A closer look at U.S. solar policies with Borrego Solar Director of Policy Dan Berwick

Dan Berwick
Dan Berwick

Dan Berwick is Borrego Solar’s Director of Policy and Business Development, based out of the New England regional headquarters. Dan’s primary focus is on shaping Borrego Solar’s business strategies and product offerings across various geographic markets and solar incentive jurisdictions, with a particular focus on guiding Borrego’s SREC market participation.

Prior to joining Borrego Solar, Dan worked on renewable energy policy reform at the Texas House of Representatives. He’s also worked in the utilities practice area at The Brattle Group, an economic consulting firm, and he supported Federal policy efforts for the Pew Center on Global Climate Change.

 

Solar Server: First, can you give our readers a brief background on Borrego Solar, the diverse services your company offers, and its approach to developing and building PV plants?

Dan Berwick: We are a little more than a 32 year-old company. The first 20 years we were just two guys in a truck running around the desert. We have been growing for about a dozen years into the company that we are today, which is a nation-wide, turnkey solar development, design and construction company.

So we develop distributed generation projects between about half a MW and a 20 MW in different markets around the country. Our main offices are in California and Massachusetts, but we are in about ten different states around the country, doing projects of that size.

We will either develop and build projects on the smaller end of that spectrum for building owners that want to net meter on their own account, or we will do medium-sized, larger, ground-mounted distributed generation arrays where we are selling power either to multiple host customers through virtual net metering or directly to a utility.

 

Solar Server: To move over to policy, in terms of the expiration of the section 1603 Treasury Grant Program and the DOE loan guarantee program, how significant is the end of those policies, and what is Borrego Solar's strategy to operate in the new environment following the expiration of those programs?

Dan Berwick: The loan guarantee program is a non-factor for us. It's not a policy that we have engaged with. We've taken a few steps down the path towards a few loan guarantee financings over the last few years, but never came close, this never was a viable option for us. It's more I think for upstream investments and very large projects, or that is what it is more suited for.

As far as the Treasury Grant... I think we will be fine, we have tax-equity relationships, we have relationships with tax-equity investors; during the Treasury Grant Program we were still using a tax equity investor in our capital stack. We are in good shape with a strong pipeline that should be fine with the ITC. The economics of the ITC are not considerably worse than the treasury grant; it's the access to tax equity that is the issue.

I don't know, I don't think anybody really knows whether the expiration of the Treasury Grant will have a sort of big or small effect. I think tax equity investors or those who are in a position to be tax equity investors have said a lot recently that their appetite for 1603 investments is a lot larger than their ITC investments.

But now that ship has sailed and we are in the ITC framework, the question of whether there is sufficient tax equity appetite for the sort of scale of the solar financing pipeline in the U.S. is I think an open question. I suspect that there may be.

 

Solar Server: Interesting. Now to go from the federal to the state level, how significant are the state-level policies in the different markets in which Borrego Solar operates? And which policies do you feel are particularly significant?

Dan Berwick: They are fundamental right now. With solar at four dollars per watt until recently, maybe three dollars per watt now, we are still at a point where after the ITC, the sort of sub-markets within the U.S. that are successful markets are the markets where state or local policy makers do something else to incentivize the package or create a favorable policy environment for solar. So, we are still in an environment now where it is the marginal state policy which really makes the market.

And that's why California, New Jersey, Massachusetts, until recently Pennsylvania, and other states that are aggressively pursuing solar have been having some success. That is, I think, beginning to shift somewhat, where, the prices continue to fall and fall much further, then we are sort of approaching... the term grid parity gets thrown around a lot and has a lot of definitions.

If the definition is the point at which, you could talk about, maybe ITC grid parity, which I would say is the point at which a net-metering solar array competing with retail electricity would be competitive with no major financial incentive except for the ITC. I think that we're starting to see markets where that is the case.

And as solar prices continue to fall over the next few years I think we are going to see more and more of those. And that will diminish the importance of an additional state incentive, but not the importance of good state polices like good interconnection frameworks, and excellent net metering policy.

I think one way to think about the importance of state policy and the shift in state policy, is as prices fall, the financial incentive policies will become less and less important, and the net metering policy will become more and more important.

 

Solar Server: If you had privilege state policies versus federal policies in the United States, which do you think have been more important for the U.S. solar industry?

Dan Berwick: I don't think you could really pick one or the other. For the growth in U.S. solar in the last few years that has been pretty substantial, there are three necessary conditions: the ITC, the patchwork of state policies, and falling installation prices.

 

Solar Server: What would you like to see in the next few years in terms of policy development, and what do you expect to see?

Dan Berwick: Are you talking about the state or federal level?

Solar Server: Either.

Dan Berwick: Well, at the federal level we need the continuation of the ITC. I think that's the critical thing. It's important to remember and it often gets lost that all generation technologies are subsidized and the ITC does not represent some sort of outside subsidy.

While in general, incentive policies and subsidies are best thought of as temporary measures to get a growing industry down its learning curve into cost competitiveness unsubsidized, in electricity, that's a somewhat limited framework, and the ITC doesn't really fall under that framework—It should be thought of as the type of ongoing incentive for new generation that all generation technologies have in one form or another.

The ITC is set to expire in 2016, and that needs to be extended. That is the one major policy. Certainly a federal renewable energy standard would be great, but that doesn't look likely any time soon.

On the state level, states embracing renewable energy frameworks where they are putting some state money in a smart and targeted way to bridge that gap in terms of viability with the ITC and true viability for a growing solar market in a given state is important, and will continue to be important for the next couple of years.

Ultimately, I think the most important thing that we need states to do, and regional transmission organizations to do, is to standardize and streamline the interconnection and net metering process. So that distributed generation customers can interconnect their projects smoothly, and get credit for the true value of the excess power they are producing.

 

Solar Server: To shift back to Borrego Solar, your company was awarded a broad contract by the U.S. General Services Administration in February 2012. Have any individual projects come about as a result of that contract?

Dan Berwick: The thing that we've got, in terms of anything in the project construction pipeline now, we've got two project developers focused on the federal space, one of whom has been there for a year and one who is just starting this month.

It's an area that we're anxious to move into and the GSA is certainly a fundamental building block for that strategy. And we have a good early stage pipeline of federal projects. But with federal government work it can take a little while.

Interview conducted on June 4th, 2012 by Solar Server International Correspondent Christian Roselund