On October 13, 2009, while on a West Coast fundraising swing, President Barack Obama touted his administration’s plan to boost renewable energy production and create jobs as a key part of his ‘green’ economic revival strategy. Obama told a sold-out audience at the Center For American Progress that his plan is meant to promote “sustainable, renewable energy sources” such as solar power, creating 10 million new energy-related jobs and reducing greenhouse gas emissions by up to 30 percent by 2030.
His speech comes as the administration is preparing to release its ‘Green Jobs’ plan, which it says will create or save over 30 million jobs nationwide over the next decade by driving down the cost of energy and growing the green economy. Some estimates peg the total cost to taxpayers at over $20 billion.
But how does Obama’s plan to stimulate the solar industry stack up against the competition? We took a close look at the plan and how it compares to what the industry has to offer.
A 10-Year Plan
The bulk of Obama’s plan involves spending over $50 billion on what’s known as the ‘SunShot Initiative.’ This is a research and development program designed to reduce the cost of solar energy by 70% by 2030. The goal is to develop technologies that will make solar energy cost-competitive with traditional energy sources like coal and oil.
“We have to transform our energy economy,” Obama said in his speech. “And part of that involves ending our dependence on oil and coal and investing in new clean energy sources like solar and wind.”
One of the first things the administration did after taking office was to make a major policy change that would stimulate the solar industry. They eliminated all federal tax benefits for solar energy projects, limiting businesses’ ability to lease solar equipment for free or at discounted rates. The new policy is generally seen as a hindrance by the industry, since it makes it more difficult for smaller businesses to enter the market.
Since the end of 2009, over 2,000 MW of new solar capacity has been installed across the country. According to the Solar Energy Industries Association (SEIA), over 83,000 MW of solar power has been installed across the country since 2010. This would make it the largest source of renewable energy in the U.S.
Cost-Competitive With Other Forms Of Energy
According to the White House, the centerpiece of Obama’s plan is the creation of a national renewable energy fund, which it says will create or save over 10 million jobs and reduce greenhouse gas emissions by up to 30 percent. The goal is to drive down the cost of renewable energy and make it competitive with conventional sources like coal and oil, which are currently the most common and cheapest forms of energy available.
One of the main ways the administration says it will achieve this is through increased government spending on research and development. They propose spending $14 billion on clean energy programs and $7 billion on weatherization efforts to make homes more energy-efficient.
Other funding mechanisms in the plan include a 30% federal investment in the National Renewable Energy Lab, which conducts research and development for the energy industry. Another proposal calls for increased funding for rural energy, which would help communities and businesses in non-urban areas that are more remote.
One of the main reasons Obama’s plan has drawn such significant interest is its promise to make solar power cost-competitive with other forms of energy. Many people believe that solar energy is the key to achieving true energy independence, since it is a renewable source and thus has the potential to never run out.
Obama’s plan would make solar energy cost-competitive with other forms of energy by implementing the following strategies:
1. Increased Government Spending On R&D
One of the ways the administration plans to drive down the cost of solar energy is through increased government research and development. They propose spending $7 billion over the next decade on weatherization efforts and $14 billion on clean energy programs.
According to the White House, over 80% of the U.S.’s existing energy inefficient homes could be retrofitted to make them more energy-efficient. The program is called the Weatherization Assistance Program, and it provides working capital and low-cost loans to help homeowners make their homes more energy-efficient.
“Our plan would bring unprecedented investment to our energy system, ensuring new jobs and cutting costs for families and businesses. By investing in energy efficiency upgrades like insulation, airtight sealing, and renewable energy, we can get people the help they need and ensure our energy is affordable and reliable,” Obama said in a press release. “These are real tangible benefits that will make a difference in people’s lives.”
2. Solar Saves Energy
While energy costs can be reduced with increased government spending on R&D, the main way the plan says it will achieve cost-competitiveness is through increased adoption of solar power. To that end, Obama proposes spending $50 billion over the next decade to develop solar technologies that can produce energy more efficiently and cheaply. This would include efforts to integrate solar energy into the grid and developing more efficient solar panels.
The White House predicts that by 2030, solar energy will be cost-competitive with other forms of energy. According to them, this will lead to a 70% decline in electricity prices and a 30% reduction in greenhouse gas emissions.
3. Job Creation
To create or save 10 million jobs as part of the ‘Green Jobs’ plan, the administration says it will need to invest in new energy infrastructure and create demand for high-quality employment. They plan on doing this by doing the following:
a. Increasing the Production Of Renewable Energy
The bulk of the plan involves increasing the production of renewable energy, which the administration says will create or save 10 million jobs and reduce greenhouse gas emissions by up to 30%. They propose spending $50 billion on “smart” energy technology and $14 billion on weatherization efforts to make homes more energy-efficient.
b. Expanding Energy Education And Training
The administration also says it will need to increase energy education and training for workers and students. To that end, they propose spending $7 billion on energy literacy and $5 billion on higher education to create or save over 30 million new jobs. This includes efforts to expand both in-demand and in-less-demand energy skills.
c. Updating Infrastructure For The 21st Century
The administration also believes that existing infrastructure such as power lines, water pipes, and sewage treatment plants need to be updated to ensure they can support the booming renewable energy industry. To that end, they propose spending $7 billion on infrastructure and $2 billion on local governments to create or save over 20 million jobs.
The above represents only a small fraction of Obama’s plan. To see how much money is actually allocated to solar energy in particular, we had to dig deeper and analyze the specific proposals. According to the White House, the total cost to taxpayers is estimated to be over $20 billion.
In terms of job creation, the proposed budget anticipates that between 2020 and 2030, the number of new jobs will grow by 69%. The plan sets a goal of creating or saving 10 million jobs, with over half of these coming from clean energy programs. The goal is to reduce unemployment and drive down the poverty rate.
While Obama’s plan sounds promising, there are a few limitations. For starters, some people question whether or not the plan will do enough to reduce energy costs and boost the industry. Many people believe that the cost of solar energy will still be too high, due to the expensive nature of photovoltaic cells and other technologies.
Some say that the plan is overly reliant on government spending and could create a “subsidy swamp,” since companies that produce solar energy equipment and technology will be the ones competing for government contracts. Lastly, since the plan is for the federal government to lead the way, only certain elements of it will take effect.
To be sure, everyone will have access to energy-efficient appliances and technologies, but there won’t be anywhere for contractors and manufacturers to sell them. This is because the plan will do everything possible to drive down the cost of energy, which could lead to fewer sales and higher prices as a result.
What Is Your Opinion?
Do you think that Obama’s proposed plan to boost the solar industry will help fuel America’s green energy future?