Combine solar power purchase agreements, the Department of Defense "Buy American" Act, a well-meaning but ill-informed Congress, and a solar industry in flux. Add a pinch of jingoism and shake well. What do you get?
A big hot mess.
Earlier this month, The Buy American Solar Amendment passed the Senate. Sponsored by Democratic Senators Tom Udall (D-N.M.) and Charles E. Schumer (D-N.Y.), and as reported on Udall's website, the amendment is meant to close loopholes in the Buy American Act, part of the 2012 National Defense Authorization Act.
The statement on the Senator's website includes this passage:
The Department of Defense is required to comply with the Buy American Act and purchase American-made goods, including solar panels. In practice, however, the Buy American requirements often do not apply to solar projects at military facilities because third-party producers procure, install and maintain solar panels, financed by innovative long-term energy contracts with the department. Since the Department of Defense buys the power, and not necessarily the solar panels, a loophole in Buy American requirements has emerged where the military can purchase power from producers who do not use Buy American compliant panels.
The Buy American Solar Amendment will close this loophole and create a level playing field for U.S. solar manufacturers.
The "American" solar manufacturers listed as supporters of the Act include: Sharp Electronics (Japanese), Schott North America (German), Sanyo North America (Japanese), Solar World Industries America (German), Suniva (American), Konarka Technologies (American), Kyocera Solar (Japanese), and United Solar Ovonic (American). Of the three actual American companies, United Solar Ovonic is on its last legs, Konarka is efficiency-challenged, and Suniva is still ramping up to scale. The other "American" firms do
not have a U.S. manufacturing presence. Note that the actual American solar firms First Solar and SunPower are not listed as supporters.
Panels made by China's Suntech at its Goodyear, Arizona factory are Buy American Act-compliant but will soon likely have a tariff upon them because of their Chinese cell content.
In his press release, Senator Udall was quoted as saying, "We are closing this loophole so that the Department of Defense always buys American when it funds solar projects for its energy security. China does not use U.S. solar panels at its military bases, so why should we use theirs at ours?"
Senator Schumer said, "When it comes to charging up the American manufacturing sector and slashing our dependence on sources of foreign power, U.S. defense facilities should be using American-made solar panels in their clean energy initiatives without exception," adding, "The 'Buy American' requirement could not have been clearer, and I'm thrilled that the Senate has closed the loophole that allows foreign solar panel manufacturers to unfairly compete their way into our defense facilities."
The release goes on to say:
The U.S. solar industry employs more than 100,000 Americans, and is one of the fastest growing sectors in the economy.
That's the point -- and this is where the senators might be hoisted on their own petard. More than half of those 100,000 jobs are not manufacturing jobs. They are in fact, downstream jobs in installation, development, project engineering and the like. For every megawatt of solar panels manufactured, more jobs are created downstream than in the actual manufacturing itself. And it's low-cost solar panels that have spurred adoption of solar roofs.
Which brings us to the example of the SolarStrong project. SolarStrong is the largest residential solar project in the U.S., and possibly the world. The program has SolarCity partnered with military housing developers and would install as many as 160,000 solar rooftops on privatized military housing across the country. (There were only 166,000 photovoltaic installations in the U.S. at the end of Q1 2011, according to GTM Research.) Bank of America is the financing partner.
The project in its current state is about 300 megawatts and about 120,000 housing units, with a total cost of $1 billion over the course of the five-year project life, $350 million of which will come from the bank.
Lyndon Rive, the CEO of SolarCity, noted that "cost per kilowatt-hour is the only number that matters" and that the price for customers in the SolarStrong program will be at or below the current cost of electricity.
The only way that happens is with low-cost solar panels.
SolarCity expects SolarStrong to create thousands of temporary and full-time jobs in the downstream market. The company hopes to provide as many of those jobs as possible to U.S. veterans and military family members. On the subject of jobs, Rive notes that the vast majority of U.S. solar jobs are "focused on the delivery" of solar rather than the manufacturing of hardware. Rive sees the adoption of solar being slowed if a tariff is placed on low-priced solar panels.
Or if installers are compelled to use higher-price, domestically made panels from Japanese and German companies as per the Buy American Solar Amendment.