‘. :1 ONGRESSIONAL RESEARCH SERVICE LIBRARY OF CONGRESS i I «F 1 4 ; 1 I i I -1o3a6oi27 g 010 SOLAR POWER ISSUE BRIEF NUMBER IB7Q059 AUTHOR: Moore, J. Glen Science Policy Research Division THE LIBRARY OF CONGRESS CONGRESSIONAL RESEARCH SERVICE MAJOR ISSUES SYSTEM xl DATE ORIGINATED Q§AQ1[ u Q§AQ§A DATE UPDATED I23! FOR ADDITIONAL INFORMATION CALL 287-5700 0827 CRS- 1 IB7Q059 UPDATE-08/06/80 2§§!§_2§ElElIlQ! Solar radiation represents a widely distributed, virtually inexhaustible energy resource. Its potential as a supplement to conventional energy sources, while considered great, is essentially untapped. when and to what extent solar development will impact on presently used energy sources are key questions that cannot be reliably answered at this time. Responsibility for the Federal solar energy program is vested in the Department of Energy (DOE). Applications under development include systems for heating and cooling buildings, agriculture and industrial process heat systems, the generation of electricity from thermal and photovoltiac conversion .of sunlight, wind energy, ocean thermal energy conversion, and the conversion of solar-produced organic materials (biomass) into clean-burning fuels. BACKGROUND AND POLICY ANALYSIS EQ1QBE-BBQ§B§-$ FOR SOLAR ENEBGX The direct use of solar energy is one of only a few possible alternatives this country has for helping to meet long-range energy needs. While prospects are good for some effective use of solar power in the near term, particularly in low-temperature applications such as water heating, space heating, and industrial process heating, solar energy is not expected to contribute significantly to our energy budget in the next 5 to 10 years. There is great uncertainty about the future of solar energy use in the mid-to 7ong-term, resulting in part from the unpredictable nature of technological levelopment; from instability in international, social, and economic relationships; and from disagreements about the limits of existing energy resources. Consequently, the potential "alternative futures" of U.S. solar energy development span a wide range, from a relatively minor role for solar energy to the possibility of solar being America's primary energy source in the 21st century. A On June 20, 1979, the President committed the Nation to a goal of meeting 20% of our energy needs with solar and renewable resources by the end of this century. The solar-related resources hydropower and wood (for direct combustion) currently meet about 5% of the U.S. energy demand and are expected to contribute about half the goal; wind and direct solar resources such as photovoltaics and space heating systems are expected to contribute the rest. Achievement of the goal would mean a significant reduction in the U.S. need for imported oil. At issue, however, is the question of whether the President has proposed adequate economic and institutional incentives to achieve the goal. For the present, and for the next several years we must depend increasingly on domestic sources of coal, oil, gas, and nuclear fission, combined with effective energy conservation, to reduce dependence on foreign oil and vulnerability to supply interruptions. Even in the long term, solar energy will not be a single answer to the long-range energy supply problem. Therefore, research, development, and demonstration in other new energy “echnologies are also being he pursued. Other issue briefs on solar-related topics are IB78012, Solar Energy from Space; Satellite Power Stations; IB7QO58, Ocean-Generated Power: Ocean CBS= 2 IB7flO59 UPDATE”08/06/30 Thermal Energy Conversion; and IB74087, Gasohol: The Alcohol Fuels. Congress first became serious about renewable energy resources in the aftermath of the Arab oil embargo late in 1973. The first legislative successes ever in solar energy dealt with research and development and policy; these were scored in 1974 by the 93d Congress (1973-197a). The 94th Congress (1975-1976) was concerned with economic incentives for solar energy applications. Low-interest loans, special considerations for small business and other measures were considered, but the focus was on a tax credit for residential solar installations. Congressional sentiment favored the credit, but the measure was attached to different pieces of major legislation in the House and Senate, and the two Houses failed to agree on compromise legislation with the solar tax credit intact. The 9uth Congress was able to legislate substantial increases in the solar budget in both fiscal years of the term, but, overall, the term was a disappointing one for solar advocates hoping to adopt major economic incentives for solar energy. Economic incentives continued to be the top priority for solar advocates in the 95th Congress (1977-1978). Tax credits and other incentives which failed in the 9uth Congress were guickly reintroduced. Many of the incentives were incorporated in the. National Energy Act (NEA). Other measures were introduced and marshalled_ through Congress by the Solar Coalition -- a group of about 100 House and Senate Members strongly supportive of solar energy. After a long and arduous struggle over matters generally not related to solar energy, the NEA passed with provisions for residential tax credits and other incentives for solar. In addition, the Coalition achieved many of its legislative objectives, making the 95th Congress a highly successful one for solar advocates. During the 96th Congress (1979-1980), the President committed the Nation to a goal of meeting 20% of our energy needs from solar resources by the year 2000. Solar interest in Congress centered on two key components of the strategy designed to meet that goal: (1) legislation to establish a solar energy development bank, and (2) legislation to increase the residential and commercial tax credits allowed for solar energy installations allowed under the National Energy Act of 1978 (P.L. 95-618). Both of these initiatives were successful: the solar bank was established by the Energy Security Act (P.L. 96-29a); increases in the residential and commercial solar tax credit were provided in the Crude Oil Windfall Profit Tax Act (P.L. 96-223). CRS- 3 IB74059 B29li2-L§!§.Eele2in9-22.:Ae.Q§e-9£_§9ler-§ner9z UPDATE-08/06/80 £22l;2-Le1 _------__-_--_- .222;e..----....--._--_-- - Date 93-409 Solar Heating and Cooling Demonstration ‘ Act of 1974 3 Sept 74 93-438 Energy Reorganization Act of 1974 11 Oct 74 93-473 Solar Energy Research, Development and Demonstration Act of 1974 26 Oct 74 93-577 Federal Non-nuclear Energy Research and Development Act of 1974 31 Dec 74 94-385 Energy Conservation and Production Act 14 Aug 76 95-88 International Development and Food Assistance Act of 1977 3 Aug 77 95-91 Department of Energy Organization Act 4 Aug 77 95-93 Youth Employment and Demonstration Projects Act of 1977 5 Aug 77 95-113 Food and Agriculture Act of 1977 29 Sep 77 95-202 GI Bill Improvement Act of 1977 23 Nov 77 95-238 Department of Energy Act of 1978 - Civilian Applications 25 Feb 78 95-242 Nuclear Non-Proliferation Act of 1978 10 Mar 78 95-253 National Sun Day - Joint Resolution 27 Mar 78 95-279 Wheat, Feed Grains, and Upland Cotton, Emergency Assistance 15 May 78 95-315 Small Business Energy Loan Act 4 July 78 95-356 Military Construction Authorization Act, 1979 8 Sept 78 95-424 International Development and Food Assistance Act of 1978 6 Oct 78 95-426 Foreign Relations Authorization Act, Fiscal Year 1979 7 Oct 78‘ 95-434 NSF Authorization Act 10 Oct 78 95-476 Veterans’ Housing Benefits Act of 1978 18 Oct 78 95-557 Housing and Community Development Amendments of 1978 31 Oct 78 95-577 Rayburn Office Building Solar Collector Installation 2 Nov 78 95-590 Solar Photovoltaic Energy Research, Development, and Demonstration Act of 1978 4 Nov 78 L,.2;’2i9I;<:t..l..EI;.<=._-1_=qz_A<.=r 95-617 Public Utility Regulatory Policies Act of 1978 9 Nov 78 95-618 Energy Tax Act of 1978 9 Nov 78 95-619 National Energy Conservation Policy Act 9 Nov 78 95-620 Powerplant and Industrial Fuel Use Act of 1978 9 Nov 78 95-621 Natural Gas Policy Act of 1978 9 Nov 78 96-223 Crude Oil Windfall Profit Tax Act 2 Apr 80 96-294 Energy Security Act 30 Jun 80 96-310 Ocean Thermal Energy Conversion Research and Development Act of 1980 17 Jul 80 96-320 Ocean Thermal Energy Conversion Act of 1980 3 Aug 80 Note: Not included above {except for P.L. 95-238) are DOE and predecessor agency annual authorization and appropriation bills, which may also affect solar energy policy. CBS- 1% IB7!4O 59 UPDP-;'l'E—0 8/G6/'80 §Xl.§1lE§.-L1'.'E.D§§AL-§9.L.1.1.B..A §.3.l§.'1.‘AE§.§ ..EBQ§B.1_iL‘1_5. Over the last several years, Congress and the Administration have promoted the use of solar technologies by establishing various financial, educational and informational programs. Highlights of Federal assistance currently available include: :22 grad’ .§ Solar tax s;sdit_ §g§_ hgssggssgs. For expenditures on solar, wind, photovoltaic or geothermal energy equipment made after Dec. 31, 1979, taxpayers can take a credit of fl0% on the first $10,000 spent on qualifying solar equipment. The maximum credit is $fl,000. Although the incentive is available through 1985, any credit in excess of tax liability can be carried over to taxable years ending in 1987. Taxpayers file for the credit on IRS form 5695, "Energy Credits," as explained in IRS publication 903, "Energy Credits for Individuals." Conssrvation ta§_g;sdits. Homes should be effectively insulated before installing a solar space heating system. A 15% credit on expenditures up to $2,000 is available for investments in insulation, weatherstripping, storm windows or doors, and other conservation techniques. The tax form and publication for solar devices are also used for conservation credits. §Q;sg_t§x_sredits for busigsssss. A 15% business energy tax credit is available to businesses for solar equipment installed between Dec. 31, 1979, and Dec. 31, 1985, on both new and existing buildings. The credit is in addition to the regular 10%-business investment credit. Qualifying for the credit are systems which use solar or wind energy to heat water, or to provide building space conditioning, or to provide process heat for industrial or agricultural applications. This credit is nonrefundable but has a carryback/carryforward provision. L2§£§ §Qls;_§ns;qy_snd_§gs;qy_ggnservation gssg- The Energy Security Act of 1980 was signed by the President June 30, 1980 (P-L. 96-294). Title V of that Act establishes a Solar Energy and Energy Conservation Bank in the Department of Housing and Urban Development (HUD). The Bank will make subsidized loans to persons who make energy conservation improvements or install solar applications in residential or commercial buildings. Individuals will apply for loans through regular lending institutions who in turn will be reimbursed by the Bank. The interest rate and other terms of the loan will be set by a Board of Directors. The level of subsidy will be determined by the income of the applicant and other factors. Eligible solar energy applications include active, passive, and hybrid systems, wood burning appliances (including fireplaces if an integral part of a passive solar energy system), wind electric converters, solar electric devices (photovoltaic solar cells), and certain earth sheltered buildings. HUD has until January 1981 to prepare the rules and regulations under which the Bank will operate. sgall_bgs;nsss_s9ls;_lgss_pggqgsg. The Small Business Administration can ,make direct or guaranteed loans to assist small businesses in starting up or expanding operations in solar or other renewable energy resources. A small CRS- 5 IB7flO59 UPDATE~08/06/80 business may borrow up to $500,000 for 15 years at the same interest rate as other loans made under section 7 of the Small Business Act. Fadssally_;asass§ah9gs_;gaas. The National Energy Act increases from $60,000 to $72,000 (20%) the ceiling on basic Federal Housing Administration (FHA-HUD) and Farmers Home Administration (FmHA) insured mortgages for single and multi—family dwellings to cover the additional cost of passive or active solar or wind energy equipment. Separate legislation (P.L. 95-Q76, the Veterans Housing Benefits Act of 1978) grants the VA authority to guarantee loans for solar and other energy-related home improvements made at interest rates higher than rates set for loans for the purchase of homes. The higher interest rate will help ensure the availability of financing for these kinds of improvements. The VA also has the authority to guarantee loans for the purchase of homes equipped with solar devices. Homeowners may qualify for government-guaranteed loans to install solar heating, cooling and hot water units under the Federal Housing Administration's Insured Home Improvement Loan Program. A maximum of $15,000 is available for up to 15 years, at an interest rate not to exceed a level specified by FHA. Since homeowners may find it impossible to borrow from commercial institutions at the FHA rate, this program has limited value. Secgndarx fina2§in9-2£-§9lar-h2me-im2;92emen:.l2e2§- In a move to make financing available for solar—related home improvements, the National Energy Conservation Policy Act (part of the National Energy Act) authorizes the Federal Home Loan Mortgage Corporation (FHLMC) and the Federal National Mortgage Association (FNMA) to purchase Title I FHA home improvement loans or conventional home improvement loans made for qualified solar or conservation systems. sgall utility laaas. Under provisions of the National Energy Conservation Policy Act, utilities can make loans of up to $300 to their customers for the purchase or installation of specified conservation measures including solar and wind energy equipment. §£QBE§ §ammaaisy_blgs§_gsaa§_p;agsagsa HUD administers a community block grant program which is available for a wide range of projects aimed at conservation and building rehabilitation in urban centers. Block grant funds could be applied to projects involving solar energy systems. A22r92ri2:e-:e2hn9l991-§uell_9r2n:§.22Qgrem- Congress has authorized DOE to implement an appropriate technology financial support program. An office of Appropriate Technology has been established, under the direction of the Assistant Secretary for Conservation and Solar Applications. The purpose is to encourage development and demonstration of energy-related systems and supporting technologies appropriate to promoting energy conservation and use of nonconventional energy resources. The emphasis will be on small-scale, energy-related technologies appropriate to local needs. Individuals, local nonprofit organizations and institutions, state and local agencies, Indian tribes, and small businesses may apply for grants of up to $50,000 for energy-related projects in the categories of concept development, product ‘evelopment or demonstration. A §sya;s_ aaagpl9yasat_ area assissaass. The Economic Development Administration (EDA), within the Commerce Department, is authorized to make CBS- 5 IB7#G59 UPDATE=08/O6/80 grants to communities with severe unemployment problems which may be used for solar energy projects. The objective of this grant program is to stimulate employment. Solar energy is regarded as a labor-intensive industry requiring skills in job areas currently suffering from unemployment. LQg;ingggg_g9mmgnity_g;ants. Community Action Projects across the country through the Community Services Administration are engaged in building, designing and installing solar energy systems for low-income households. Greenhouses, supplementary heat for the elderly, and low—cost hot water systems are amom; the projects which have been funded. Qrnnts to sch92l§_ end- heenitnle- £22- enerq1_ eeneerzing- im2r2zemenf§- Energy conservation renovation grants to public and private nonprofit schools and hospitals are authorized under the National Energy Conservation Policy Act (National Energy Act). when fully funded, the program would pay up to 50% of the cost of each energy conservation project (or 90% in severe hardship cases), with state or private sources paying the remainder. "Energy conservation projects" may include solar space heating/cooling, solar water heating and solar electric generating systems. $900 million is authorized in fiscal years 1978 — 1980 for the purchase and installation of equipment, as well as for energy inspections. §énsn:;9nzirainin9zInf0rnerien CETA solar program. CETA (Comprehensive Employment Training Act) sponsors can apply for funds to train CETA employees to install solar hot water and space heating systems suitable to the needs of low-income homes. Called SUEDE (Solar Utilization Economic Development and Employment), the program was initiated in July 1978 and is funded jointly by DOE, the Department of Labor and the Community Services Administration. Contact the National Solar Heating and Cooling Information Center for information on SUEDE. National_ §Qlg§_ gggting_ and Cooling- lE§9£E§EiQg_ Center. NSHCIC was established by the federal Government to serve as the primary source of solar energy information for the public. By calling the Center's toll-free number (800-523-2929, in Pennsylvania 800-H62-4983) individuals can receive free information on solar educational opportunities in their state, basic information on solar thermal energy for buildings, including collectors, storage, materials, heating and cooling systems, water heating, and electric power, or referrals to other sources of information. The Center maintains state-by-state lists of architects and builders with solar experience as well as directories of solar hardware manufactures. It provides a speakers service, films, and is the initial point of contact for most federal solar assistance programs. Write: Solar Heating, P.O. Box 1607, Rockville, fiaryland 20850. §9ler-Ene291_In£9rnn:i2n_2e:e-§nnh- The SEIDB is intended to serve the technical community. It answers technical inquiries, conducts seminars and workshops, provides on-site usage of the comprehensive library collection, and conducts computerized information services. Computer services include modeling and simulation capabilities. Contact: Solar Energy Research Institute, 1536 Cole Boulevard, Golden, Colorado 80fl01 (313—23fl-7171). Ee:i9nal-§9ler-ener91-eQn9e:i9nel_§a:e-h§e- The Solar Energy Research Institute has compiled the National Solar Energy Educational Directory with information on over 1,200 solar-related courses being offered by about 700 universities, colleges, and technical-vocational trade schools. Copies of CRS- 7 IB7#059 UPDA B-08/0 /80 the Directory may be obtained for $4.75 each from the Government Printing Office, Washington, D.C. 2ouo2. (Ask for publication stock number O61-000-00210-3.) A Solar Energy Technical Education Directory (based on the SERI directory), listing 91 post—secondary institutions offering training programs in technical fields, is available from the National Solar Heating and Cooling Information Center. In addition, the National Solar Heating and Cooling Information Center has available at no charge state-by-state educational program listings. §9m§_study course. For those interested in learning about solar at home, DOE in cooperation with the solar industry has developed a correspondence course in the installation and maintenance of solar space heating and domestic hot water systems. The course encompasses 11 lessons that take 10 to 12 weeks to complete. Interested persons should contact: NHAW Home Study Institute, 1661 West Henderson Rd., Columbus, Ohio 43220 (61u-H59-2100). 3egi9ng;_§Ql§g_gggtg;§. DOE is in the process of establishing a network of four regional solar energy centers to provide general information and to assist in the commercialization of solar technologies on a regional basis. Information on the four regional centers (Hid-American Solar Energy Complex, Northeast Solar Energy Center, Western Sun, and Southern Solar Energy Center Planning Project) may be obtained from the Solar Heating and Cooling Information Center. Additi9nal-Inf9rma:i9n (1) Additional information on these and other Federal and State solar energy assistance programs is available from the National Solar Heating and ‘ooling Information Center. (2) A report entitled, “Solar Energy: A Guide to Federal and State Programs and Information Resources," is available from the Environmental Study Conference of the House of Representatives (333fl House Annex II, Washington, D.C. 20515). The report was printed in the Congressional Record of Aug. 3, 1979 (EH176-EQ178, EQ190-E4192, EQ186-EH187). (3) The August/September 1979 issue of 1hg_Ege;gy_ggn§gmg;, a publication by DOE's Office of Consumer Affairs, featured a solar/ renewable energy resources guide to Federal and State assistance programs (including films and publications). Copies of this issue are available from DOE, Office of Consumer Affairs, Washington, D.C. 20585). §QLA§-l§§E§§ The_Need for C9m9rsh2n§ize-Eederal-29lisz-i2-§9lar- Qgmmersializatieni It is becoming increasingly apparent that solar technologies will have difficulty penetrating conventional energy markets even after their technical and economic feasibility have been demonstrated. If left to normal market forces, solar will probably not penetrate established energy markets fast aenough to have a meaningful impact on U.S. energy supply, at least in this century. A number of incentive options are available at the Federal level which could speed the commercialization process. However, comprehensive Federal policy setting forth the order and timetable for exercising these options has not been formulated. In the absence of comprehensive policy, Congress and the Administration have sought to develop policy incrementally through the annual budget process and by enacting a patchwork of incentives ‘egislation intended to make specific solar technologies competitive. While is incremental approach to policy has helped to create a national awareness of the potential of solar technologies, it does not substitute for comprehensive Federal policy in solar commercialization and could actually CRS- 3 IB74059 UPDATE-08/06/80 have an adverse effect on the market. For example, premature commitment of a technology to commercialization can lead to disillusionment and retrogression, as the early history of the heat pump illustrates. Therefore, comprehensive policy for near-, mid-, and long—term solar commercialization (in the context of National energy policy) is needed to assure the most *efficient and equitable program management. g_§atignal Solar gtratggy In public ceremonies and in a formal message to Congress (Congressional Record, S8142-S8147), the President on June 20, 1979, announced the major elements of a national solar strategy and committed the Nation to a goal of meeting 20% of our energy needs with solar resources by the end of this century. Currently, about 5% of U.S. energy production comes from such sources, including hydropower, and wood burning. To help meet the goal, the President proposed a number of administrative changes and economic incentives, with funding for most of the new programs linked to passage of the Administration's proposed "windfall profits" tax on the oil industry and creation of an energy security fund for the development of alternative energy sources. Highlights of the President's action include: - A National Solar Bank as a Government corporation to be located within the Department of Housing and Urban Development (HUD). - A new 15% investment tax credit for the use of solar energy equipment to provide process heat for industry. —mA 20% tax credit, up to $2,000 per home, for new homes using passive solar designs -architectural features built into a structure to collect and store solar heat (or to provide cooling by radiating solar heat). - A 15% tax credit for the purchase and installation of airtight woodburning stoves in principal residences. (Wood is a solar-derived fuel.) — A permanent exemption from the H-cent-a-gallon federal tax for gasohol. '(Biomass, a solar-derived resource, can be used to produce alcohol which is blended with gasoline to make gasohol.) In addition: - The President directed the Offices of Management and Budget to provide an additional $100 million in FY81 to DOE for use on solar programs beyond that which had previously been identified for the FY81 base program. - DOE was also directed to establish a permanent, standing Subcommittee of the Energy Coordinating Committee to monitor and direct the implementation of the national solar energy program. The Subcommittee is expected to provide leadership and day-to-day coordinating functions. Beasxien- :9- the- Pre§i§e2::§_ 2r2qr2n- The national solar strategy announced by the President roughly follows option level one of the Domestic Policy Review of Solar Energy. Solar proponents denounced the program as the very minimum the President could have done politically. Instead of 20% by the year 2000, proponents claimed that the President's program would only boost the share of solar and renewable energy to about 15%, and that the CRS- 9 0 IB74059 UPDATEQOS/06/80 nation could have expected a 13% share without any new proposals. Major objections were raised over linking funding for the new programs to the windfall profits tax and delaying the activation of some of the programs until FY81. Paul Rappaport, the former executive director of DOE's Solar Energy Research Institute, said in a SERI news release that the goal was achievable but would cost an estimated $5 billion per year over the next 20 years —— far more than the Government is prepared to spend at this time. In FY81 the Federal solar budget may reach $1.5 billion, divided about evenly between RSD programs in the Department of Energy and procurement and incentive programs administered by other agencies. In March 1980, the General Accounting Office (GAO) completed a review of efforts within DOE to attain the 20% solar goal by the year 2000. GAO's review disclosed the lack of a comprehensive plan for attaining the goal. Furthermore, while some efforts are underway in DOE which could serve as a basis for preparing such a plan, it was not apparent to GAO at the time whether these efforts would produce a detailed plan. (20 Percent Solar Energy Goal -- Is There a Plan to Attain It? Prepared by GAO for the Subcommittee on Energy Conservation and Supply of the Senate Committee on Energy and Natural Resources. EMD-80-60. Mar. 31, 1980.) Solar strategx iuserperared- in. she- Im29r2_ Redusrieu- Br2qr2m- Solar initiatives announced on the 20th of June were incorporated in a 10-year, $1u2 billion oil Import Reduction Program announced by the President July 15, 1979. This major new program aims to cut U.S. oil imports to 4 or 5 million barrels a day by 1990, about half the 1977 import level. The solar development bank, tax credits for passive solar systems, and other solar initiatives are included in the program as incentives to encourage the use of solar energy, and thereby lessen the Nation's dependence on foreign oil. The eost of the solar initiatives is estimated to be $3.5 billion over 10 years, or about 4% of the total cost, while facilities for the production of synthetic fuels will cost an estimated $88 billion, or about 60% of the total. Actions taken under the Import Reduction Program will be funded solely from the proceeds of windfall profits tax. §2lar-Euer9z.iu-:h2_Debate Qver Hard or_§9fr-§u§r91_£ur2re§- The current and lively debate over a centralized or decentralized approach to the energy future -- so called "hard" or "soft" path -— has embroiled the Federal solar energy program. Solar energy is particularly important to advocates of the soft path since it lends itself well to decentralized modes of operatic and is one of the few possible alternatives to central station fossil and nuclear power. However, not all solar technologies can be used in the decentralized mode; ocean thermal energy conversion and solar power satellites cannot- Still other solar technologies including scdar thermal electric conversion, photovoltaics, and wind electric systems, can be used in either the decentralized or centralized mode. DOE and its predecessor agencies have been criticized for being too heavily oriented toward centralized utility applications of solar energy, to the point of underplaying the importance of other, nonutility, decentralized applications. Moderate soft-path advocates call for better program balance between the centralized and decentralized applications; more extreme advocates see the issue of centralized and decentralized systems in mutually exclusive terms and would appear to reject all Federal efforts to develop centralized solar technologies. An interagency panel set up to review the balance in the Federal solar energy rogram (Solar Energy Research and Development: Program Balance. DOE, oruary 1978) found that an imbalance in favor of centralized applications was in fact present, but indications were that adjustments were underway. While DOE has not been persuaded that it should no longer persue the CRS=1G IB7fl059 UPDATE—08/G6/80 development of centralized systems, the emphasis in the whole solar program is shifting from a heavy concentration on centralized systems to a more balanced approach giving increased attention to decentralized applications. Basig Research_in_§9la;_§ne;g1_§ggnd_Lagking. In December 1977 the White ‘House Office of Science and Technology Policy commissioned an OSTP Working Group on Basic Research to advise on the scope and quality of basic research conducted by and on behalf of the Department of Energy. A major finding of the Group (its report was released in June 1978) was that there is a lack of balance in the DOE programs between research, on the one hand, and development, engineering, and demonstration programs on the other. The dearth of research was found to be especially evident in the solar and fossil fuel programs. It was suggested that unless the level of basic scientific and engineering knowledge is significantly and continuously increased, the mandate to develop alternative sources of energy cannot be met in the foreseeable future. In recommendations aimed at strengthening the role of research in DOE, it was advised that DOE should stress innovative research in solar energy over the present programs for large-scale power stations, which were said to be economically unpromising. It was further recommended that dispersed technologies and the basic sciences related to biomass should be stressed. The findings of the OSTP Group regarding the adequacy of DOE's basic research effort in solar energy agree with earlier findings by an internal DOE review group which concluded "growth in the level of effort fr material, chemical, biological, and engineering sciences, critically important to future advances in solar energy, has not kept pace with the growth in effort for applied RED, and it should." (Solar Energy Research and Development: Program Balance. A review by the Solar Working Group. DOE. February 1978.) ggggumer Protect;gn_;§§ug§. Solar incentives enacted over the past four years are expected to motivate a growing number of consumers to purchase solar systems. The incentives are intended to spur the commercialization of a number of solar technologies, but are targeted primarily to active solar space conditioning systems for homes and businesses. Hearings and investigative work by the House Subcommittee on Oversight and Investigations in 1978 (see HEARINGS) revealed, however, that consumers cannot assume that they can purchase solar hardware with the confidence they routinely enjoy with most conventional energy conversion systems. In looking into the issue, the Subcommittee found that a significant number of design, manufacturing, and installation problems have occurred with active solar space and water heating systems. It was concluded that if these problems are not sharply reduced, the popularization of solar energy could be set back for several years. Consumer protection issues in solar energy involve standards, codes, and warranties for hardware and installations. Standards and codes are in preparation and are being applied to a limited extent- Warranties are being offered by most manufacturers and installers, but there is little consistency within the industry. Also, warranty reinsurance - possibly government-backed —- is needed by the industry to solidify and back up the warranties. The challenge for industry and government is to devise standards, codes, and warranties which give the consumer adequate protection without adversely affecting competition or stifling innovation in the industry. [This and other consumer issues related to solar energy were considered in the report, "Solar Energy and Today's Consumers,“ prepared by the Subcommittee on Oversight and Investigations of the House Committee on Interstate and Foreign Commerce (December 1978).] CBS-11 IB7flO59 UPDATE-Q8/O6/80 Utility Own§rship_gf_§Qlag_Installations. The most likely pattern of utility participation in the solar energy market involves utility ownership, financing, or installation of solar energy equipment for its customers with the recipient customer paying for these services through an add-on or surcharge to the utility bill. The charge can either be in the form of a .lease payment (analogous to the telephone company's ownership of telephones) which continues until the service is withdrawn, or in the form of an installation payment through which the customer eventually purchases the solar unit. Such arrangements may be appealing to many customers who cannot afford the high initial cost of the equipment. Other customers, unwilling to risk getting a satisfactory system installed on their own, night elect to go solar because they trust the service and performance of equipment provided by their utility. A primary argument against utility ownership, aside from the emotional one of the utility's "owning the sun," is that utilities will have a tendency to "gold—plate" since their rate of return is based non invested capital. Furthermore, opponents fear that utilities could reap excess profits at the homeowner's expense, and could swiftly monopolize the solar energy field, driving small solar companies out of business. 2$ili:1-Ba:s§.§har9sd-§2.Q2nsr§.2£-§9lar;§2a:e§-§2m§§- Because of costs. it is seldom feasible to design a home to be 100% solar-dependent; some portion of the heat load is almost always met by a back—up energy source -- in many cases electric utilities supply the back-up energy. From the utility's perspective, solar homes are characterized by low-total energy usage with sporadic periods of high-energy demand. Utilities must have sufficient generating capacity available to meet the fulltime or "base load" demand of its customers, as well as the intermittent or "peak load" demand which occurs just two or three times each day in most locations- Peak load electricity is considerably more expensive for the utility since peak load aquipment is idle most of the time, and for quick response, often burns more ixpensive fuels than base load equipment. Utility rates are generally an average of the low-cost base load and high-cost peak demands. The problem solar users pose for utilities is that extra peak capacity must be installed to meet the sporadic energy demands of those customers even though the total energy they use will be too low to justify the cost. The first impulse is to require higher rates to be paid for sporadic use of electricity by solar homes and businesses, but such an approach creates the undesired effect of discouraging the conversion to alternative energy sources. On the other hand, if the rates are not adjusted to reflect the full cost of the extra capacity, non—solar customers are put into the position of subsidizing solar ones. A voluntary guideline to assist State regulatory authorities and nonregulated electric utilities in their consideration of utility customers who use solar energy and renewable resources was prepared by DOE and published in the Federal Register of Feb. 22, 1980. In issuing the guideline, DOE was chiefly concerned that utility regulatory and ratemaking policy neither favor nor penalize use of solar energy and renewable resources by customers. Solar Access Rights. Under U.S. law a land owner has the right to receive sunlight directly above his property, but has no right to receive it across the property of a neighbor. Thus a neighbor could legally block the sunlight needed to run a solar device. Present limited experience with solar applications provides very little empirical evidence concerning whether ading will be a major problem for solar users. Nevertheless, the uncertainty regarding guaranteed access to sunlight is, in itself, enough to be a barrier to the widespread use of scdar devices. There is general cns-12 1374059 upDAmE—o3/05/so agreement that some sort of access to solar energy should be guaranteed but how that can best be done is not clear. Federal involvement in issues relating to solar access has been limited to the role of conducting research and facilitating the-flow of information to the State and local level. ghgggvoltaic Demonstrations. Through authorizations and appropriations, and with the Photovoltaics Research Act of 1978 (P.L. 95-590), Congress has indicated strong support for a Federal photovoltaics procurement and demonstration program as a means of fostering a photovoltaics industry. The Administration, on the other hand, has indicated its intention to cut back on demonstrations and in their place provide additional support for research and development. The Subcommittee on Energy Development and Applications of the House Science and Technology Committee held a hearing on DOE's response to Federal photovoltaic legislation (and on the FY81 photovoltiac program authorization request) Feb. 29, 1980. 1lQ2‘.12ll'§-§QL£i.E-12I_?9§EA.!§ During the period from about 1950 to 1970, Federal spending for terrestrial applications of solar energy averaged about $100,000 per year. An additional sum of perhaps several million dollars was. spent by the National Aeronautics and Space Administration during this period to develop reliable photovoltaic systems (solar cells) for use in space missions. Federal funding for terrestrial programs first passed the $1 million mark in 1970 (fiscal year 1971) while solar energy development was the responsibility of the National Science Foundation. Sources: cas-13 IB7uo59 UPDATE-08/O6/80 SOLAR FUNDING FEDERAL SOLAR SPENDING FROM 1971 TO 1981 (in millions) £.1.§<.=..9l_,Z.e.91=. §2.L9.I;_§§2 1971 $ 1.2(NSF) 1972 1.7(NsF) 1973 u.o(usF) 197a 14.8(NSF) 1975 5u.fl(NSF/ERDA) 1975 151.6(ERDA) 1977 286.3(ERDA) 1973 410.7(DOE) 11-year total 197 1 -73 197 11-78 1979 1980-81 1979(estimate) 718.4(DOE, all agencies and off-budget) 1163.0(DOE, all agencies and off-budget) 1u96.0(DOE, all agencies and off-budget) 1980(estimate) 1981(reguest) $4,302.1 Solar Energy Legislation Through the 94th Congress. Washington, U.S. Govt. Print. Off., 1976. Status Report on Solar Energy Domestic Policy Review. DOE. Aug. 25, 1978. U.S. Department of Energy FY80 Budget to Congress. Budget Highlights. DOE- Jan. 22, 1979. U.S. Department of Energy. Budget in Brief 1981. January 1980. CBS-14 1 IB74059 UPDATE-O8/06/80 FY_1980 Funding Request In its budget submission to Congress dated Jan. 22, 1979, DOE requesteé $597 million in budget authority for the development and application of the -various solar technologies, an increase of 13% over the amended FY79 budget. An additional $31 million was provided in FY79, and $49 million is requested in FY80 for solarmrelated activities in generic areas such as environment and basic research. when these crosscutting areas are added in, DOE solar funding totals $559 million in FY79 and $646 million (requested) in FY80. Budget Authority (in millions) ElZ2_--_..--..E1§Q Solar Technology - $315 $383 Biomass - H4 58 Solar Applications _1§g _1§§ Total DOE Direct Solar Funding $528 $597 Other DOE Solar-Related Funding __§1 __fi2 Total DOE Solar Funding $559 $6u6 Additional solar funding to other agencies totals $159 million in FY79 (estimated) and $198 million (requested) in FY80. Adding these sums to the DOE budget brings the total Federal solar budget to $718 million in FY79 and $800 million.in FY80, an increase of 17.5% not counting inflation (about 7.8% after 9% inflation in 1978 is considered). EZ-12§Q-Auth9rization H.R. 3000 authorizes appropriations to DOE for FY80. Title I contains the solar and biomass research and development authorization and was referred to the Committee on Science and Technology. Solar commercialization and related activities are authorized under Title VI which was referred to the Committee on Interstate and Foreign Commerce. For solar programs in the Science Committee's jurisdiction, DOE requested $563.8 million. The Committee made reductions in several programs including $12 million cut from the Administration's request for funds to construct the Solar Energy Research C35-15 1374059 UPDATE‘08/O6/80 Institute facility in Golden, Colorado. Overall, however, the Committee increased the request by $37.8 million to $601.6 million. The largest increase, $25 million, was in the photovoltaics program. Both science and Commerce claim jurisdiction over the market development and training program. Science cut the program by $5.3 million because of a function and mission duplication between the Regional Solar Energy Centers and the Energy Extension Service; Commerce approved the full $27 million requested by the Administration (Science claims jurisdiction over $24.3 million). Including the market development.and training program, Comerce authorized $32 million for solar programs in FY80. Commerce also has jurisdiction over the program to demonstrate solar energy in federal buildings for which the Administration requested an appropriation of $23.5 million. Since funds for this program were authorized in the National Energy Act, no additional authorization was required by the Committee. H.R. 3000 was reported from various House committees on May 15, 1979, and passed by the House Oct. 24, 1979, after several days of debate. It was placed on the Senate calendar Oct. 29, but no action has been taken in the Senate. S. 688, the Senate DOE funding bill, authorizes $637 million for solar research development, construction, and commercialization in FY80. The bill was reported from the Senate Committee on Energy and Natural Resources June 26, 1979, but no action has been taken. EX§Q_A22£922i2:i9n§ H.R. 4388, the Energy and Water Development Appropriation Bill, was approved Sept. 25, 1979 (P.L. 96-69). It appropriates $577.679 million to DOE for direct solar and biomass research, development and demonstration support in FY80, and $43.2 million in indirect solar program support, for a total FY80 DOE appropriation of $620.879 million. Appropriations to DOE for the Solar Federal Buildings Program ($11.75 million) and solar commercialization activities ($6 million) are provided under P.L. 96-126, Interior and related agencies appropriation, FY80, and total $17.75 million. Other agencies including Agriculture, Defense, Small Business, the Agency for International Development, the Economic Development Administration (Commerce Dept.), received through their respective appropriations bills an estimated $222 million for solar activities in FY80. With off—budget funding, which includes $239 million estimated for tax credits in FY80, $24 million for solar building demonstrations by the Tennessee Valley Authority, and $35 million for the proposed Solar Bank, the FY80 Federal solar appropriation totals 1.163 billion. EZéQ.§u22Len22:al-A22r92£;2:i2ns and Rescissiens P.L. 96-304 contains solar-related rescissions and deferrals to the FY80 DOE solar budget totalling $33 million. It also contains a supplemental appropriation of $3 million for ocean thermal energy conversion programs for a net reduction in the FY80 solar budget of $30 million. The Senate-approved bill included a $36.5 million deferral for the Barstow, California solar ihermal powerplant, which solar advocates thought might kill the project. he House-passed version, which was adopted in conference and subsequently passed, deferred $8 million for the Barstow project pending approval of a plan for using the 10—megawatt solar central receiver facility as a test CBS-16 IBYQOS9 UPDATE-08/Q6/80 facility for operations with conventional powerplants. §Z§1.E22§i29_Ee92e§2, The Administration's solar budget request for FY81 totals almost $1.5 billion (about $1.15 billion directly to seven agencies identified in the budget request, and about .35 billion indirectly for residential and commercial solar tax credits). The requested budget is a 28.6% increase from FY80 projections ($1.16 billion), with most of the increase for tax credits and programs outside DOE. DOE's 10% budget increase translates into a small decrease (about 2 to 3%) when expressed in uninflated dollars. The Administration submitted a revised FY81 solar budget request to Congress in March 1980 with reductions in the following programs: the Solar Energy Research Institute building ($9 million), systems development ($3 million for prototype testing of active and passive cooling systems, and $2 million for the development of point focusing collector systems); and market test and applications ($5 million for the Federal photovoltaics utilization program and $10 million for the multiyear photovoltaic purchase program). CRS-17 lB7flO59 FEDERAL SOLAR FUNDING FY80 BUDGET AUTHORITY/FY87 REQUEST (in millions) §QLgR TECHNOLOGY_JQQ§L Solar Thermal Electric Photovoltaic Energy Development Hind Energy Conservation Ocean Systems Solar Energy Research Institute Building Solar Information Systems Solar International Biomass Program Direction and Support TOTAL §QLA§-ABELl§AllQB§-12Q§l Systems Development Market Test and Applications Federal Buildings Commercial/Market Analysis Market Development and Training Solar International Applications Program Direction and Support TOTAL QI§§B-QQE-§QLAB_EE!2lE§ ' (Support from Basic Energy Sciences, Environment, Electric Energy Systems, Energy Storage Systems and the Satellite Power System)** TOTAL DOE SOLAR FUNDING FY80 Jfierimesel $121 147 63 H6* U1 ~H\lO\OO\l I69 I: I4 I69 I01 M: It» UEDA$E‘08/O6/80 FY81 (Revised) lB§QE§§EL $113 140 so 39 1 1 11 63 __E $u57 $51 W9 lU'| |U'| I69 IS ICIJ * Includes $6 million in a proposed supplemental appropriation. ** Does not include hydropower. I-I tr) ‘J -1:’: O U1 \D CBS-18 UPDATE‘08/O5/80 FEDERAL SOLAR FUNDING (continued) FY80 BUDGET AUTHORITY/FY81 REQUEST (in millions) OTHER FEDERAL SOLAR FUNDING Agency for International Development $38 $53 Solar Bank (HUD) 35 150 Small Business Administration 20 12 Economic Development Administration 75 7a Power Marketing Agencies (TVA, etc.) 24 H1 Biomass Loan Program (USDA) 50 #1 other Federal Activities _§2 _§§ TOTAL $281 $fl 6 TOTAL FEDERAL SOLAR PROGRAMS gggg §3‘11g Tax Expenditures gggg §§§§ ALL SOLAR FUNDING A §1‘1§; §1‘g§g 0 2:0 If) I -3 m H tad Q 4: <3 ()1 \D (:3 *U ts fig r-3 N 1 <3 (D \ <3