Time to recognize solar's huge potential in Iowa

Iowa’s potential to be the “Saudi Arabia of wind” is widely acknowledged, but the state’s capacity to harness solar power for producing electricity or thermal heating is a better-kept secret. A five-year program to install 300 megawatts of solar power could create nearly 5,000 jobs and add more than $332 million in value to Iowa’s economy, according to a new report commissioned by the Iowa Policy Project, the Iowa Environmental Council, Environmental Law and Policy Center and the Vote Solar Initiative.

After the jump I’ve posted the summary of the new report. Click here to download the full report (18-page pdf).

Iowa State University economist Dave Swenson (known to be cautious about calculating economic impacts) did the analysis for the report.

In his analysis, ISU’s Swenson estimated during the five years of installing 300 MW of solar the average annual impact would be:

• $174 million value added to the economy

• $302 million increased industrial output

• $99 million increased labor income.

Those numbers include sizable indirect effects – spinoff economic effects caused by the initial investment.

“Growth in the solar industry means direct jobs for more than just rooftop installers but also for electricians, builders, contractors, engineers, technicians, financiers, lawyers, marketers and salespeople,” the report stated.

Swenson’s estimate does not include new manufacturing jobs in the solar industry that might be created if Iowa adopted incentives to produce more solar power.

State Senator Joe Bolkcom has introduced a bill to spur more solar installation in Iowa:

Other states have jump-started the growth of solar panel manufacturers by providing tax credits to businesses and homeowners who buy from manufacturers in their states, Bolkcom said.

His proposal in Senate File 99 is not that specific, but it would provide up to $10 million in state-sponsored rebates to home-owners and businesses to help defray the cost of installing solar energy panels. The grants would cover 30 percent of the cost of installation, up to a maximum of $15,000 for farms and businesses and up to $3,000 for residences.

Later this month, the Iowa Policy Project’s David Osterberg is planning to take some state legislators on a tour of solar sites in Waterloo, Cedar Falls, Cedar Rapids and Iowa City. I hope to see bipartisan support for expanding solar power generation here.

So far, the main energy policy moving through the Iowa legislature during the 2011 session relates to nuclear power. In 2010, lawmakers approved a bill to allow MidAmerican Energy “to pass along up to $5 million per year in study expenses to customers for three years” as it studies potential locations for a new nuclear power plant. Now MidAmerican and utility industry groups are pushing “Construction Work in Progress” legislation that “would allow Iowa public utilities to charge ratepayers higher rates now to cover potential future costs of a yet to be constructed nuclear reactor, even if such a reactor is never built.” The Iowa House Commerce Committee unanimously approved one of the bills this week, and a companion bill has support in the Iowa Senate. Paul Deaton explains here and here why these bills are a bad idea. I recommend clicking through to read both posts, but here’s an excerpt:

The State of Georgia may build the first new nuclear plant in 30 years and adopted a CWIP [Construction Work in Progress] . Iowa legislators should study the impact the Georgia CWIP has on ratepayers. Other CWIPs were passed in South Carolina and Florida and they should also be studied. People familiar with the Georgia CWIP say Iowa’s proposed legislation shifts more risk to customers than does Georgia. There are other things to consider regarding CWIPs before the legislature passes one.

It boils down to this. If MidAmerican Energy builds a nuclear power generating station, for each billion dollars in costs, on average, $1,597 will be passed along to each of MidAmerican’s 626,223 Iowa retail customers. Are Iowa households ready for this? Are Iowa households ready to foot the bill knowing that a nuclear power generating station may never be built?

Nuclear power is expensive compared to other methods for generating electricity. It is “not viable” without huge government subsidies and “shifts financial risks to taxpayers.”

Iowa could expand solar power without passing along millions of dollars in costs to utility company customers. Hundreds of megawatts of solar power generating capacity could be brought online in Iowa over a few years, whereas a new nuclear plant would not be completed until 2020. Moreover, a nuclear plant would probably employ several hundred people in one locality. (Iowa’s only existing nuclear power plant employs roughly 500 people in the Palo area.) Ramping up Iowa’s solar capacity could create jobs for thousands of people spread out all over the state, wherever buildings are retrofitted to accommodate solar power.

Any comments about energy policy are welcome in this thread.

UPDATE: Today’s Des Moines Register contains an outstanding guest piece by Mark Cooper, senior fellow for economic analysis at Vermont Law School’s Institute for Energy and the Environment. Click through to read the whole thing. I’ve posted some excerpts below.

Press release:

Shining Bright: Growing Solar Jobs in Iowa

News Release – Report: Solar Investment Would Yield Jobs, More for Iowa Economy

March 8, 2011

Full report (18-page PDF)

News release (2-page PDF)

DES MOINES, Iowa – A new report shows Iowa could create thousands of new jobs and economic benefits by developing solar power with state policies that ensure Iowa reaps solar’s full rewards.

“Iowa has a choice to make: sit on the sidelines and watch as surrounding states attract the investment and jobs solar will inevitably bring, or aggressively pursue solar energy as it did decades ago with wind and become a national leader,” according to the report.

The report included job-impact analysis by Iowa State University researcher David Swenson, who found that during the fifth year of a program to install 300 megawatts of solar power in Iowa, the equivalent of almost 5,000 jobs would be created and over $332 million in value added to Iowa’s economy.

“The job creation potential of the solar industry is surprisingly large,” said David Osterberg, executive director of the nonpartisan Iowa Policy Project, which produced the report in collaboration with the Iowa Environmental Council, Environmental Law and Policy Center and the Vote Solar Initiative.

A solar industry developer, former Iowa and NFL football star Tim Dwight, said the report confirms what he has seen in the energy marketplace.

“This is the right time for Iowa to strike. Everyone is looking for a way to create jobs, and the solar industry is a good investment here in Iowa where we already rely on the sun to power crop growth,” Dwight said.

Iowa had 3,675 MW of wind power in 2010, growing from just 243 MW of capacity in 2000. Three hundred megawatts of solar, Osterberg said, would be larger than the largest wind farm in Iowa.

“It is very doable. But it will take a commitment from policymakers and interest in private industry to make it happen. Iowa would be a big winner,” Osterberg said.

“Wind power has created huge benefits for Iowa, and solar can do the same,” said Steve Falck, senior policy advocate at the Environmental Law & Policy Center. “Now is the time for the Legislature to step up to the plate and turn this job-creating potential into reality.”

The report noted that solar markets are flourishing where good policy has made solar energy accessible and offered reasonable incentives to drive private investment in solar technology. “Taxpayers should demand a return with any investment, and solar offers it,” Falck said.

In his analysis, ISU’s Swenson estimated during the five years of installing 300 MW of solar the average annual impact would be:

• $174 million value added to the economy

• $302 million increased industrial output

• $99 million increased labor income.

Those numbers include sizable indirect effects – spinoff economic effects caused by the initial investment.

“Growth in the solar industry means direct jobs for more than just rooftop installers but also for electricians, builders, contractors, engineers, technicians, financiers, lawyers, marketers and salespeople,” the report stated.

Osterberg said it was important to turn to Swenson for this analysis because he is very careful about assuring reliable estimates.

“We chose 300 megawatts as a target because it is sufficiently aggressive, yet reasonably could be done if Iowa’s leaders got behind it,” he said.

Nathaniel Baer of the Iowa Environmental Council noted the finding that various incentives can support a strong solar goal. One bill this year would provide $10 million in solar incentives to encourage Iowa homeowners and businesses to install solar power.

Baer said Iowa has experience and a track record of success in developing clean, renewable sources of energy.

“There are many other options including production based incentives, tax credits and waivers, an expansion of Iowa’s first-in-the-nation renewable energy standard, and low-interest financing programs,” according to the report. “Iowa already has the essential net metering and interconnection policies in place to help facilitate customers’ access to the grid and ensure they receive fair credit for the power they produce.”

The report noted at least 25 Iowa businesses and nonprofits and 16 Iowa universities, colleges, community colleges, schools and libraries, as well as many private homes, use solar energy. It focuses on three examples: Allsteel in Muscatine, Marshalltown Public Library, and a home in Spencer.

From Mark Cooper’s editorial in the March 9 Des Moines Register: Iowa shouldn’t overpay for nuclear power that may not even happen.

Why would anyone pay a $150 for something that costs $100? They wouldn’t if they had a choice, and that’s the problem with new nuclear reactors. Wall Street knows that new reactors cost too much and won’t fund them. But MidAmerican Energy wants to build them, so the company is looking to the Iowa ratepayer to play the fool.

MidAmerican’s 636,000 customers in Iowa are captive customers; they can’t shop for the best power deal. Historically, when a utility wants to add new generating capacity it must build the plant and begin producing electricity before seeking to recover the costs from its customers. They can only recover costs that are reasonable and prudent. And the utility’s rate of return on its investment in the new plant should be commensurate with the risk the utility faces in undertaking the project.

MidAmerican, through HSB 124 and SSB 1144, wants to turn the whole process on its head. As a result, all three of these traditional consumer protections would be dramatically weakened.

Ratepayers’ risks would increase

The cost recovery scheme that MidAmerican is pushing shifts the risks away from its stockholders and onto its ratepayers. Electric bills rise long before a new power plant even produces one kilowatt. Ratepayers are on the hook even if the new plant costs soar, or the project is canceled or abandoned. […]

Meanwhile, utilities are abandoning or delaying proposed new large reactor projects throughout the U.S., because estimated costs for these reactors have soared and can’t compete against cheaper alternatives.

Giving MidAmerican advanced cost recovery for totally untested designs is the absolute worst thing to do with ratepayer money. Ratepayers are not merely forced to be investment bankers; they are turned into venture capitalists with a high risk of failure and no projected return on their investment.

MidAmerican is selling its plan to the Legislature and Iowans as a way to create jobs and deliver new supplies of energy. That’s just not true. Nuclear reactors produce relatively few jobs for the dollars invested. The costly electricity means consumers have less to spend on other goods and services and add to the cost of doing business. And the equipment vendors often are foreign corporations, sucking U.S. dollars overseas.

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