President Barack Obama installed solar panels on the White House earlier this year, but a new presidential memorandum could see solar on all 500,000 federal buildings by 2020. The president understands the importance of leading by example, but are solar panels cash savers or cash suckers? Here's what you need to know.
Obama said his latest memorandum is preparing the U.S. government for sustainable savings. The POTUS is set on reducing our nation's fossil fuel dependence, and Uncle Sam's energy expenditures seem like a good place to start. Obama has set a new goal for 20% of the federal government's energy to come from clean sources by 2020.
"In order to create a clean energy economy that will increase our nation's prosperity, promote energy security, combat climate change, protect the interests of taxpayers, and safeguard the health of our environment, the federal government must lead by example," the president noted in the memo.
While federal agency greenhouse gas emissions are already down more than 15% from the start of Obama's presidency, the nation's leader wants more. With more than 500,000 buildings and a 600,000-vehicle fleet, the federal government's energy use isn't just symbolic -- it's real change.
Currently, there are 400,000 individual solar projects nationwide. Slapping solar on each government roof would more than double that number. It may seem impossible (or impossibly expensive), but small-scale projects are on the rise.
The Solar Energy Industries Association (SEIA) recently announced that third-quarter solar power installations were up 35% year over year, with residential projects hitting record highs of 183 megawatts installed. "Without a doubt, 2013 will go down as a record-shattering year for the U.S. solar industry," said SEIA CEO Rhone Resch.
Government initiatives aren't usually known for either their progressiveness or timeliness, but Obama's decision may be part of a growing private-sector trend.
SolarCity (NASDAQ: SCTY ) CEO Lyndon Rive expects his company to install a whopping 1 million rooftop projects over the next five years, and he is making moves to scale up installations nationwide. The company acquired Paramount Solar in August for $120 million and continues to expand its stretch.
Last month, SolarCity announced an innovative partnership with Tesla Motors (NASDAQ: TSLA ) . SolarCity will use Tesla Motors' energy storage system to create miniature power plants for businesses nationwide. Now, businesses with solar panel installations can snag solar power throughout the day, but save the electricity for peak hours or rainy days. The partnership is good for both SolarCity and Tesla Motors, and makes Obama's memorandum more meaningful and manageable than ever.
High-efficiency panel producers like SunPower (NASDAQ: SPWR ) could see an especially large boost in sales. Government buildings are often located on prime urban real estate, where sunny surface area is at a premium. The company has seen earnings go from red to black in the past year and plans to have another 350 MW of production online by 2015.
Obama's memorandum almost triples the previous mandate of 7.5% clean-sourced energy by 2020, and the president's aggressive expansion isn't without its critics. As the national deficit remains a concern, opponents may point to the high price of renewables. Lux Research said in a new report it doesn't expect solar to reach price parity with natural gas until 2025 -- and even that number relies on a wide range of assumptions, including a 39% fall in utility-scale photovoltaic costs over the next 15 years. Still, with system prices down 4.2% quarter over quarter for third-quarter 2013, the decrease isn't a pipe dream.
While the SEIA applauded Obama's announcement, it challenged the president to continue to make solar more affordable through expansion of power purchase agreement schemes. According to Resch, "Today's outdated system discourages the same power purchases for federal facilities that successful companies like Walmart, Costco and Apple use to save money by going solar."
The finances of solar are of utmost importance to consumers, from individual homeowners to the federal government. Only about half the nation's states currently support power purchase agreement regulation, and a national movement to lower up-front installation costs could go further than any installation goals. Companies like Warren Buffett-backed NRG Energy (NYSE: NRG ) have dished out more than 2,000 MW of solar units, from solar farms to hospital rooftop systems.
But Obama's hands are tied on nationwide renewable energy standards, and this latest memorandum is just as much a reminder of the president's limited power as it is a successful initiative for the federal government.
President Obama's new memorandum on renewable energy isn't a game changer, but it's a step in the right direction. All signs point toward environmental and financial sustainability for solar, and federal spending today will mean federal saving tomorrow. Leading by example isn't a lost art.
Leading by example
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