Industry perceptions of solar in the SW US pasqualetti and haag

Industry perceptions of solar energy policy in the American southwestSusan Haaga*, Martin Pasqualettiband Marie Manningc a Center for Research on Education in Science, Mathematics, Engin

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Industry perceptions of solar energy policy in the American southwest

Susan Haag a , Mart in Pasqual et t i b & Marie Manning c a

Cent er f or Research on Educat ion in Science, Mat hemat ics, Engineering, and Technol ogy (CRESMET), Arizona St at e Universit y, Tempe, AZ, 85287, USA

b School of Geographical Sciences, Coor Hal l , Arizona St at e Universit y, 5t h f l oor, 975 S Myrt l e Ave , Tempe, AZ, 85287, USA c

Barret t Honors Col l ege, Arizona St at e Universit y, Tempe, AZ,

85287, USA Avail abl e onl ine: 28 Feb 2012

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sol ar energy pol icy in t he American sout hwest , Journal of Int egrat ive Environment al Sciences, 9: 1, 37-50

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Industry perceptions of solar energy policy in the American southwest

Susan Haaga*, Martin Pasqualettiband Marie Manningc

a

Center for Research on Education in Science, Mathematics, Engineering, and Technology (CRESMET), Arizona State University, Tempe, AZ 85287, USA;bSchool of Geographical Sciences, Coor Hall, 5th floor, 975 S Myrtle Ave Arizona State University, Tempe, AZ 85287, USA;cBarrett Honors College, Arizona State University, Tempe, AZ 85287, USA

(Received 27 May 2011; final version received 26 October 2011)

The American southwest has among the best solar resources in the world For this reason, the solar industry monitors the progress of solar energy development there closely Yet, meaningful adoption has been slow, particularly in the state with the richest resource, Arizona This article reports on the results of internet surveys and personal interviews to explain why this is true We focused on identifying industry-perceived barriers to solar adoption We asked three questions: (1) Which industry factors slow the speed of adoption of solar energy

in Arizona? (2) Are there unmet workforce needs that slow adoption in Arizona? (3) Which policy incentives are needed to accelerate solar development? We identified a need for the following steps: establish financial security for projects with newly created and targeted statutory instruments, develop standardized college-level solar curriculum to train a local workforce, and provide conspicuous government support and supportive policy commitments that are sustainable A systematic and integrated effort with government, industry, educational, and public representation is needed to make solar energy a significant contributor to the future economic vitality of the state, thereby helping to advance such adoption in other places with similar opportunities for solar energy development Keywords: solar energy; energy policy; workforce development; American Southwest

1 Introduction

One of the most abundant energy resources in the American Southwest is sunshine

In places such as Palm Springs, Phoenix, and Tucson, the attraction of this sunshine has been for seasonal tourism Once reliable and affordable air conditioning became available, however, everything changed and the population of the area boomed (Oi 1996) Since then, Arizona’s climate in particular has fueled endless speculation that the state would one day be the national trendsetter for solar energy development It has not happened, but there are several signs that the contribution of solar energy might soon match the rhetoric that has long touted its potential The goal of this article is to explain why solar energy has been diffused less effectively in Arizona and

to provide strategies to reverse the trend

*Corresponding author Email: susan.haag@ymail.com

Vol 9, No 1, March 2012, 37–50

ISSN 1943-815X print/ISSN 1943-8168 online

Ó 2012 Taylor & Francis

http://dx.doi.org/10.1080/1943815X.2011.636368

Various reports have put the commercial development potential of solar in Arizona as 2.5 GW, almost three times that of California (Arizona Department of Commerce, 2007) Just the roof space on residential buildings in the state could support 7.5 GW, ignoring economics There is the perception, then, that the commercial development of solar power in Arizona is moving toward its touted potential (Kurtz et al 2004; Hoffmann 2006), but progress has been slow For example, there has been notable success in several less-endowed countries such as Germany and Japan In other countries with more successful solar power markets, the history of that country’s renewable energy market and the politics surrounding these alternative sources dictate the structure of solar energy deployment This development chasm has resulted from the many differences between Arizona and these other countries, particularly the success of the European feed-in tariffs (Scheer 2007) This tariff, combined with events such as the Chernobyl and Fukushima nuclear accidents and the increasingly negative public image of coal mining, is among the factors that distinguish European and American solar growth (Laird and Stefes 2009)

1.2 General barriers to renewable energy adoption in the USA

Understanding the diffusion – and more importantly, the barriers – to renewable energy adoption is a critical issue for policy makers and companies operating in the industry Recent research into the slow progress of renewable energies in the United States has revealed various factors that inhibit the adoption of these new technologies by US consumers Among these, one of the most frequently noted hesitancies of the public concerns the perceived cost disadvantage renewables have to tradition fossil and nuclear fuels (Allen et al 2002; Haas et al 2008; Sovacool 2008; Sovacool 2009a) Although it is the opinion of experts that the ‘‘transmission cost’’ (Allen et al 2002) associated with moving away from traditional power sources could be recovered in time, the American public is either unaware, uninformed or apathetic to this information (Sovacool 2009a) This phenomenon

of rejection is speculated to be part of a larger conglomerate of social, cultural, and behavioral barriers that currently represent a huge impediment to US adoption of sustainable energy sources (Wustenhagen et al 2007; Sovacool 2008; Sovacool 2009b) For instance, Sovacool (2009b) presents the case for resistance

to changing energy sources as being based in the public’s perception, under-standing, and requirements of energy In his research, Sovacool found that the relative dissonance between where and how electrical energy is generated and the way it is presented to consumers facilitates a mentality of clean, efficient energy hardly worth upgrading It has also been hypothesized that misunderstandings about the danger associated with renewable energy sources have limited success (Laird and Stefes 2009)

In addition to barriers rooted in societal behaviors and expectations, it is clear that certain institutional, political, and legislative processes continue to bar full viability of sustainable energy sources (Haas 2008; Sovacool 2008) In particular, regulatory laws, a lengthy approval process, and specific equipment and resource requirements often associated with green energy sources are shown to serve as blockades against a smooth transition (Alderfer 2001)

The delayed diffusion of solar power in the United States is also subject to general market trends, especially consumer resistance to innovative products

Consumer resistance is generally thought to be a contributing factor to inhibited product diffusion when said innovative products conflict with consumers’ beliefs or habits (Garcia et al 2007) Changing a society from one fueled by traditional means

to one powered by renewable energy sources such as solar energy will require changes in the ways individuals think about energy and energy needs Thus, despite evidence that the public supports the ideology behind renewable energy sources (Farhar 1994), it should come as no surprise that sectors of the market have met solar power technologies with hesitation Fragmentation among providers of solar power might also be detrimental to the market As such, horizontal cooperation and competition with other industry-wide players would be beneficial to all those within that industry (Garcia et al 2007)

2 The Arizona solar context

There is still a sense that Arizona will soon be narrowing the gap in solar energy adoption (Arizona Goes Solar 2010; Arizona Solar Center 2010) The Arizona Corporation Commission, for instance, has established ‘‘Renewable Portfolio Standards (RPS),’’ which requires regulated utilities to generate approximately 15% of their electricity from renewable energy by 2025, including 4.5% from distributed sources (Union of Concerned Scientists (UCS) 2008) Reaching the 15% threshold will require 4000 MW of additional renewable energy generation Moreover, the Arizona RPS is making a difference For a 4 kW residential system, the commercial, unsubsidized price for such an installation is about $25,000 This cost goes down in response to various incentives and subsidies, where about $12,500 of the cost is reimbursed by utility rebates, the direct result of the RPS In addition, there is

$1000 in state tax relief and about $2000 from a similar federal program Payback for such a system, after rebates, is between 9 and 12 years

The Arizona legislature has also helped by providing a full property tax exemption for property owners with solar systems, as well as legal protection for homeowners who wish to install solar modules even when they face prohibitions from Home Owners’ Associations (Arizona Revised Statute (ARS) 2010) Without the RPS, it would take more than twice as long Thus, the RPS has been the key factor in the installation of most of the 4000–5000 solar units that have been made in the state, both for photovoltaic and hot water heating systems Furthermore, there is a steady decline in the cost associated with setting up solar modules Just between the years

2000 and 2005, the price of setting up solar cells dropped approximately 20%, largely due to the increasing experience companies have with constructing these modules (Moore et al 2005) In addition, with market opportunities in Arizona and parti-cularly California, several of the largest solar companies have moved in, including First Solar, BP Solar International, Kyocera, and Suntech Power, with more than three dozen solar projects of varying size having been proposed for the state, a potential commitment that would have a total capital cost of several billion dollars In addition to Arizona, electricity will be sold to California for their consumption

As a whole, however, Arizona’s solar energy adoption has been slower than might be expected, given the plentiful sunshine there Part of the explanation for this results from the higher incentives in the leading solar states – California and New Jersey – but there are other reasons as well For example, it simultaneously suffers from its low per capita income and largely conservative political climate It might also be suffering due to fragmentation and disagreement in policy-making machinery

(Scheer, 2007) Arizona’s RPS is low compared with California, which requires 33%

by 2020, excluding credit for the existing large hydroelectric capacity Notably, there are also workforce gaps that inhibit adoption A well-trained workforce was identified as a necessary condition to grow the solar energy industry (Arizona Department of Commerce 2007) Other barriers to renewable energy adoption include ongoing challenges to the RPS (Randazzo 2010), relatively low rates for conventional power, and an existing conservative political climate (Sarzynski 2009) Characterizing the barriers to solar energy adoption is a crucial issue for policy makers and solar companies operating in the industry, and Arizona is a particularly interesting context for this type of research

Below we describe the results of a study that elicited perceptions from the local solar industry about the factors inhibiting its growth Focusing on the supply side parties within the solar industry, we asked three questions: (1) Which industry factors slow the speed of adoption of solar energy in Arizona? (2) Are there unmet workforce needs that slow adoption in Arizona? (3) Which policy incentives are needed to accelerate solar development? Our purpose was to uncover why solar energy development is so slow in Arizona and to identify strategies that can reverse this trend

3 Methods

We wanted to examine the perceptions of solar industry members doing business in Arizona We chose this emphasis because the supply side is on the front lines of any wave of future development Those in the solar industry will be most sensitive to what is missing and the required remedies We collected two forms of data First, we conducted formal interviews of the larger companies Second, we administered an online survey Those targeted for the personal interviews and online survey included CEOs, owners and presidents, engineers, directors and business managers, and human resources and training managers These individuals were well informed and knowledgeable regarding the current state of the solar industry as well as future trends and needs

We identified over 150 firms that claimed some level of solar energy expertise operating in the state A pre-survey letter was distributed to all these to identify a willingness to participate in our study We found that several companies on our initial list had gone out of business and some were only participating in solar energy

in a marginal way These were deleted from the pool, yielding a net of 134 solar energy companies Of this number, 92 companies agreed that they were appropriate candidates for the study and agreed to participate Three reminders were sent out after the first online mailing in the spring of 2010 Of the 92 local relevant companies,

76 responded, yielding a response rate of 83%

We collaborated with industry members and university faculty to design a survey instrument with items to answer the three research questions To answer the first research question concerning specific industry factors that inhibit solar adoption, we used a 5-point Likert Scale (strongly agree ¼ 5 and strongly disagree ¼ 1) to tabulate their responses Participants were asked questions about possible legal barriers such as incompatible codes and regulations, and Homes Owners’ Association rules To answer the second research question regarding workforce needs, we asked questions about gaps in education and training, again on a 5-point Likert Scale (as above) To answer the third question, we asked industry members about incentives such as feed-in tariffs, and full net metering

Personal interviews were conducted with 20 members of the solar community Those selected for interviews represented the several groups selected for the survey Through the course of the interviews, we raised questions that would reveal participants’ perceptions concerning challenges to growth and necessary changes in the solar energy industry that would help move the solar energy sector to the next level of market penetration The personal interviews utilized a standardized semi-structured approach in which open-ended questions were presented to participants in

a predetermined order All interviews were audio-recorded, transcribed, and coded The survey also provided a comment box where industry members could write perceived challenges to the industry Codes derived from interview and survey comment data were created to reduce a vast amount of information into manageable chunks for analysis

Qualitative data analysis included a three-step process: data reduction, data display, and conclusion drawing and verification (Miles and Huberman 1994) Data-reduction helped to sort, focus, and condense excerpts that allowed the researcher to organize the data to develop conclusions Data were reduced and transformed through such means as selection, summary, and paraphrasing Data display was the second major activity during which the researcher reviewed the reduced data and displayed it in a compressed way so that conclusions could be drawn Excerpts served as our supportive evidence for categories, themes, and assertions concerning industry costs, workforce development, and policy incentives Conclusion drawing and verification was the final analytical activity for the researchers

Initially, when sending out the survey announcement to the solar energy industry, we asked company contacts to recommend someone who would be able

to answer several questions about supply side needs We stated that the opinions of their company were crucial to the research questions As a result, a majority (65%)

of the responses came from company owners, presidents, and CEOs If we consider the length of the comments they wrote and the time they invested in answering several pages of questions, we can infer that this key group of stakeholders perceived the importance of such a needs assessment in Arizona and responded personally The presidents, owners, and CEO’s, the majority of respondents (65%) were followed by engineers (11%), directors/managers or those involved in business development (10%), human resources or hiring managers (10%), and training managers (4%) The findings in this study and statements, particularly those of solar energy CEO’s and presidents, reveal participant attitudes and perceptions This survey research highlights outlooks from industry members and key stakeholders

4 Results

4.1 Direction of the industry

Our research revealed that in Arizona, the majority of solar-electric companies focus

on photovoltaics (Table 1) This could be partially explained because PVs are easily scalable, modular, and simpler to install and maintain than Concentrating Solar Power (CSP), in spite of their reputation for being more costly One could also speculate that there is little or no CSP research or instruction currently in the state It

is likely this might be remedied in the future as the CSP market in the state continues

to grow The following results highlight findings from the majority of solar energy industry members operating in the state currently focusing on photovoltaics

Our initial goal was to identify the vision respondents held for the future of solar energy development in Arizona Overall, respondents were optimistic One of the advantages they identified was the comparatively static costs of electricity from solar energy as compared with conventional energy development They were neutral on whether an increase in the use of renewable energy was going to drive up the cost of electricity; thus, they envisioned a bright future of solar energy in the state in part because they expect the price for electricity from conventional sources will rise faster than the cost of renewables (see Table 2) The authors recognize that this might not always be the true in all locations and for all rate categories, but it is commonly considered to be likely

Among industry members, there is also a strong perceived relationship between lowering costs of solar energy and a rising share of solar energy in the future However, they were not naı¨ve about the difficulties of reaching toward a higher solar energy penetration, as 63.2% ‘‘Strongly Agreed’’ and 21.1% ‘‘Agreed’’ that there would be challenges in the future

4.2 Speed of adoption

To answer the first research question concerning specific industry factors that inhibit solar adoption, participants were asked questions about possible legal barriers such as incompatible codes and regulations and Homes Owners’ Association rules Table 3

Table 2 Future direction of the solar energy industry

Survey items

Strongly agree (%)

Agree (%)

Neutral (%)

Disagree (%)

Strongly disagree (%)

I see an increased share of our energy

coming from solar energy over the next 25 years

I see a continuing narrowing of the

gap in the retail cost between conventional energy resources and solar energy

38.2 43.4 18.4

I see rising energy costs due to the

inclusion of increasingly larger percentages of renewable energies within the energy supply

19.7 22.4 25.0 17.1 15.8

Note: Likert scale 5 ¼ Strongly Agree to 1 ¼ Strongly Disagree All 76 respondents completed this item.

Table 1 Frequency of product specialization offered by each company (76 companies)

describes perceived attitudes on stimulating the solar energy industry in Arizona Respondents tied speed of adoption to costs, indicating that ‘‘potential solar adopters need a faster payback’’ (the breakeven point where the solar energy generated and sold back to the utility companies equals the cost of the solar equipment) While accurate calculation of such payback periods can be complex, the average consumer simply looks at the reduced energy bill and calculates how long it will be before he or she can recoup the out-of-pocked expense of the solar installation This response had the strongest agreement (76.2%) among those responding, with a mean score of 4.07

We found correlations between responses to key survey items, where an ‘‘r’’ statistic between 0.1 and 0.3 is small; between 0.30 to 0.50 is medium; and between 0.50 and 1.0 is large (Cohen 1988) Scores on ‘‘Potential solar adopters need a faster payback’’ were correlated with scores on ‘‘HOAs need to adopt more flexible standards,’’ (r ¼ 0.32, p ¼ 0.005) In other words, as scores on faster payback increased, so did scores on HOA standards This suggests that there may be a positive relationship between industry members’ perceptions about HOA standards and perceptions about homeowners recouping their investment Note that correlation does not imply causality but simply a positive statistical relation A strong correlation also existed between scores on ‘‘codes, regulations and laws are slowing adoption’’ and scores on ‘‘the bottleneck is in the legislature,’’ (r ¼ 0.56,

p 50.001) Similarly, scores on ‘‘codes, regulations, and laws are slowing adoption’’ were correlated with scores on ‘‘HOAs need to adopt more flexible standards,’’ (r ¼ 0.51, p 5 0.001) However, the survey results minimized objections based on aesthetics The phrase ‘‘solar devices are unattractive’’ had the least perceived effect

on the speed of solar energy adoption

4.3 Workforce development

To answer the second question regarding unmet workforce needs, respondents were asked whether there were current shortages of potential employees and whether their new employees had specific solar energy experience or training when they were hired

Table 3 Speed of adoption

Survey item

Strongly agree (%)

Agree (%)

Neutral (%)

Disagree (%)

Strongly disagree (%) Potential solar adopters need a

faster payback

Codes, regulations, and laws

are slowing adoption

HOAs need to adopt more

flexible standards

Homeowners move their

residences too frequently to recoup investment

The bottleneck is the

legislature

Solar devices are unattractive 1.3 5.3 30.3 36.8 26.3

Note: Likert scale 5 ¼ Strongly Agree, 4 ¼ Agree, 3 ¼ Neutral, 2 ¼ Disagree, 1 ¼ Strongly Disagree All 76 respondents completed this item.

Workforce development attracted attention from both survey and interview participants, and responses indicated that there are shortages in potential solar energy employees Survey data suggested a lack of access to adequately trained solar professionals and also indicated that workforce education is a critical need in the state Most industry members captured in the survey data (56%) agreed that there are workforce shortages with engineering knowledge associated with solar technologies They also indicated that the majority of those hired lacked specific solar energy training and experience Thus, new employees are expected to acquire solar expertise with on-the-job training (Table 4)

Industry respondents indicated that non-technical skills and project management are at least as valuable as solar training Solar companies welcome capabilities in written communication, teaming, oral communication, and multi-disciplinary problem-solving Solar basics, power electronics, and solar energy project economics and finance were highly valued, whereas semi-conductor theory had less value (Table 5)

The ideal candidate would hold a diverse skill set That is, he or she would have a basic understanding of engineering principles, effective oral and written commu-nication skills, and interdisciplinary teaming ability The preferred majors in the

Table 4 Workforce needs

Survey item

Strongly agree (%)

Agree (%)

Neutral (%)

Disagree (%)

Strongly agree (%) Current workforce shortages

There are shortages of potential

employees with engineering knowledge in solar technologies

34.2 22.4 28.9 13.2 1.3

New hires that lack formal solar training

will learn the appropriate skills with on-the-job training

Before hiring, few of our solar

engineering workforce had specific solar energy training

22.4 28.9 22.4 14.5 11.8

Before hiring, few of our solar

engineering workforce had specific solar energy experience

21.2 31.6 19.7 15.7 11.8

Workforce needs-new hires will be able to

Demonstrate effective written

communication skills

53.9 40.8 5.3 Demonstrate effective teaming skills 51.3 40.8 7.9

Demonstrate effective oral

communication skills

27.6 55.3 11.8 5.3 Demonstrate project management

expertise

31.6 44.8 19.7 3.9 Solve problems in a multidisciplinary

context

28.9 50.1 17.1 3.9 Apply business practices along with

engineering skills

22.4 55.3 19.7 2.6 Design solar projects of any scale 23.7 31.6 27.6 15.8 1.3

Note: Likert scale 5 ¼ Strongly Agree, 4 ¼ Agree, 3 ¼ Neutral, 2 ¼ Disagree, 1 ¼ Strongly Disagree All 76 respondents completed this item.

technology areas of solar energy design would include a degree in electrical engineering or a degree in mechanical engineering (Pasqualetti and Haag 2011) Solar energy respondents more frequently stated that an ideal candidate would have schooling in economics and project financing, business knowledge, and AutoCAD training The focus would be on how projects are financed and knowledge of return

on investment Many indicated that internships and cooperative education would be beneficial in a solar energy engineering curriculum

4.4 Incentives and needed strategies: growing the industry

A staple question about solar energy in Arizona is what needs to be done to grow the industry Table 6 addresses this topic with regard to incentives Several potential changes that are perceived as helping to progress the solar energy industry in Arizona were presented in the 5-point Likert scale Most of the incentives and strategies were perceived as needed for solar adoption In fact the majority of respondents (59.2%) ‘‘strongly agreed’’ that stronger leadership is needed from the elected officials (M ¼ 4.50) Almost one-half (48%) strongly agreed that ‘‘full net-metering’’ (M ¼ 4.20) was necessary and over one-third perceived that ‘‘higher

Table 5 Solar energy coursework needed

Mean Standard deviation Solar engineering principles (photovoltaic system basics) 3.76 0.53 Power electrics (AC/DC power conversion etc.) 3.28 0.72

Solar energy supply chain and logistics 2.80 0.80

Note: Levels of importance Likert scale 4 ¼ Very High, 3 ¼ High, 2 ¼ Average, 1 ¼ Low All respondents completed this item.

Table 6 Incentives and needed strategies for adoption

Needed change (%)

Strongly agree (%)

Agree (%)

Neutral (%)

Disagree (%)

Strongly disagree (%) Stronger leadership

from the elected officials

Higher portfolio

standard requirement

More tax incentives 26.3 34.2 23.7 15.8

Note: Likert scale 5 ¼ Strongly Agree, 4 ¼ Agree, 3 ¼ Neutral, 2 ¼ Disagree, 1 ¼ Strongly Disagree All 76 respondents completed this item.