USA: Barack Obama's election as the next US president could usher in a new era of solar energy development in the US. However, economic difficulties may prove a barrier to some of the more expensive renewable initiatives.

Event
On 4 November 2008, Democratic Party candidate Barack Obama was elected the 44th president of the United States. He will take office on 20 January 2009. In addition, the Democrats maintained their majorities in both houses of Congress.

Analysis
President-elect Barack Obama's New Energy for America plan could have a significant impact on the US solar industry. The plan's provisions include:
• A federal renewable portfolio standard (RPS) that requires 10 percent of electricity consumed in the US to come from renewable sources by 2012.
• A $150 billion investment over 10 years in research, technology demonstration and commercial deployment of clean energy technology.
• Extension of production tax credits for five years to encourage renewable energy production.
• A cap-and-trade system of carbon credits to provide an incentive for businesses to reduce greenhouse gas emissions.

Demand for solar energy remains dependent on government subsidies, because it costs more than conventional forms of electric-power generation. However, the new US administration could help encourage investment in solar energy projects if it succeeds in implementing some of its plans, which is more likely with majorities in both houses of Congress.

This increased emphasis on renewable energy and the extension of the 30 percent investment tax credit for solar projects, passed last month, could finally help realize the US's vast potential for solar energy. As a result, the US could overtake Germany as the largest photovoltaic market within a few years.

However, the new president will face a difficult economic situation that could significantly impede his plans. Expensive government programs will be hard to pass if tax receipts are declining and corporate earnings are depressed, even with Democratic control of Congress.

It is likely that the RPS will be passed during 2009, which will provide a strong boost to US demand for solar energy. The other provisions, which require significant spending or tax incentives, might have to wait until the economy starts to recover.

Recommendations
• Solar panel vendors: Accelerate plans to penetrate the US market. Establish relationships with distributors and system integrators and build up sales and service capabilities in the US.
• Utility companies with coal-fired power plants: Begin evaluating solar energy technologies and vendors in anticipation of a federally mandated RPS. Follow best practices from states such as California, which has an RPS, for sourcing renewable energy.
• Enterprises: Consider solar energy as part of a strategy to reduce carbon emissions.
•  US companies developing solar energy technologies: Prepare to submit applications for grants should new government funds become available.

Source: Gartner