Solar Power and Current Finance

From the Wall Street Journal:

For the solar-power industry, it was the best of times and the worst of times—all in the space of a long weekend. On Friday, after the passage of the Wall Street bailout bill that included juicy tax breaks for solar power, champagne was the order of the day. By Monday, as stock markets went south and some of the implications of the new tax breaks sank in, solar companies expecting to cash in saw their prospects turn as gloomy as anybody’s.

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Mixed signals for solar in the U.S. (AP)

Optimism reigned on Friday after Congress and President Bush inked an eight-year extension to clean-energy tax credits which should help solar power especially. The new law gives homeowners serious help in installing their own solar-power arrays, and for the first time opens up the tax credits to power companies.

The combination was meant to herald a new era of big solar-power rollout. Or, as Lyndon Rive, chief executive officer of SolarCity in San Francisco, told The Wall Street Journal: “The solar industry has been waiting 30 years to be able to offer parity with grid prices. Now we’re able to offer it.”

Headwinds in the rest of the economy—and some potential impacts from the new law—appear to be to blame for the sector’s woes. Now that homeowners can finally get tax breaks for 30% of home-solar installations—breaking down hefty upfront costs, one of the biggest barriers to solar power—the credit crunch means homeowners are struggling to land loans to cover the other 70% of the cost of installation.

And now that utilities can take advantage of the tax credits, the solar-power lobby expected a rapid explosion of big solar-power installations. Under the old law, power companies had to buy solar-generated electricity from independent developers.

That could be a mixed blessing for the companies that make solar-power gear. Many were already rubbing their hands at the prospects of huge sales to utilities that need to build large-scale solar projects to help meet local requirements to generate clean electricity.

But utilities’ financial muscle could also mean they drive a tough bargain on prices. As Dow Jones Clean Tech Insight (sub reqd.) reports, many power companies are already flexing their muscles: “Suntech Power Holdings Co. said that the price that Southern California Edison said it would be willing to pay is more than 20% lower than the market level.”

The prospect of losing pricing power dovetailed with another Black Monday on Wall Street; amidst the overall market carnage, solar companies tanked. Companies such as Suntech Power Holdings, First Solar, Trina Solar, and Solarfun all lost more than 10%.

Clean energy may yet have its day in the sun—but as long as the financial-market turmoil lasts, it isn’t going to be an easy ride for anyone.

Profitability of Organic Farms

From a University of Georgia press release:

Research at the Agroecology Laboratory at the UGA Odum School of Ecology has led to the creation of organic farming enterprise budgets. Prior to this development, the economic decision-making tool used to estimate profitability was not widely available for organic production.

“Centuries of extensive tillage to produce crops like tobacco and cotton have caused much of our native topsoil to be washed into rivers,” said Krista Jacobsen, a recent Odum School Ph.D. graduate. “Many farmers in the Southeast inherit these degraded soils and it is important to develop and study farming practices that can restore soil and allow it to be farmed profitably at the same time. That’s where enterprise budgets come in.”

Until Jacobsen’s innovation, only one set of budgets for a limited number of organic crops had been developed for the Southeastern U.S. Now, budgets for okra, hot peppers and a corn/winter squash mix are available – providing organic farmers with one of the only organic conservation tillage budgets in the country.

“Conservation tillage is the practice of reducing tillage on farming systems and leaving at least 30 percent of crop residues on the soil surface,” explained Jacobsen. “My research demonstrates that using this practice outperforms a conventional system that uses regular tillage and chemical fertilizers in degraded soils like those of the Georgia Piedmont.”

According to Jacobsen’s advisor Carl Jordan, there is overwhelming evidence that organic agriculture is more sustainable than industrial agriculture. Organic agriculture improves the soil, reduces pollution from fertilizers and helps agriculture-friendly insects. The big question, therefore, is determining if organic agriculture can be economically competitive.

“Krista’s research at Spring Valley EcoFarms in Athens has shown that while yield from organically managed fields often is slightly less than from industrial cropland, energy-intensive inputs such as nitrogen fertilizer, pesticides and tractor fuel is much less,” said Jordan, senior research associate at the Odum School of Ecology. “As a result, input costs are less and profit margins can be higher. Low energy costs are especially important in these days of surging petroleum prices.”

For more information on Spring Valley EcoFarms, see www.springvalleyecofarms.org.