The solar industry is rapidly evolving, driving both economies of scale and remarkable innovation that gives solar power a bright future in the United States, if we get the policies right, according to Eric Peeters, Business Vice President for Solar at Dow Corning. Mr. Peeters recently spoke to me for a podcast interview exclusively for theEnergyCollective.com, which you can listen to in its entirety below.

Listen to the podcast:




Despite intense international competition, the future of the solar industry can be invented and built in the United States, Mr. Peeters noted, but he stressed that American policymakers need to enact a set of policies to encourage U.S. solar manufacturing, invest in innovation and education, and catalyze the formation of competitive regional industry clusters.

Dow Corning is a Michigan-based materials supplier that provides a variety of materials to the solar industry, including polysilicon feedstock for solar photovoltaics (PV) and silane gas used in thin film solar panel production. The company recently made a $3 billion investment to expand materials production at facilities in Michigan and Tennessee run by their majority-owned joint venture, the Hemlock Semiconductor Group.

In assessing where to make new investments in operations in today’s era of globalization, Mr. Peeters said the solar feedstock provider looks for synergies with established regional clean energy industry clusters, including access to suppliers, skilled labor, technical knowledge, and universities and R&D facilities. That makes it all the more important, Mr. Peeters stressed, for the United States to focus policies on attracting and retaining “seed companies,” big high-tech manufacturers that can anchor competitive regional industry clusters.

Dow Corning has outlined a four-point solar policy plan (pdf) to make “America a 21st century solar power,” which we discussed in detail in our interview.
1.   The first objective is to establish “a broad federal legislative and regulatory package” to accelerate the growth of the solar industry and encourage consumer adoption of solar technologies. This includes specific incentives for U.S.-based clean energy manufacturing – the company recommends a permanent extension of the Section 48c advanced manufacturing tax credit – and a package of policies to clear hurdles to market adoption and provide strong, consistent domestic demand for solar power.

This package of incentives includes a broad and robust national renewable electricity standard (RES) to “get the whole country marching in the right direction,” Mr. Peeters said, as well as targeted and robust production incentives in the form of feed-in tariffs or other “renewable energy payment” policies.

These targeted incentives are particularly important, Mr. Peeters said, “because solar is an infant industry really. It's young. There is a lot to learn. Technology development is very very fast. Solar will get to a cost where it is competing with traditional sources of energy … We will see it in the next ten years the technology will evolve fast enough so that in many places, those incentives will go way way down, maybe down to zero. But right now, today,” Peeters noted, “[production incentives] are an important tool to bring some people over this initial barrier, to give the activation energy to make this happen."

While carbon pricing or cap and trade is critical to address climate change, which Mr. Peeters called "probably one of the biggest challenges of the next generation," when it comes to spurring demand for solar power, carbon prices are just one tool among many, and perhaps not the top priority for the solar industry. Carbon pricing does not feature among the package of incentives noted in Dow Corning’s solar policy plan.

2.   The second critical pillar of Dow Corning’s solar plan involves a big increase in federal “investments in research and development to support innovation in solar energy technologies.” Both a big increase in federal investment in solar R&D and new paradigms to encourage public-private, collaborative research are critical, Mr. Peeters noted.

"Dow Corning has always felt very strongly about innovation. It is in our genes,” Mr. Peeters told me. “Dow Corning, going back 67 years, was really a technology start-up company. We see a need here for companies like Dow Corning that are focused on innovation to collaborate with universities to fill that gap in the middle" between long-term, pre-commercial research typically performed at universities and the more near-term, applied research typically taken up by companies.

This so-called “translational research gap” can be bridged through collaborative, regional, public-private research consortia that can also help anchor regional industry clusters. That’s been the focus of a number of recent policy proposals (see three examples from Third Way and the Breakthrough Institute; the Brookings Institution; and the New England Clean Energy Council) to help accelerate clean energy innovation and commercialization and strengthen American competitiveness. Mr. Peeters said Dow Corning is working with Michigan universities to establish a collaborative solar research consortia and is eager for more government support for such critical efforts.

3.   “Further invest[ment] in renewable energy-related education” is the third plank in Dow Corning’s solar policy plan, and Mr. Peeters stressed the need for greater efforts to inspire and train everyone from installers and engineers “all the way to the PhDs who are doing the innovation for the next generation.”

“It's essential that we get young people excited to become scientists and … get them excited to work in this field," Peeters told me. The United States clearly has the best universities in the world, Mr. Peeters said, but more needs to be done to get them oriented towards training and inspiring a new generation of solar and other renewable energy installers, engineers, and scientists.

4.   Finally, Dow Corning is calling on the federal government to “lead by example” in the implementation of clean technologies. Dow’s plan notes:
From procurement of onsite generation, including solar energy systems, to retrofitting buildings for improved energy efficiency, to establishing new building standards and power purchase agreements, the federal government can lead the way to a new future for energy, focused on clean, sustainable technologies.
As we discuss in the podcast, procuring new technologies at the cutting edge of high-tech fields is a traditional role for the federal government. From radios to microchips and jet engines to the Internet, federal leadership in high-tech fields has been critical to establishing early demand for emerging technologies and leading the way to robust new industries that have grown into key engines of the U.S. economy. It’s time for the government to similarly “lead the way” into a clean energy economy, Mr. Peeters said.
Overall, Mr. Peeters pointed to Germany as an example for American policymakers: there, big investments in R&D and a strong, robust, world-leading market supported by consistent targeted incentives have helped the nation become a major producer and high-tech leader in the solar industry.

Investment giant Deutsche Bank would agree. The firm recently surveyed global market environments for clean energy investment and concluded that "generous and well-targeted [clean tech] incentives" backed by "comprehensive and integrated government plans" were the hallmark of the best environments for clean energy investing, and Germany, along with countries like China and Japan, came out on top of the list. In contrast, Deutsche Bank concluded, the U.S. is a "moderate-risk" country compared to the lower-risk environment Germany or China, because we rely on "a more volatile market incentive approach and has suffered from a start-stop approach in some areas."

Mr. Peeters, who formerly directed research activities at Dow Corning, noted that both rapid innovation and growing economies of scale (along with learning during scale-up) are currently driving costs down and performance up across the solar industry.

The big innovations are happening at the manufacturing level rather than just the cell level, Mr. Peeters said. "This industry is very rapidly moving from what I would call a cottage industry to an industry that is really specialized in automated assembly,” he told me. “And of course with that, not just the cost goes down but also the quality improves and the constancy improves … and the industry is making better and better products."

The overarching goal for the industry is to drive down costs to make solar energy competitive without permanent subsidy. "When I look at Dow Corning's portfolio, basically everything we are working on is having that goal in mind of how can we reduce the cost per kilowatt-hour," Mr. Peeters stressed.

"Of course automation on its own is not going to do this [i.e. make solar cost competitive with traditional energy sources],” Mr. Peeters noted. “We really need some breakthrough innovation as well at different levels in the chain, and we see that happening." You can listen to the podcast to hear Mr. Peeters discuss three big technological advancements coming from Dow Corning and across the solar industry.

The upshot is this: the innovators at solar industry pioneers like Dow Corning are doing their part to make solar energy cost competitive and help build a U.S.-based clean energy industry. Will the US government?