility company’s Energy Star program. The incentives are similar to those homeowners would receive if they installed the systems during construction via contractors or by themselves. The plan is designed to spur the use of solar power for homes, which eventually will help APS meet state standards, while enhancing energy-efficiency. The program offers incentives of $3 per watt for solar systems linked to the power grid, and 75 cents per watt for solar hot water heaters, which is equivalent to the rates it pays to customers for retrofits. Arizona has been benefitting from its large-scale solar potential in 2009 at both the corporate and consumer level. The infusion of new solar power plants will draw additional private investment into the state and stimulate the lackluster economy, which has been highly reliant on tourism, home construction and real estate over the last 20 years. President Obama’s American Reinvestment and Recovery Act has been making an impact in the short-term; however, it will take several years for the funding initiatives to mature due to the time-consuming nature of solar research and its transfer to the commercial market.

Analyses are solely the work of the authors and have not been edited or endorsed by GLG.

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