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By Andrew Holland on Oct 17, 2012 with 4 responses

Wind Tax Credits and the State of Solar: A Discussion With Admiral Dennis McGinn

Vice Admiral (Ret.) Dennis V. McGinn, the President and CEO of the American Council on Renewable Energy (ACORE).

Recently, I sat down to speak with Vice Admiral (Ret.) Denny McGinn, the President and CEO of the American Council on Renewable Energy (ACORE). Adm. McGinn  served for 35 years in the Navy as a naval aviator and test pilot, rising to command an Aircraft Carrier, and ultimately the 3rd Fleet. His final position on active duty was as Deputy Chief of Naval Operations for Warfare Requirements and Programs at the Pentagon, which helps scope and develop the Navy’s capabilities for the future.

State of the Solar Industry

We had a wide ranging discussion on renewable energy issues, touching on issues that will be familiar to regular readers of my blog column, including the rapid growth of solar power and the challenge of Chinese competition, wind power, the military’s transition to clean energy, and the politics of renewable energy. I’ve divided the interview into two blog posts. In this one I will talk about wind and solar, while I will focus on the military in the next.

I started the interview by asking about the state of the solar industry. Over the last three years, the prices of solar photovoltaic panels have dropped dramatically. This has been a boon to consumers, but it is hurting many solar manufacturers by undercutting their profit margins. Many have gone out of business. Some of these companies have blamed unfair competitive practices from Chinese firms for the falling market.

Despite this, McGinn maintains that the overall market for solar is strong. He points to the “pipeline of new projects in the works” as a sign of growth in the industry, pointing to utility-scale solar plants, the installation of solar power on commercial buildings, and – especially – the vast number of residential installations. He claims that the problems at solar manufacturers right now are a sign of a maturing, competitive industry; mergers, failures, and acquisitions are indicative of an industry that is growing rapidly. He added that this industry’s price dynamics are “probably on a par – or perhaps even more dramatic” than other high-technology industries at this stage in their development.

Chinese and a ‘Level Playing Field’

With regard to the challenge that China presents to solar manufacturing, McGinn maintains that competition is beneficial, so long as the “level playing field” is maintained. He added: “If, in fact, any company, and nation, or any nation-backed company aren’t playing by the rules, I think there ought to be some sort of action.” It is important to note that I conducted this interview before the recently announced imposition of anti-dumping tariffs on imports of Chinese solar panels, so I was not able to get his specific response to that event. These tariffs have divided the solar industry between the manufacturers harmed by low-cost solar imports and the installers, like Solar City, that have benefited from low-priced panels.

He maintains, however, that it is important that we do not think of the solar market as solely about solar panels. We have to think of the market as also the companies that install, finance, and equip solar energy. Overall, McGinn was optimistic, saying that it is a good thing that solar is so fiercely competitive: this will make it a stronger industry in the long run.

Expiration of Wind Tax Credits

The other major sector we talked about was wind. The American wind industry is going into a storm as the Production Tax Credit (PTC) is set to expire on December 31. McGinn maintains that “the PTC has really delivered” in creating a wind industry, all along the value chain. He is hopeful that Congress will extend the PTC as part of a broader deal on taxes and the deficit when they return for a lame-duck session after the election. While the PTC is politically controversial now, he noted that when it was first introduced as part of the Energy Policy Act of 1992, it only received 3 votes against it.

More important, however, than an extension of the PTC is trying to create a stable investment environment for wind power in the future. He claims the “on again-off again” nature of the PTC over the past decade has undercut the industry’s ability to generate true economies of scale that will make it more price competitive than it already is. He stresses that the industry knows they will not have a subsidy forever – nor should it – but businesses need predictability to be able to make market-based decisions. He noted that a 3-5 year time frame would allow a transition from government to private sector financing of renewable energy.

McGinn stressed the importance of the Total Energy USA Conference, to be held November 27-29 in Houston, Texas. He says that we need more events that really look at energy from an “all of the above” perspective. We need better diversification of our energy portfolio that looks at the value (including un-priced aspects like pollution) of each form of energy. We need to think about costs, benefits, and risks, and he looks forward to the event  –– which will also host the ACORE Midwest Regional Roundtable; more information about Total Energy USA, November 27-29 in Houston, Texas at www.TotalEnergyUSA.com.

  1. By notKit P on October 17, 2012 at 7:13 pm

    In these troubled times, could there be anything less important than making electricity with solar?

    And what does a retired Admiral with no experience in the power industry bring to the table? Knowledge of sucking money out of the government without accountability.

    I think solar is great and maybe someday we will have lots of stored that provide details on the actual performance and benefits. That is if the beltway fed scam artists do not destroy the inddustry.

    Again!

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  2. By Ben on October 18, 2012 at 6:50 pm

    I’d say that these remarks by Notkit are less than charitable, even as they fail to appreciate the views that Adm. McGinn seeks to bring to the discussion about the pros/cons of renewable energy.   Though I do not know the admiral, I do know a number of flag officers in the naval services who speak well of him and his service to the nation.   It is no secret that I have shared in this forum my misgiving about DOD’s, to include the Navy, working assumptions about the potential value/viability/scalability of biofuels.   

     

    Let there be little doubt that the so-called ”Beltway Bandits” are all-too-often the tail that wags the dog in Washington’s policymaking process.  All the flag-saluting, veteran-trumpeting and national secuity pandering in the world won’t change the bottom line asessment as to whether bioenergy options make good sense for the American taxpayers and allocation from the federal treasury.   

    The folks at ACORE are hardly just a disinterested group of citizen-advocates.  Quite the contrary.  They are a collection of very interested parties who believe in the future of renewable energy and it’s benefits.  They are, on balance, a group of capable professionals who advocate on behalf of renewables because they are genuine believers in their cause, the future of America and the opportunities that green energy represents for their own interests.   Do I agree with the likes of Col. Bill Holmberg, USMC (Ret.), as he got a gleam in those combat Marine-tested eyes and preached from the holy script of biodiesel?  Not really.  Yet, I’m reminded that when the colonel snuck into the Corps at the tender age 16 in the midst of WWII, he showed with his deeds his eagerness to serve the nation even as he sought out of “self-interest” a little adventure away from the farm. I guess you could say that Adm. McGinn is keeping pretty damn good company if you ask me!  Much better company than that offered by some contibuting to this blog.

    Ben (from a pretty decent view of the Marine Memorial)

     

     

     

       

     

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    • By Andrew Holland on October 18, 2012 at 7:13 pm

      Ben- thanks for comments. I’m probably writing from about 5 miles down the Potomac from you. 

      Your point about ACORE as a collection of interested parties is an important one. They are interested because they argrinassociation of companies and individuals who come together to advocate on behalf of the renewable energy industry. It’s important to note that this doesn’t happen in a vacuum- in Washingtonlot he lobbies balance each other out. Sometimes the oil guys win, and sometimes ACORE wins. But- I would say that API comes to the table with a heck of a lot more resources than ACORE does. Good for them, then, for bringing on a distinguished public servant like Adm. McGinn who can effectively communicate their message. 

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  3. By notKit P on October 18, 2012 at 9:47 pm

    @Ben

    If you are looking for a true believer in renewable energy, I am your man. I am interested in projects and production figures, not Vision Statements but I can see why you would like ACORE. Yes, I am skeptical of people in DC actually delivering.

    So lets start with biomass. The best renewable energy project is a compost pile. Huge return and very low capital costs. Next up the food chain is rescuing wood from the land fill to heat my house. Small chains saws do not cost that much. Landfill gas is likely the cheapest source of renewable energy. Anaerobic digestors have a high capital cost but reduce the impact of animal waste. Lots of 30 year old wood waste power plants producing power at 5 cents per kwh.

    Now for the metal art form of renewable energy. City folks love pictures of wind turbines next to a dairy cow. Nothing enhances the desert landscape like a few square miles of solar. Good jobs for us hicks.

     

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