Living on Earth: constant light for solar

After years of ever-changing clean energy policies, the solar industry now sees 10 years of consistent policy ahead of it to build stable businesses and industry. (Photo: coniferconifer, Flickr, CC BY 2.0)

For years, renewables have received intermittent financial support from the US government, limiting their development to combat the growing climate crisis. Those days seem over now that the Cut Inflation Act 2022 provides for a decade of tax breaks and clean energy funds. George Hershman, CEO of SOLV Energy, joins host Steve Curwood to discuss this new day for solar energy.


Transcription

BASCOMB: This is Living on Earth, I’m Bobby Bascomb.

CURWOOD: And I’m Steve Curwood.

For years, solar and wind power have enjoyed intermittent financial support from the US government, limiting the development of renewables to combat the growing climate crisis. Those days are now over. The Cut Inflation Act of 2022 ends the federal financial stutter for renewable energy with a ten-year commitment for tax breaks and funds to spur innovation and industrial development. George Hershman is the CEO of SOLV Energy, a 4,000-employee company that installs solar panels on a large scale. And now that the Cut Inflation Act money and tax credits are in line, his company, and pretty much the entire renewable energy business, is eyeing explosive growth. George Hershman, welcome back to Living on Earth.

HERSHMAN: Thanks for seeing me again, Steve. It’s quite an exciting time.

CURWOOD: Our pleasure. Now, we told you earlier this year about the discontinuation of solar panel imports from Asia that President Biden has now lifted those restrictions for the next two years. So today we want to ask you how the great law of cutting inflation affects the outlook for your industry and your business. First, what does this mean for your industry?

HERSHMAN: Well, this is really historic legislation for the solar industry. And so when I look at the industry as a whole, I think all sectors have been covered. There are really three types of market sectors that we look at from a solar perspective. We have a residential market, a commercial market and the utility sector, which is where our business operates the most. But those three sectors have received, you know, a lot of support through this bill. What’s exciting to me is the fact that we have over 10 years of cohesive policy around which we can build businesses and industries and, and really bring about the historic change that we need in this country to fight against climate change through clean energy.

CURWOOD: Tell me about the scale of the manufacturing revival. Will what is provided for in this bill be sufficient for the demand you expect to see in the years to come?

The IRA bill introduces tax credits for domestic manufacturers who build solar power technologies to improve the domestic supply chain for the solar industry. (Photo by: Qatar Solar Energy, Flickr, CC BY-NC 2.0)

HERSHMAN: Well, the way it’s structured is a performance tax credit. So the more you build, the more tax credit manufacturers get. So it’s really built for scale. There are plans to build large-scale factories to meet demand. It will take time. We probably won’t have this online manufacturing to achieve all of these goals. So it’s always going to be an industry that’s going to be dependent on, you know, some of the imports to set it up. But this bill does a lot to start building factories. We are already hearing several manufacturers making announcements of new plants or expansion. Now we have this support and this legislation which is what we all ultimately want, which is a stable supply chain that we can rely on and build here at the national level.

CURWOOD: So, George, what’s your best estimate of the total amount of renewable energy we need each year to meet the targets that have been set? And how does that compare to say what a coal-fired power plant can produce?

HERSHMAN: So, you know, by all estimates, we need to, by the end of the decade, start pumping 70 to 80 gigawatts of renewable energy into the ground every year to replace the decommissioning fleet, coal and of gas, as well as to provide new load for the demand that will be added due to the fleet of electric cars. So, in comparison, a traditional coal plant is between two and three gigawatts. So you can imagine that we’re going to replace, you know, 50 a year.

CURWOOD: Now, what about jobs in this renewable energy sector now? What do you see over the next five to ten years in terms of job creation?

HERSHMAN: This is a huge job creation bill. We have seen up to 2 million new jobs. I’ve seen numbers with manufacturing and wind that say, you know, eight to 10 million jobs. So it’s a clean energy bill in the first place, but it’s really a job creation bill at the end of the day.

CURWOOD: Now let’s talk about your own business. What has changed now that you no longer consider the impossibility of importing solar cells, when in fact there is this huge stimulus from the federal government? What has changed for you and what projects are you undertaking now?

The solar industry sees the creation of millions of jobs as the federal government supports the industry through the new legislature. (Photo by: Renovus Solar, Flickr, CC BY 2.0)

HERSHMAN: The company’s forward-looking projections are to grow it three or four times from its current size, just to keep pace with our customers’ demands. We’re also looking at, you know, how to provide all the service offerings that our customers need as this market grows. This has traditionally been a business that has a three to five year track. We usually look at it in very short increments because we get an investment tax credit for five years and it starts to fade. So there is a cyclical nature of the ramping up of this business over the past 12 years. Well, now you can look ahead and you know exactly what the business model will look like. And it’s just, you know, it’s straight.

CURWOOD: George, what would you like to see as new technology in the next few years?

HERSHMAN: The IRA legislation was about investment tax credits for hydrogen and emerging technologies. I think one of the ways the bill has been uniquely structured is that after five years, the investment tax credit, which is currently set for wind and solar, in five years, it turns into a technology-neutral ITC, which basically says that any technology that decarbonizes energy production can qualify for an investment tax credit. So that leaves the door open for new technologies and new inventions as we move forward so that we don’t stall in the development of clean energy. I love that we challenge inventors to think outside the box and think about the next technology, not pick winners and losers. And let the market determine what we are going to do in five years.

CURWOOD: Right now, as we speak, George, the financial markets are pretty upset and people are talking about a recession. What does your instinct tell you that this bill, as a whole, built from a new generation of a way to generate electricity, will solve what currently appear to be problems economy in this country?

HERSHMAN: Well, I think that meets a lot of the needs that we will have in the future. It’s hard to say that tomorrow we’re going to highlight something that this bill did that changed some of the challenges we have today in a supply chain coming out of COVID. It’s just a kind of global restructuring. But some of the things that we’re dealing with, just structurally, like, you know, manufacturing that’s being moved offshore, that’s hurting our supply chain, it’s bringing a lot of that manufacturing back. If we produce low-cost energy in this country, we will manufacture more because manufacturing traditionally moves to low-cost energy markets as much as it moves to labor markets Low cost. And so because we’re efficient from a manufacturing perspective, and we can do it with low-cost energy, we’re going to build manufacturing infrastructure. Again, we already see that we supported it in the CHIPS bill, you’re going to see CHIPS coming back here. Now you’re going to see the solar supply chain come here. We’re just going to see an onslaught of manufacturing and building businesses that will ultimately make us stronger in the long run.

CURWOOD: George, I have to ask you how you feel now as a result of this Inflation Reduction Act being passed, is that the correct scientific term? Wow!

HERSHMAN: Yeah, I think I’ll go with that one. I’m excited. The industry is excited. Although we are very excited and came together last week as an industry at RE+, which is the largest energy and renewable energy conference in the country, I think the message was interesting. It was, “Let’s celebrate. Let’s take a lap of honor. Let’s pat ourselves on the back, then put our heads down and get to work because we have a lot of work to do.

CURWOOD: George Hershman is the CEO of SOLV energy. Thank you very much, George, for taking the time with us today.

HERSHMAN: Absolutely. Thanks Steve. I appreciate the time.

Connections

Learn more about solar tax credits

Learn more about the numbers of what the Inflation Reduction Act includes

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