Tax Credit Crunch Time for Concentrated Solar Power
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With less than one percent of New Mexico's energy production coming from renewable sources, concentrated solar power (CSP) and other solar technologies present us with an opportunity to produce clean and renewable energy from a very abundant state source, the sun.
On July 2nd a Senate Energy and Natural Resources Committee hearing was held at Sandia Labs to discuss the future of, and some of the impediments to, developing renewable sources of energy, primarily CSP, in the U.S., Southwest, and New Mexico. Senator Jeff Bingaman and Senator Pete Domenici, Chairman and Ranking Member respectively of the committee, headed the hearing. Senator Bernie Sanders of Vermont, who claims the title Solar Power Senator on his homepage, joined the New Mexico Senators to speak and ask questions. Testifying at the hearing were representatives from PNM, Sandia National Labs, Mesa del Sol, Abengoa Solar, Schott Solar, and Pacific Gas & Electric.
CSP is a type of solar thermal energy, the process of using solar radiation to heat a source.
This technology is different from photovoltaics, which generate electricity directly when photons from the sun knock electrons loose in solar cells. CSP systems use mirrors that track the sun to concentrate solar radiation on a focal point (thermal receiver). The heat produced is then used to generate electricity through conventional methods such as a steam turbine.
There are a number of CSP systems but only three are widely used today; the parabolic trough, parabolic dish and solar power tower.
The parabolic trough and dish are similar in design; both systems use a parabolic reflector, mirrors aligned in a parabola U-shape, to concentrate solar radiation onto a solar receiver where synthetic oil is stored that is then routed to produce steam for a turbine.
Solar power towers on the other hand are much larger systems. Hundreds of huge sun-tracking mirrors called heliostats direct sunlight to a storage tank surrounded by a solar receiver mounted on a tower. One type of solar power tower has liquid salt pumped to the solar receiver tank to be heated. The heated liquid salt can then be stored and later pumped to a steam generator when needed.
Some notable advantages of CSP:
* Energy produced by CSP systems can be stored, allowing electricity generation long after the sun has gone down.
* Best bang for the buck among solar technologies at around 16 cents/kWh.
* Technology for CSP is far from developed and projected future costs could be as low as 6 cents/kWh.
* The major components are steel and mirrors, making CSP systems reliable and relatively cheap to build, although upfront costs are still expensive.
Despite the extraordinary potential of CSP to provide cheap, reliable renewable energy, industry representatives at the hearing expressed a number of concerns for the future of solar power. Chief among them was the expiration of the federal Renewable Tax Credits (RTC), set to expire this December. Renewable energy companies can claim one of two tax credits, either the Production Tax Credit (PTC) or the Investment Tax Credit (ITC).
The PTC, which was enacted in 1992 and has been extended numerous times, currently provides renewable energy companies with 1.5¢ of federal income tax reductions for every kilowatt-hour of energy produced. The on-again off-again renewal of the PTC proves just how important these tax credits are, with production dropping steeply when the tax credit expires and subsequently booming when the tax credit is renewed.
The ITC reduces taxes by 30 percent, helping to offset the large initial capital costs renewable energy projects often face. A bill introduced June 17th that would have extended the ITC was filibustered on the floor of the Senate, largely due to debate over how to finance renewable energy tax credits, which included the outrageous suggestion of cutting oil subsidies to fund them.
Representatives at the hearing repeatedly stated that without an eight-year extension of the RTC, new plants will not be financed, technological development will slow substantially, and investors will look elsewhere. But by extending the RTC, renewable sources of energy will be economically competitive, investors will have a clear signal to invest in the industry, and the tax credits will pay for themselves with the growth of new jobs. Senator Bingaman and Senator Domenici agreed on the need for bipartisanship to extend the tax credits.
The cost to produce electricity from fossil fuel sources might be cheaper now, but as the price of fossil fuels continues to climb, the costs of renewable sources will fall as the technology is developed. Clearly, we have a winner.
New Mexico already has Sandia Labs and SkyFuel, two leading innovators in the field of CSP. Investment in New Mexico's solar future from companies like Abengoa Solar and Schott Solar is strong, but without the extension of the RTC, both companies fear that their growth in New Mexico will slow or even stop.
Related Links:
NM Independent - Shadow Over Solar
GoSun Solutions.com
Politico - Without tax breaks, solar future looks cloudy
On July 2nd a Senate Energy and Natural Resources Committee hearing was held at Sandia Labs to discuss the future of, and some of the impediments to, developing renewable sources of energy, primarily CSP, in the U.S., Southwest, and New Mexico. Senator Jeff Bingaman and Senator Pete Domenici, Chairman and Ranking Member respectively of the committee, headed the hearing. Senator Bernie Sanders of Vermont, who claims the title Solar Power Senator on his homepage, joined the New Mexico Senators to speak and ask questions. Testifying at the hearing were representatives from PNM, Sandia National Labs, Mesa del Sol, Abengoa Solar, Schott Solar, and Pacific Gas & Electric.
CSP is a type of solar thermal energy, the process of using solar radiation to heat a source.
This technology is different from photovoltaics, which generate electricity directly when photons from the sun knock electrons loose in solar cells. CSP systems use mirrors that track the sun to concentrate solar radiation on a focal point (thermal receiver). The heat produced is then used to generate electricity through conventional methods such as a steam turbine.
There are a number of CSP systems but only three are widely used today; the parabolic trough, parabolic dish and solar power tower.
The parabolic trough and dish are similar in design; both systems use a parabolic reflector, mirrors aligned in a parabola U-shape, to concentrate solar radiation onto a solar receiver where synthetic oil is stored that is then routed to produce steam for a turbine.
Solar power towers on the other hand are much larger systems. Hundreds of huge sun-tracking mirrors called heliostats direct sunlight to a storage tank surrounded by a solar receiver mounted on a tower. One type of solar power tower has liquid salt pumped to the solar receiver tank to be heated. The heated liquid salt can then be stored and later pumped to a steam generator when needed.
Some notable advantages of CSP:
* Energy produced by CSP systems can be stored, allowing electricity generation long after the sun has gone down.
* Best bang for the buck among solar technologies at around 16 cents/kWh.
* Technology for CSP is far from developed and projected future costs could be as low as 6 cents/kWh.
* The major components are steel and mirrors, making CSP systems reliable and relatively cheap to build, although upfront costs are still expensive.
Despite the extraordinary potential of CSP to provide cheap, reliable renewable energy, industry representatives at the hearing expressed a number of concerns for the future of solar power. Chief among them was the expiration of the federal Renewable Tax Credits (RTC), set to expire this December. Renewable energy companies can claim one of two tax credits, either the Production Tax Credit (PTC) or the Investment Tax Credit (ITC).
The PTC, which was enacted in 1992 and has been extended numerous times, currently provides renewable energy companies with 1.5¢ of federal income tax reductions for every kilowatt-hour of energy produced. The on-again off-again renewal of the PTC proves just how important these tax credits are, with production dropping steeply when the tax credit expires and subsequently booming when the tax credit is renewed.
The ITC reduces taxes by 30 percent, helping to offset the large initial capital costs renewable energy projects often face. A bill introduced June 17th that would have extended the ITC was filibustered on the floor of the Senate, largely due to debate over how to finance renewable energy tax credits, which included the outrageous suggestion of cutting oil subsidies to fund them.
Representatives at the hearing repeatedly stated that without an eight-year extension of the RTC, new plants will not be financed, technological development will slow substantially, and investors will look elsewhere. But by extending the RTC, renewable sources of energy will be economically competitive, investors will have a clear signal to invest in the industry, and the tax credits will pay for themselves with the growth of new jobs. Senator Bingaman and Senator Domenici agreed on the need for bipartisanship to extend the tax credits.
The cost to produce electricity from fossil fuel sources might be cheaper now, but as the price of fossil fuels continues to climb, the costs of renewable sources will fall as the technology is developed. Clearly, we have a winner.
New Mexico already has Sandia Labs and SkyFuel, two leading innovators in the field of CSP. Investment in New Mexico's solar future from companies like Abengoa Solar and Schott Solar is strong, but without the extension of the RTC, both companies fear that their growth in New Mexico will slow or even stop.
Related Links:
NM Independent - Shadow Over Solar
GoSun Solutions.com
Politico - Without tax breaks, solar future looks cloudy
