State Solar Mandate in Face of Weak US Energy Policy

Implications: Hawaii has broken new ground in becoming the first state to require solar water heaters in new construction.  This policy joins an array of others employed by states and localities to develop renewable energy markets in lieu of federal paralysis.   It will not be a magic bullet with federal incentives threatened with expiration after 2008, but it will help keep some markets going.

Analysis: While Washington fiddles with a renewable energy policy, state and local governments have rolled up their sleeves to get serious in implementing their own developing markets in solar, wind and related technologies.  There are an array of actions, which can be monitored at North Carolina State University's Database for State Incentives in Renewable Energy (www.dsireusa.org).  These include Renewable Portfolio Standards, net metering and interconnection standards and an array of grants and rebates.  Newer instruments, like feed in tariff rates borrowed from Europe, have begun to appear in a few states and localities.

One instrument that has not been employed on a widespread basis in the US is mandating the installation of solar energy systems on buildings.  This has been employed in countries like Israel for decades, and instituted for new construction and substantial rehabilitation in growing markets like Spain and Portugal.  It has appeared in a few local small and medium jurisdictions in Oregon and California.

Now Republican Governor Lingle has signed into law the first mandatory statewide requirement for solar energy systems in the US.  Nearly every new home constructed in Hawaii will have to have a solar water heating system.  This will result in about 4,000 or so units a year added to the estimated 65,000 installations already in existence, bout a $25-30 million dollar a year market.

This may be a sign of things to come in the U.S., if not right away  Hawaii is a unique state, with high energy prices and completely dependent on imported fuels.  Its mild climate is conducive for solar water heating, and with relatively few and homogeneous building codes, there was relatively little opposition from a typically parochial building industry.  Despite electricity prices averaging more than California's, photovoltaic systems were not mandated, likely due to a higher five figure cost for installations in lieu of a mid-four figure price for solar water heaters.

Nevertheless, measures like these will catch on in various states and localities, especially in the vacuum of Washington decision making.  The bad news is that this continues to fracture the US solar market. The good news is that these policies will sustain at least a base solar market in lieu of Washington's dithering.