Some of us remember the surge in solar and other renewable technologies in the late 70s and early 80s, and how, when incentives for them gradually disappeared, the market seemed to go with it. A large part of the problem, at least regarding residential solar, was further hampered by the surge in solar contractors, who seemed to pop up overnight and were out to make a quick buck. Without a strong professional image, the industry had very little to prop itself up with when the tax credits went away. What is the risk of this history repeating itself?

The History

In the early 1970s, escalating oil prices led to a lot of research into improving energy efficiency and finding renewable resources. With that background, President Carter formed the U.S. Department of Energy in 1977.

The movement started out strong enough. In “Renewable Energy Policies and Markets in the United States,” coauthors Eric Martinot, Ryan Wiser, and Jan Hamrin (affiliated with the Center for Resource Solutions of San Francisco) point out that “the introduction of the Public Utilities Regulatory Policy Act (PURPA) of 1978 required utilities to purchase power from qualifying third parties at the utility’s avoided cost.” Because of “California’s interpretation of PURPA and favorable tax incentives, 12,000 MW of renewable power was constructed in the United States during the 1980s,” they wrote.

However, several factors caused renewable energy markets to stagnate sharply in the mid-80s. These included “a long period of electric power sector restructuring, repeal of federal and state incentives, and sharply lower natural gas prices,” stated the report.

Now we have entered a period that some have optimistically called a renaissance for solar thermal electric plants in the United States. But do we run the risk of relying too heavily on rebates again? If they were to vanish tomorrow, would the market evaporate?

Near Zero

Charles Culp, P.E., Ph.D., LEED-AP, professor — Department of Architecture and associate director, Energy Systems Laboratory, Texas A&M University (TAMU), learned about incorporating renewable and sustainable technologies through the process of building his own three homes. The first, he said, was average; the second experience was with “the builder from hades”; and “the third builder was from heaven.”

The home is very efficient. However, it did not achieve net zero status, which states that from Jan. 1-Dec. 31, the building generates at least as much energy as it uses, Culp explained. “At times the PV can feed back to the grid,” he said, though not always. “It’s a very good goal as long as it can be done cost effectively.”

The house that he wants to build with grad students may be a smaller, affordable home (1,000-1,450 square feet). A normal house in the area ranges from 1,000 to 2,500 square feet, he said. His redesign would include strategies like removing hallways and creating an atrium; “then we can move the air slowly to move it around.

“We think we can get the fundamental energy consumption down to 50 percent of what a normal house uses,” Culp said. “Let’s use as much energy as we can before we throw it outside.” A 1,500-square-foot house for the project would use a propane chiller and chilled-beam technology, plus zoning.

The green home market today still has a ways to go, he said. Development, field testing, market acceptance, inspections, and of course builder acceptance are needed for large-scale green system application.

“PV prices are dropping like crazy,” he continued. “I was told by a PV manufacturer ahead of the curve that in three to five years it will be cost competitive with grid power. I assume that this means increasing costs of electricity and lower costs of PV. At that point it makes sense to go PV as much as possible and let the grid handle the excess.”

To make costs still more competitive, “I think we’ll get to the point where the installation itself will be the focus,” Culp said. “I think we’re getting there” using clip-on, bolt-down methods.

Self Sustaining?

The $64,000 question, as the older folks say, is whether the current market for sustainable technology could sustain itself in the absence of rebates and incentives.

“Good question,” said Culp. “Don’t know.” There are good reasons now to harvest solar power, though mainly due to incentives and rebates. Plus, “It will generate power and your home value goes up. If the rebates went away, it wouldn’t be as attractive,” he continued. “But if the cost of the collectors goes down, it will get pretty interesting.”

“I’ve been in this industry over 40 years,” said Steve Howard, president of The ACT Group. “It’s déjà vu, the solar industry, especially living in Phoenix where it was a big deal. I took a course and it was fascinating, and I got on that bandwagon.

“My crystal ball says long term, every industry must be able to prosper wholly within the boundaries of the free enterprise system. Currently solar, wind, and ethanol (with huge federal subsidies) are not viable for the economy as a whole if they must rely on any type of good-intentioned government subsidies or rebates.”

Why should we hope the results will be different this time?

“There’s always hope,” Culp said. Since the mid-80s, “Our awareness of energy is really starting to develop. The part that will make us see the biggest difference, though, is cost. I think we will see growth in the industry. I think people will spend money on it. But I really do think it’s a cost-driven thing. In Europe they treat it differently.”

Culp said the area he focuses on, existing building commissioning, can save 10-20 percent of a building’s total energy use (which means about 20-40 percent of the HVAC energy use). “If we could apply this to every building in the U.S. or world, it would be real savings, but would not solve the increasing energy use issue.

“The reality is that this will take 10 to 20 years to really apply widely because applying the technology requires highly skilled people to do this effectively,” he said. “Add this to the fact that buildings have a 50-plus-year life, and we have a real challenge.”

People have an unfortunate tendency to think in the short term, which can lead to short-sighted solutions, Howard said. Back in the day, “Everybody and his brother got into solar. When the government’s giving away free money, worms come out of the woodwork … As soon as these rebates are gone, the solar industry will be a struggle. Some consumers will buy it because they are adopters, environmentalists, etc., and that’s where our company comes in, to train contractors on who their customers are and what their motives are. From our standpoint, these changes are good.”

There also are requirements for utilities to use a certain percentage of renewables, Howard pointed out, so the market will be there. How the utilities achieve this is not stipulated.

Personal Power

Howard, who lives in Arizona, resides in an adobe house built in the 1870s. It uses passive solar and is oriented North-South, “so the only time we get any direct solar is in wintertime,” he said. The system combines in-floor radiant heat with the utility’s time-of-day rate; “at night we heat up the gypcrete for infloor radiant, and it warms the house all day long.”

The home’s 22-inch-thick walls mean that even without conditioning, “even in summer, you can walk in and it’s 10 degrees cooler inside. In wintertime it’ll get down in the 30s outside, and it’s in the 60s inside.” It also utilizes small windows, thick walls, and natural materials (creek mud and stone).

“There’s a super high-efficiency market for smart dealers,” he said. “It doesn’t make sense here to have 13 SEER when you could have 20.” But it requires more than technical know how; financing and knowledge of the rebate programs are crucial. “It requires a sophisticated dealer who is available to help the customer.”

These days Howard is doing what he has been doing all along: “training contractors on selling value, not price.” He said the definition of value has changed. “We used to have a box that put out hot or cold filtered air. Now we have variable-speed, zone-controlled, total-comfort systems. Selling geothermal or solar, the value of the equation has changed; now it’s the ability to make your own power,” Howard said.

“It’s an emotional high. The customer’s motives have changed. It could be independence, ego, or simply going green. They feel good because they’re doing the right thing. If I’m buying a system and the saleperson really understands my motives, there is a chemical response that makes the sale go through.

“You don’t have to go into thermodynamics,” Howard said. “But you do need to understand the technology, so they can transfer that to the benefits the customer wants.”

Now and Then

“I think the thing that’s different now is that every buyer has different motives for different products,” he continued. “If you can tap into that, you can find your buyers. We need to understand the benefits and match those to what the buyers want.”

In “Renewable Energy Policies and Markets in the United States,” the authors spelled out a few lessons from our less-than-sustainable past:

1. Policy consistency is essential. U.S. renewable energy policy has suffered from inconsistency as incentives have been repeatedly enacted for short periods of time and then suspended. This stop-and-go tendency has seriously hampered the development of markets and industries.

2. The major renewable energy markets are overseas, particularly in Europe and Japan. A U.S. market would benefit U.S. manufacturers.

3. State-level policies are needed for market expansion, with complementary federal policies.

4. Who owns and maintains the power transmission system when harvested renewable power is placed on the grid? That needs to be worked out.

Publication date: 09/19/2011