[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
                       UTILITY-SCALE SOLAR POWER: 
                      OPPORTUNITIES AND OBSTACLES 

=======================================================================

                             FIELD HEARING

                               BEFORE THE

                       SUBCOMMITTEE ON ENERGY AND
                              ENVIRONMENT

                  COMMITTEE ON SCIENCE AND TECHNOLOGY
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 17, 2008

                               __________

                           Serial No. 110-87

                               __________

     Printed for the use of the Committee on Science and Technology


     Available via the World Wide Web: http://www.science.house.gov

                                 ______

                         U.S. GOVERNMENT PRINTING OFFICE 

41-132 PDF                      WASHINGTON : 2008 

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                  COMMITTEE ON SCIENCE AND TECHNOLOGY

                 HON. BART GORDON, Tennessee, Chairman
JERRY F. COSTELLO, Illinois          RALPH M. HALL, Texas
EDDIE BERNICE JOHNSON, Texas         F. JAMES SENSENBRENNER JR., 
LYNN C. WOOLSEY, California              Wisconsin
MARK UDALL, Colorado                 LAMAR S. SMITH, Texas
DAVID WU, Oregon                     DANA ROHRABACHER, California
BRIAN BAIRD, Washington              ROSCOE G. BARTLETT, Maryland
BRAD MILLER, North Carolina          VERNON J. EHLERS, Michigan
DANIEL LIPINSKI, Illinois            FRANK D. LUCAS, Oklahoma
NICK LAMPSON, Texas                  JUDY BIGGERT, Illinois
GABRIELLE GIFFORDS, Arizona          W. TODD AKIN, Missouri
JERRY MCNERNEY, California           JO BONNER, Alabama
LAURA RICHARDSON, California         TOM FEENEY, Florida
PAUL KANJORSKI, Pennsylvania         RANDY NEUGEBAUER, Texas
DARLENE HOOLEY, Oregon               BOB INGLIS, South Carolina
STEVEN R. ROTHMAN, New Jersey        DAVID G. REICHERT, Washington
JIM MATHESON, Utah                   MICHAEL T. MCCAUL, Texas
MIKE ROSS, Arkansas                  MARIO DIAZ-BALART, Florida
BEN CHANDLER, Kentucky               PHIL GINGREY, Georgia
RUSS CARNAHAN, Missouri              BRIAN P. BILBRAY, California
CHARLIE MELANCON, Louisiana          ADRIAN SMITH, Nebraska
BARON P. HILL, Indiana               PAUL C. BROUN, Georgia
HARRY E. MITCHELL, Arizona
CHARLES A. WILSON, Ohio
                                 ------                                

                 Subcommittee on Energy and Environment

                   HON. NICK LAMPSON, Texas, Chairman
JERRY F. COSTELLO, Illinois          BOB INGLIS, South Carolina
LYNN C. WOOLSEY, California          ROSCOE G. BARTLETT, Maryland
DANIEL LIPINSKI, Illinois            JUDY BIGGERT, Illinois
GABRIELLE GIFFORDS, Arizona          W. TODD AKIN, Missouri
JERRY MCNERNEY, California           RANDY NEUGEBAUER, Texas
MARK UDALL, Colorado                 MICHAEL T. MCCAUL, Texas
BRIAN BAIRD, Washington              MARIO DIAZ-BALART, Florida
PAUL KANJORSKI, Pennsylvania             
BART GORDON, Tennessee               RALPH M. HALL, Texas
                  JEAN FRUCI Democratic Staff Director
            CHRIS KING Democratic Professional Staff Member
        MICHELLE DALLAFIOR Democratic Professional Staff Member
         SHIMERE WILLIAMS Democratic Professional Staff Member
      ELAINE PAULIONIS PHELEN Democratic Professional Staff Member
          ADAM ROSENBERG Democratic Professional Staff Member
          ELIZABETH STACK Republican Professional Staff Member
          TARA ROTHSCHILD Republican Professional Staff Member
                    STACEY STEEP Research Assistant


































                            C O N T E N T S

                             March 17, 2008

                                                                   Page
Witness List.....................................................     2

Hearing Charter..................................................     3

                           Opening Statements

Statement by Representative Bart Gordon, Chairman, Committee on 
  Science and Technology, U.S. House of Representatives..........    11
    Written Statement............................................    12

Statement by Representative Gabrielle Giffords, Acting Chair, 
  Subcommittee on Energy and Environment, Committee on Science 
  and Technology, U.S. House of Representatives..................     5
    Written Statement............................................     7

Statement by Representative Ralph M. Hall, Ranking Minority 
  Member, Committee on Science and Technology, U.S. House of 
  Representatives................................................     8
    Written Statement............................................    10

Statement by Representative Daniel Lipinski, Member, Subcommittee 
  on Energy and Environment, Committee on Science and Technology, 
  U.S. House of Representatives..................................    14

Statement by Representative Jim Matheson, Member, Committee on 
  Science and Technology, U.S. House of Representatives..........    13

Statement by Representative Harry E. Mitchell, Member, Committee 
  on Science and Technology, U.S. House of Representatives.......    12

Prepared Statement by Representative Adrian Smith, Member, 
  Committee on Science and Technology, U.S. House of 
  Representatives................................................    14

                               Witnesses:

Mr. Mark Mehos, Program Manager, Concentrating Solar Power 
  Program, National Renewable Energy Lab, Colorado
    Oral Statement...............................................    15
    Written Statement............................................    18
    Biography....................................................    28

Mr. Thomas N. Hansen, Vice President, Environmental Services, 
  Conservation and Renewable Energy, Tucson Electric Power
    Oral Statement...............................................    28
    Written Statement............................................    30
    Biography....................................................    34

Ms. Kate Maracas, Vice President, Arizona Operations, Abengoa 
  Solar Inc.
    Oral Statement...............................................    36
    Written Statement............................................    40
    Biography....................................................    42

Ms. Valerie Rauluk, Founder and CEO, Venture Catalyst Inc.
    Oral Statement...............................................    43
    Written Statement............................................    45
    Biography....................................................    71

Ms. Barbara D. Lockwood, Manager, Renewable Energy, Arizona 
  Public Service Company
    Oral Statement...............................................    71
    Written Statement............................................    73
    Biography....................................................    78

Mr. Joseph Kastner, Vice President of Implementation and 
  Operations, MMA Renewable Ventures LLC
    Oral Statement...............................................    78
    Written Statement............................................    80
    Biography....................................................    84

Discussion
  The Grand Solar Plan: Jobs and Economic Benefits...............    85
  Nellis Air Force Base Partnership..............................    86
  International Competition in Solar Energy......................    86
  Why Does Solar Energy Need So Much Assistance?.................    87
  Environmental Effects of Using Solar Power.....................    89
  Increasing the Efficiency of Solar Cells.......................    90
  Accelerated Technology Innovation..............................    92
  Financing Technology Development...............................    93
  Land Usage for Solar Power.....................................    94
  Price of ``Green'' Power.......................................    95
  Utility-Scale Versus Distributed Generation....................    95
  Compressed Air Storage and Greenhouse Gas Emissions............    97

             Appendix 1: Answers to Post-Hearing Questions

Mr. Thomas N. Hansen, Vice President, Environmental Services, 
  Conservation and Renewable Energy, Tucson Electric Power.......   100

Ms. Valerie Rauluk, Founder and CEO, Venture Catalyst Inc........   101

Mr. Joseph Kastner, Vice President of Implementation and 
  Operations, MMA Renewable Ventures LLC.........................   102

             Appendix 2: Additional Material for the Record

``By 2050 solar power could end U.S. dependence on foreign oil 
  and slash greenhouse gas emmissions,'' by Ken Zweibel, James 
  Mason and Vasilis Fthenakis, Scientific American, January 2008, 
  pp. 64-73......................................................   104


         UTILITY-SCALE SOLAR POWER: OPPORTUNITIES AND OBSTACLES

                              ----------                              


                         MONDAY, MARCH 17, 2008

                  House of Representatives,
            Subcommittee on Energy and Environment,
                       Committee on Science and Technology,
                                                    Washington, DC.

    The Subcommittee met, pursuant to call, at 12:30 p.m., in 
the Pima County Administration Building Hearing Room, 1st 
Floor, 130 W. Congress Street, Tucson, Arizona, Hon. Gabrielle 
Giffords [Vice Chairman of the Subcommittee] presiding.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                         field hearing charter

                 SUBCOMMITTEE ON ENERGY AND ENVIRONMENT

                  COMMITTEE ON SCIENCE AND TECHNOLOGY

                     U.S. HOUSE OF REPRESENTATIVES

                       Utility-Scale Solar Power:

                      Opportunities and Obstacles

                         monday, march 17, 2008
                          12:30 p.m.-2:30 p.m.
      pima county administration building hearing room, 1st floor
                         130 w. congress street
                         tucson, arizona 85701

Purpose

    On Monday, March 17, 2008 the House Committee on Science & 
Technology, Subcommittee on Energy and Environment will hold a hearing 
entitled, ``Utility-Scale Solar Power: Opportunities and Obstacles,'' 
at the Pima County Administration Building Hearing Room, Tucson, 
Arizona.
    The Subcommittee's hearing will explore the potential for utility-
scale solar power to provide a significant fraction of U.S. electric 
generating capacity and the challenges to achieving this goal. The 
specific technologies to be discussed include solar thermal technology, 
concentrating photovoltaics and distributed solar power. Transmission, 
regulatory and financial issues will also be examined, along with a 
look at the government and private industry roles in the development of 
utility-scale solar power--and enabling productive partnerships between 
them.

Witnesses

          Mr. Mark Mehos is the Program Manager for the 
        Concentrating Solar Power Program at the National Renewable 
        Energy Laboratory. Mr. Mehos will provide an overall assessment 
        of the available resource size for solar energy in the U.S. and 
        an introduction to the known technologies that may take 
        advantage of solar power on a large scale.

          Mr. Tom Hansen is the Vice President of Environmental 
        Services, Conservation and Renewable Energy at Tucson Electric 
        Power. Mr. Hansen will describe a ``Solar Grand Plan'' to 
        provide more than half of the U.S.'s electricity from solar 
        power by 2050.

          Ms. Kate Maracas is the Vice President of Arizona 
        operations at Abengoa Solar. Ms. Maracas will describe the 
        current state of solar thermal technology and the near- and 
        long-term economic costs and benefits of large-scale solar 
        power in general.

          Ms. Valerie Rauluk is the Founder and CEO of Venture 
        Catalyst, Inc. Ms. Rauluk will describe the current state of 
        distributed and concentrating photovoltaics and provide an 
        assessment of how the marketplace for solar energy will change 
        over the next 10 years.

          Ms. Barbara Lockwood is the Manager of Renewable 
        Energy for Arizona Public Service. Ms. Lockwood will provide 
        the perspective of utilities on the ability for large-scale 
        solar power to be a significant competitor in the U.S. energy 
        sector over the next 50 years.

          Mr. Joe Kastner is the Vice President of 
        Implementation and Operations for MMA Renewable Ventures LLC. 
        Mr. Kastner will describe his company's experience with 
        installing and managing the Nellis Air Force Base solar array 
        and ways to enable productive partnerships between government 
        and renewable energy industries in general.

Background

    An article in the January 2008 issue of Scientific American titled 
``A Solar Grand Plan'' outlined a potential path to providing nearly 70 
percent of U.S. electricity demand and 35 percent of its total energy 
demand, including transportation, with solar power by 2050. It is also 
estimated that if fully implemented, the plan would reduce U.S. carbon 
dioxide emissions to 62 percent below 2005 levels. Approximately $420 
billion in various government subsidies from 2011 to 2050 would be 
required to fund the necessary infrastructure and make solar power 
cost-competitive.
    Several types of technology would be needed to follow through on 
such a plan. Photovoltaics (PV), which convert sunlight directly to 
electricity, are the most familiar. Vast arrays of PV cells can be 
deployed in the Southwest covering multiple square miles to generate 
hundreds of megawatts of electricity per field. A variation on this 
technology, known as concentrating photovoltaics (CPV), uses lenses or 
mirrors to concentrate sunlight onto high-efficiency solar cells. These 
solar cells are typically more expensive than conventional cells used 
for flat-plate PV systems. However, the concentration decreases the 
required cell area while also increasing the cell efficiency. PV and 
CPV systems may employ any of a number of electrical energy storage 
technologies for use during periods of passing clouds or into the 
evening.
    An alternate technology could also be used. Solar thermal 
technology produces electric power by converting the sun's energy into 
high-temperature heat with various mirror configurations. The heat is 
then used to power a conventional generator. Solar thermal plants 
consist of two parts: one that collects solar energy and converts it to 
heat and another that converts heat energy to electricity. Just as 
batteries may assist PV systems, molten salts and other forms of 
thermal energy storage technology allow this heat to be retained for 
later use in generating electric power.
    An expansive new transmission and distribution system would be 
required for the remainder of the country to take full advantage of the 
immense solar resource in the American Southwest. A 2005 study 
commissioned by the Western Governors' Association estimated that solar 
energy from the Southwest alone could provide up to 6,800 GW of 
electricity to the U.S. To put this in perspective, the electric 
generating capacity of the entire country is currently about 1,000 GW. 
However, the existing system of alternating-current (AC) power lines 
would lose a significant fraction of its energy over long hauls so the 
Solar Grand Plan recommends building a new backbone of high-voltage, 
direct current (HVDC) power transmission lines and coupling this to 
sites near population centers that may utilize another form of 
electrical energy storage technology known as compressed air energy 
storage (CAES).
    Under this scheme, electricity generated from solar power plants 
hundreds of miles away compresses air and pumps it into vacant 
underground caverns, abandoned mines, aquifers and depleted natural gas 
wells. The pressurized air is released on demand to turn a turbine that 
generates electricity, aided by burning small amounts of natural gas. 
Citing a study by the Electric Power Research Institute (EPRI) and the 
natural gas industry, the Plan affirms that suitable geologic 
formations exist in 75 percent of the country often close to 
metropolitan areas, and that a national CAES system would look similar 
to the current U.S. natural gas storage system.
    The Plan assumes relatively small increases in PV solar-to-electric 
efficiency from 10 percent today to 14 percent in 2050 and increases in 
efficiency for solar thermal technology from 13 to 17 percent. The Plan 
also assumes significant reductions in installed cost and electricity 
price based on economies of scale reaching 5-9 cents/kWh. (Today's 
rates for these systems in the U.S. are 16-18 cents/kWh and average 
overall electricity rates are currently 5-15 cents/kWh depending on the 
region.)
    Though not directly addressed by the Solar Grand Plan, one other 
method to generate solar power on a large scale is distributed 
generation (DG) which consists of smaller facilities on otherwise 
unused real estate (roof-tops and sites of 10 to 500 acres) located 
near the load demand and dispersed throughout many communities. DG 
systems typically produce under 20MW of power and may consist of PV and 
CPV components. By providing power near or directly at the point of 
use, DG may offer a more cost-effective near-term solution in many 
areas of the country.
    Ms. Giffords. This hearing will come to order. Good 
morning, everyone. It is my great, great honor and privilege to 
welcome you all this morning to a field hearing of the 
Subcommittee on Energy and Environment entitled ``Utility-Scale 
Solar Power: Opportunities and Obstacles.''
    I want to welcome everyone here to Tucson. I want to thank 
Chairman Richard Elias for having us here in the Supervisor's 
Headquarters. Richard, where are you? Thank you so much for 
having us here today.
    We also have with us Councilwoman Nina Trasoff. Thank you 
for all the work that you are doing, one of our local elected 
officials, I appreciate having all your support.
    Rarely does a meeting in Congress go by when I do not have 
an opportunity to talk to my colleagues about how extraordinary 
southern Arizona is, and so that is one of the reasons why I am 
so pleased to have so many of our colleagues here with us today 
to enjoy this extraordinary part of the world that we call 
home.
    Many thanks to my colleagues who are interested in utility-
scale solar power for coming. All have given up time in their 
district work periods to be here in southern Arizona. We are 
honored to have Members from around the country with us today. 
I believe it is a testament to the high degree of energy and 
interest that we have in solar technology.
    In particular, I would like to extend a very special 
welcome to the two most senior Members of the Science and 
Technology Committee. The Chairman of the Full Committee, Mr. 
Bart Gordon from Tennessee, unfortunately, was detained in 
Washington due to weather and mechanical problems with his 
airplane, but he is going to be joining us by telephone in just 
a few minutes.
    But, I would like to thank Ranking Member, Mr. Ralph Hall 
from Texas. Ralph Hall has been on the Science and Technology 
Committee for 28 years, and also Energy and Commerce. So, we 
are very pleased to have him with us today.
    Also with us is Representative Dan Lipinski of Illinois, 
Vice Chair of the Full Committee, Representative Jim Matheson 
from the State of Utah, thank you for coming, and 
Representative Harry Mitchell, a fellow Member of the Arizona 
Congressional Delegation, from Tempe, Arizona.
    No one can remember the last time that we had so many 
Members of Congress in southern Arizona for an actual field 
hearing. So, I am particularly pleased that we are all here on 
a topic as important as solar energy.
    I would like to extend a very warm welcome to our witnesses 
who are here today. We are glad that you are here to share in 
your expertise, to enlighten the Committee and members of the 
public about the experiences that you have and the thoughts 
that you have. It was challenging to only have six panelists 
when we have so many talented people that are experts in solar 
technology, but we are very pleased that you are here to join 
with us today.
    We also have many smart and talented members of my Solar 
Advisory Committee that are in the audience today, and I want 
to thank you as well for taking this part of the world and 
making it so focused on solar energy and the possibilities that 
lay ahead of us.
    Finally, a welcome to all the members as well, just of the 
general public, who are here because they care about what is 
happening with the future of energy technology, and again, I 
want to thank you, our Members today, but also watching live on 
the Internet, and we know we have a streaming video and we will 
capture that for people who are not able to participate.
    In the Science and Technology Committee, it is common for 
our Chairman, Mr. Gordon, to refer to us as the Committee of 
big ideas. The notion is certainly well grounded from the 
history of the Committee. Just last week we celebrated 50 years 
of the Science and Technology Committee, with Bill Gates coming 
to talk to us. It is a Committee that oversaw the days of NASA 
and winning the space race, the wake of Sputnik, but the 
Chairman's statement is as much, I believe, about the future as 
it is about the past. It expresses a belief which I share, that 
the greatest days of American innovation are the days which lay 
ahead. So, in my view, it could not be more fitting for the 
Committee to turn its attention to solar power.
    Solar power is a big idea, whose time has come. And, like 
the space program, solar is an idea that can shape our nation 
in significant and positive ways. In the coming months, in the 
coming years, we will face critical decisions on how to address 
climate change, reduce our dependence on foreign energy, and 
boost our economic competitiveness.
    The beauty of solar power is that it offers an elegant 
solution to all three of these challenges. Imagine what it 
would be like if every time that it rained it rained oil, big 
black drops falling from the sky. Don't you think that we would 
find some way to run around with a big bucket and collect all 
of that energy that was falling from the sky? I know this 
sounds like an absurd picture, but the reality is that what we 
have outside today is something very comparable to that. 
Literally, we have useful energy pouring out of the sky, and 
nowhere does it rain sunshine with greater intensity and 
consistency than in the American southwest.
    In fact, some studies show that there is enough sunshine in 
the southwest to power almost our entire nation. One of these 
studies was recently covered on--actually, was brought forward 
on the front cover of the ``Scientific American Magazine.'' So, 
in other words, the southwest is home to a national treasure 
that streams from the sky almost every day.
    That sounds like a good enough reason to start developing 
an effective solar bucket, and while we are at it, let us make 
it a really big bucket.
    The focus of this hearing is not just about any kind of 
solar power, it is about utility-scale solar power. Utility-
scale refers to large installations that can generate 
significant amounts of electricity for the grid, but with free 
fuel and, virtually, no pollution. Developing solar 
installations on this scale creates unique opportunities, but 
it also presents unique challenges.
    So, we look forward today to hearing from our witnesses 
about both. Our goals in holding this hearing are to explore 
five key issues. First, the potential scale of solar power in 
America. Second, the current state of technology. Third, the 
benefits to our nation of embracing this energy source. Fourth, 
the obstacles to developing solar power in a big way. And 
finally, the policies that can help us overcome these 
obstacles.
    The time for solar is now. Technologies are proving, the 
costs are falling, and the reasons to adopt it are compelling. 
We need to truly understand the potential of this energy source 
and how we can unleash it. So, that is what today's hearing is 
all about.
    So, we should get started. Since we do not have 
Congressional hearings in Tucson every day, I want to briefly 
explain how we are going to proceed. First, some of my 
colleagues will make opening statements. Then we will have a 
chance to hear from each of the witnesses in turn. We ask our 
witnesses, because of our time consideration, to keep their 
testimony to five minutes, and we have our technology here on 
the table to indicate when your time is being close to up.
    Then, following the witnesses, each Member will have five 
minutes to ask questions. Once all the Members have asked 
questions, if time remains we will have a chance to recycle and 
go back to the beginning.
    I know that some of my colleagues have planes to catch, so 
we are planning on wrapping up around 2:30.
    Now, following the conclusion of the formal hearing, I 
would like to take a short ten-minute break. I encourage people 
who are interested in the community to stay around, because we 
are going to ask our panelists to come on the dias and be able 
to directly answer your questions.
    With that, I would now like to yield to Mr. Hall for his 
opening statement.
    [The prepared statement of Acting Chair Giffords follows:]
         Prepared Statement of Acting Chair Gabrielle Giffords
    Good morning. It is my great privilege today to convene this field 
hearing of the Subcommittee on Energy & Environment, entitled 
``Utility-Scale Solar Power: Opportunities and Obstacles.'' I want to 
welcome everyone to Tucson.
    Rarely does a hearing go by where I do not talk about Arizona so 
you can imagine what a pleasure it is to be able to show my fellow 
Committee Members why I am so proud of our community and the work we 
are doing together on Solar energy.
    Many thanks to my colleagues from the Science and Technology 
Committee. They have all given part of their District work period to 
come to southern Arizona today.
    We are honored to have with us Members from all over the country. 
This is a testament to the high level of interest in solar power, and 
to its relevance to the whole Nation.
    In particular, I would like to extend a very special welcome to the 
two most senior Members of the Full Science and Technology Committee:

          The Chairman of the Full Committee, Mr. Bart Gordon, 
        of Tennessee, who was unfortunately detained in Washington due 
        to weather and mechanical problems with his airplane. He should 
        be joining us by phone in just a bit. And

          The Ranking Member, Mr. Ralph Hall, of Texas.

    Thank you both for coming.
    Also with us today are:

          Rep. Dan Lipinski of Illinois, Vice Chair of the Full 
        Committee,

          Rep. Jim Matheson from Utah, and

          Rep. Harry Mitchell, a fellow Member of the Arizona 
        delegation.

    No one can remember the last time that so many Members of Congress 
came together in Tucson for a Field Hearing. I am particularly pleased 
that we are here on such an important topic.
    Thank you all for making the special effort to be here today.
    I would like to extend a very warm welcome to our witnesses. We are 
glad you are here to share your expertise with the Committee. It was an 
incredible challenge to narrow our panel down to just six.
    There are so many smart and talented people with important 
perspectives on these issues, including many members of my own Solar 
Advisory Council.
    I wish we could fit them all at the witness table, but space and 
time constraints prevent us from doing so.
    I thank all of these people for their important contributions to 
solar power and their work with my office on our solar initiatives. We 
value their expertise, and I will continue to seek their counsel and 
collaboration as we move forward.
    Finally, a special welcome to all the members of the community who 
are here today. Thank you for your interest in this critical issue.
    In the Science and Technology Committee it is common for our 
Chairman, Mr. Gordon, to refer to us as the ``Committee of Big Ideas.''
    This notion is certainly well-grounded in history. Formed in the 
wake of Sputnik and initially charged with winning the space race, the 
Committee is now celebrating 50 years of promoting big ideas in 
American science and technology.
    But the Chairman's statement is as much about the future as it is 
about the past. It expresses the belief--which I share--that the 
greatest days of American innovation lie ahead of us.
    So in my view it could not be more fitting that the Committee is 
turning its attention to solar power. Solar is a BIG IDEA whose time 
has come.
    And like the space program, solar is an idea that can shape our 
nation in significant and positive ways.
    In the coming months and years, we will face critical decisions on 
how to address climate change, reduce our dependence on foreign energy, 
and boost our economic competitiveness.
    The beauty of solar power is that it offers an elegant solution to 
all three of these pressing concerns.
    Imagine what it would be like if every time it rained, it rained 
oil--big, black drops falling from the sky. Don't you think we'd find a 
way to catch some of that bounty from the heavens? I think we'd be 
running around with big buckets, scooping up every available drop.
    As absurd as that picture may be, with solar energy we have 
something just as good--useful energy that is literally pouring down 
from the sky.
    And nowhere does it ``rain'' sunshine with greater intensity and 
consistency than in the American Southwest. In fact, some studies show 
there's enough sunshine in the Southwest to power almost our entire 
country! One of these studies was recently reported in a cover story in 
Scientific American.
    In other words, the Southwest is home to a national treasure that 
streams from the sky almost every day. That sounds like a good reason 
to get serious about developing an effective solar bucket.
    And while we're at it, let's make it a big bucket. The focus of 
this hearing is not just any kind of solar power, it is utility-scale 
solar power.
    Utility-scale refers to large installations that can generate 
significant amounts of electricity for the grid, but with free fuel and 
no pollution.
    Developing solar installations on this scale creates unique 
opportunities, but it also has unique challenges. We look forward to 
hearing from our witnesses today about both.
    Our goals in holding this hearing are to explore five issues:

          the potential scale of solar power in America

          the current state of solar technology

          the benefits to our nation of embracing this energy 
        source

          the obstacles to developing solar power in a big way, 
        and

          the policies that can help us overcome those 
        obstacles.

    The time for solar is now: technologies are improving, costs are 
falling, and the reasons to adopt it are increasingly compelling.
    We need to truly understand the potential of this energy source, 
and how we can unleash it. That's what today's hearing is about.

    Mr. Hall. Thank you very much, Madam Chair, and I am 
honored to be here.
    What she did not tell you is that I am the oldest guy in 
the United States House of Representatives, and that makes me 
the dean. I am 84 years old, but I was running at 5:45 this 
morning, two to three miles every morning. I am trying to stay 
young to keep up with my grandchildren. I get a little sick of 
some of them telling old man jokes, Madam Chair, about me. The 
latest one was that a woman's husband was about to quit golfing 
because he was 92, and he could not see where the ball was 
going. And, she hated to see him leave golf and be at home all 
the time. She said, well, my brother is 94 and he does not golf 
but he likes exercise. He has wonderful vision and he can see, 
I will bet he could tell you where your ball went. And, they 
worked that out. That following Monday out on the golf course 
he hit that ball, and it was way up in the air. He said, 
Orville, are you watching it? He said, yeah, I am watching it. 
He said, is it still up there? He said, yeah. Can you see it? 
Yeah, I can see it. Has it hit yet? He said, yeah, just hit. He 
said, where did it go. And, he said, I cannot remember.
    So, us senior Members have problems of all kinds. But in 
this campaign--I just won the primary election, and the 
``Dallas News'' called me an old geezer. And I made the 
argument, Madam Chairman, that it does not hurt to have--I do 
not recommend a whole floor of old 84-year-old guys or women, 
but it does not hurt to have one old geezer up there. And, I 
had all kind of call-ins and letters and everything, and 
finally the guy that won the contest told me my motto should 
be, ``Win One for the Geezer,`` and that is what we did.
    But, I am glad and honored to be here with you in Tucson, 
and this very important hearing on solar energy. I am anxious 
to listen. I am here more to listen than I am to talk. The 
longest speech I will make is one that I will be reading to you 
right now in a few minutes.
    I just want to say that I have often said that our country 
needs to become more energy independent, and to do that we need 
to use all the forms of energy. Americans, we have many forms 
of energy, and we just passed an energy bill a year and a half 
ago that had some incentive for every form of energy. And, 
energy is important, it is important in that if we solve our 
energy problems we also solve our war problems, because energy 
or lack of energy is the cause of most wars. It is the 
causation of it.
    Japan did not dislike this country. Cordell Hull and Henry 
Stimson had cut their oil off. They had 13 months of national 
existence with no oil. So, we had to know they were going to 
break out and go south into Malaysia or somewhere. That was an 
energy war, it was not because they did not like us. Japan 
today is probably the best friend we have in the world, the 
best partner we have, I think. And, I would like to see them 
arm again, because they know how to deal with the Chinas, and 
the Koreas, and all that, but that is not what we are here 
about today. We are here about energy, and, of course, when 
George Bush, the elder George Bush, sent 450,000 youngsters to 
Iraq ten or 11 years ago, that was to keep a bad guy named 
Saddam Hussein from getting his foot on half the known energy 
in that part of the world. That was an energy war, in my 
opinion.
    And, that is how important this hearing is, and solar is 
such an important part of energy. A balanced solution can 
reduce our dependence on foreign sources of energy, and that is 
one thing we really need to do, to make our air and water 
cleaner, most importantly, a viable solution reduces the cost 
of energy for Americans so that their economy can continue to 
grow.
    As demand rises by an estimated 40 percent in the 
electricity sector by 2030, we are going to need solutions that 
keep America economically prosperous and competitive. As is 
evident here in the desert of the American southwest, the sun 
provides an abundant source of energy. Citizens have been using 
this source for years to power many small and some large-scale 
projects and devices. And, an entire small community of 
astronauts live on the International Space Station that is run 
entirely on solar energy. Yet, solar energy makes up a very 
small proportion of our overall consumption picture, only 0.4 
percent of global energy demand is met by geothermal solar and 
wind energy combined.
    In the United States, statistics by the Department of 
Energy from 2004 indicate that solar energy accounted for one 
percent of the total U.S. energy consumption, and 0.2 percent 
of our electricity generation.
    Part of the reason this resource is not widely used is that 
sunlight is not constant, it is not focused. The amount of 
energy generated depends on the time of day, location, and 
weather conditions. In order to use solar energy for stable 
grid operations, we need better storage techniques. To this 
end, I introduced a bill last year, the Energy for America Act, 
which included the provision permitting research and 
development and demonstration of energy storage technologies 
for electricity transmission and distribution. I am pleased 
that this provision was included in the energy bill signed into 
law last year.
    So, Madam Chair, I look forward to hearing this testimony 
today by this very esteemed panel of individuals, on how 
America can better harness the power of the sun to generate 
more utility-scale power that lowers the cost to taxpayers and 
consumers.
    We write law up there. We write the law, but we write it 
based on people that know more about what we are talking about 
than we do, and that is this panel and people just like you. We 
will take your testimony, the rest of this committee, and the 
rest of Congress will have the opportunity to read it. Some of 
them will read it, but it can be the major part of a bill that 
would be introduced later, probably by Madam Chair with many of 
us being her co-sponsors.
    With that, I thank you, and I yield back my time.
    [The prepared statement of Mr. Hall follows:]
           Prepared Statement of Representative Ralph M. Hall
    Thank you. I am pleased to be here today in Tucson, Arizona for 
this important hearing on solar energy and I want to thank Rep. 
Giffords for organizing this gathering.
    I have often said that America needs to become more energy 
independent, and to do that we need to use all forms of energy. 
Americans currently have, and will continue to need, reliable and 
affordable domestic energy. Citizens are rightfully concerned about 
rising energy prices and protecting the environment. A balanced 
solution reduces our dependence on foreign sources of energy while also 
making our air and water cleaner. Most importantly, a viable solution 
reduces the cost of energy for Americans so that our economy can 
continue to grow. As demand rises by an estimated 40 percent in the 
electricity sector by 2030, we will need solutions that keep America 
economically prosperous and competitive.
    As is evident here in the desert of the American Southwest, the sun 
provides an abundant source of energy. Citizens have been using this 
source for years to power many small and large-scale projects and 
devices. Indeed, an entire small community of astronauts live on an 
International Space Station that is run entirely on solar energy. Yet, 
solar energy makes up a very small proportion of our overall 
consumption picture. Only 0.4 percent of global energy demand is met by 
geothermal, solar, and wind energy combined. In the U.S., statistics by 
the Department of Energy from 2004 indicate that solar energy accounted 
for one percent of the total U.S. energy consumption, and 0.2 percent 
of our electricity generation.
    Part of the reason this resource is not widely used is that 
sunlight is not constant and focused. The amount of energy generated 
depends on the time of day, location, and weather conditions. In order 
to use solar energy for stable grid operations, we need better storage 
techniques. To this end, I introduced a bill last year, the Energy for 
America Act, which included a provision promoting the research, 
development, and demonstration of energy storage technologies for 
electricity transmission and distribution. I am pleased that this 
provision was included in the Energy Bill signed into law last year.
    I look forward to hearing the testimony today by this esteemed 
panel of individuals on how America can better harness the power of the 
sun to generate more utility-scale power that lowers the cost to 
taxpayers and consumers.
    I yield back the balance of my time.

    Ms. Giffords. Thank you, Mr. Hall.
    I would now like to yield to the Chairman of the Science 
and Technology Committee, Mr. Gordon, who will offer his 
opening remarks (by phone).
    Chairman Gordon. Thank you.
    I am disappointed as to the mechanical problem that I 
cannot join all of you in southern Arizona today, but I want to 
thank you, Representative Giffords, for taking the lead and 
putting together this important hearing, and I want to thank my 
colleague, Old Geezer, and the other colleagues there, for 
being on the scene, and I know you are going to be bringing 
back a good report for us.
    It is obvious that solar energy has the potential to 
provide a significant amount of power in Arizona, and I look 
forward to learning more about how states that do not get quite 
as much sun, like my own State of Tennessee, might be able to 
benefit from the tremendous resource we have in the southwest.
    And again, I would point out that in 2006 Germany installed 
about seven times more solar power than the entire U.S., and 
that Germany's solar resources are roughly equal to Alaska's. 
So, I know that we can be doing much more to utilize the sun's 
energy.
    It is clear that a major component of any scheme to use 
solar power on a large scale has to be energy storage. So, I am 
encouraged by the grand solar plan that Mr. Hansen will be 
describing. Additionally, further development in advanced 
batteries will also be a critical part of the distributed 
generation system that Ms. Rauluk will talk more about.
    I am pleased about the bipartisan work last year on the 
energy storage, which had official contributions in this area 
from both you, Madam Chair, and Mr. Hall, as it was introduced 
in the latest energy bill and became law in December.
    An improved transmission system is also needed, especially, 
if we ever expect to get a large fraction of our energy from 
remote regions where renewable resources, like solar and wind, 
are concentrated.
    I am also concerned about the nexus between water and 
energy, something that we are going to be looking into more 
this year on the Committee. While regular solar panels do not 
need much water, except to clean them on occasion, some 
estimate that solar thermal technology uses more water than a 
typical coal plant. So, it is important that while we move 
forward we take the whole picture into account, and do 
everything we can to avoid trading one big problem for another.
    And, I am excited about the opportunities that large-scale 
solar power present to create thousands of new green jobs, and 
reduce our dependency on old sources of energy. Our committee 
will continue to do everything we can to help overcome the 
barriers to getting us there.
    Representative Giffords, thank you again for your strong 
leadership to promote solar energy, and thanks to this 
distinguished panel of witnesses for being here today.
    I yield back my time.
    [The prepared statement of Chairman Gordon follows:]
               Prepared Statement of Chairman Bart Gordon
    Thank you, Congresswoman, for taking the lead in putting together 
this important hearing. It is obvious that solar energy has the 
potential to provide a significant amount of power right here in 
Arizona, and I look forward to learning more about how states that 
don't get quite as much sun, like my home State of Tennessee might be 
able to benefit from the tremendous resource we have in the Southwest.
    Then again, I could point out that in 2006, Germany installed about 
seven times more solar power than the entire U.S., and that country's 
solar resources are roughly equal to Alaska's, so I know that we could 
be doing much more to utilize the sun's energy.
    It's clear that a major component of any scheme to use solar power 
on a large scale has to be energy storage. I am encouraged that the 
Grand Solar Plan that Mr. Hansen will describe would make use of 
compressed air and thermal energy storage technologies.
    Further developments in advanced batteries will also be a critical 
part of the distributed generation systems that Ms. Rauluk will talk 
more about in just a few minutes. I'm proud that our committee's 
bipartisan work last year on energy storage, which had essential 
contributions in this area from both you and Mr. Hall, was included in 
the latest energy bill that became law in December.
    An improved transmission system is also needed especially if we 
ever expect to get a large fraction of our energy from the remote 
regions where renewable resources like solar and wind are concentrated.
    Our current system of power lines isn't robust enough to carry 
large amounts of power from these centers to consumers everywhere. Too 
much energy would be lost over the long distances between generation 
and delivery of power.
    Studies by Oak Ridge National Laboratory show that new high-voltage 
direct current lines lose far less energy than existing transmission 
lines over the same distances. They may also be more reliable and 
cheaper to build. I look forward to hearing more about the prospects 
for making these kinds of changes to our electric grid system from this 
panel.
    And I am also concerned about the nexus between water and energy. 
While regular solar panels really don't need much water except to clean 
them on occasion, some estimates show solar thermal technology using 
more water than a typical coal plant.
    It is important that, moving forward we take the whole picture into 
account and do everything we can to avoid trading one big problem for 
another.
    I am excited about the opportunities that large-scale solar power 
presents to create thousands of new green jobs and reduce our 
dependence on foreign sources of energy. Our committee will continue to 
do everything we can to help overcome the barriers to getting us there.
    Representative Giffords, thank you again for your strong leadership 
to promote solar energy, and thanks to this distinguished panel of 
witnesses for being here today.

    Ms. Giffords. Thank you, Mr. Chairman.
    Next, I would like to yield to Representative Harry 
Mitchell, for his opening statement.
    Mr. Mitchell. Thank you, Madam Chair.
    I would also like to thank Chairman Gordon and 
Congresswoman Giffords for organizing this field hearing.
    As a fellow freshman Member of Congress, from the sunny 
State of Arizona, Ms. Giffords and I have a unique perspective 
on how to address our nation's energy crisis.
    We are lucky here in Arizona to enjoy over 300 days a year 
of sunshine. We have a real opportunity to brighten our state's 
future by investing in solar energy research and technology.
    As solar technology advances, I believe that Arizona will 
be a leader in clean alternative energy production. Refocusing 
our energy production on alternative sources such as solar is 
critical for our national security and the environment.
    Moreover, investing in solar energy is vital to Arizona's 
economy. Recently, Arbengoa Solar, and Arizona Public Service, 
announced exciting plans to develop the Solana Generating 
Station, and that is a 280 megawatt solar thermal energy plant, 
right here in the southwest. This will be the world's largest 
solar power plant. Solana will not only be a leading source of 
emission-free electricity, but it will also start significant 
development for Arizona.
    However, the Arbengoa and Arizona Public Service executives 
have candidly told us that the Solana project will not happen 
without the extension of essential solar tax credits.
    I am proud of the work that we have done in Congress to 
make sure that utility-scale solar projects, in particular, 
like Solana, continue to benefit from solar tax credits.
    Recently, I voted for, and the House passed, the Renewable 
Energy Conservation Act, which would extend the 30 percent 
investment tax credit for solar energy property for eight 
years, through 2016. For the first time, public utilities would 
also be able to claim this investment tax credit.
    I remain committed in doing what I can do in Congress to 
encourage further development and production of solar energy, 
and I would also like to thank two people from my district who 
are here to testify today. Barbara Lockwood is the Manager of 
Renewable Energy for Arizona Public Service, and Kate Maracas 
is the Vice President of Arbengoa Solar's Arizona Project. Both 
Arizona Public Service and Arbengoa are leaders in utility-
scale solar energy and are working together to develop the 
Solana plant.
    I look forward to hearing more about what we can do to 
establish Arizona's reputation as the Solar State, and I yield 
back the balance of my time.
    Ms. Giffords. Thank you, Mr. Mitchell.
    I would like to yield a few minutes to Representative 
Matheson for his opening statement.
    Mr. Matheson. Well, thank you, Madam Chair. I will be very 
brief, because I am looking forward to hearing from the panel. 
But, I just do want to emphasize that the Science Committee is 
a very bipartisan committee in the House of Representatives. It 
is a committee that usually takes on a longer-term view on 
issues, and I think the issues before the Science Committee are 
really the issues that matter when you look out a couple of 
generations from now.
    Congresswoman Giffords, you have been a leader in 
advocating the solar energy issue. You are a great Member of 
the Science Committee, and I am really impressed with how you 
have brought this hearing together today, and I just want to 
acknowledge that in your freshman term you have already 
established yourself as a real champion for this issue, and I 
will yield back my time.
    Ms. Giffords. Thank you, Mr. Matheson.
    Representative Lipinski.
    Mr. Lipinski. I just want to very briefly say, back in 1980 
I was in 8th grade. We had a science fair. I did a science fair 
project on solar energy. It seems like in the--well, soon 
afterwards, we stopped having much interest in solar energy. It 
seemed like 30 years ago that was the emerging energy 
technology, where we had all these concerns about high gas 
prices, what is going to happen with oil, our oil supply, but 
here we are 30 years later, it feels like we are in the same 
place.
    It is very important that we do not make mistakes now that 
we made back then. So, that is why I am very happy that 
Congresswoman Giffords is holding this hearing today. You know, 
having this many Members of Congress come out to a field 
hearing just really shows how important the issue is, and the 
role that Congresswoman Giffords is playing here--you know, 
this is a freshman Member of Congress--to have all this out 
here.
    As Vice Chairman of the Science Committee, I think this is 
just a fantastic opportunity that we have here today. This is 
critical for the future of our country, and it is very 
important, critical for southern Arizona, certainly, and I look 
forward today to hearing from all the witnesses here today, and 
making sure that we do everything we can at the federal level 
so that we can take advantage of what is available, what solar 
energy makes possible for us.
    And, I know Congresswoman Giffords is going to be a leader 
in Congress in doing that.
    So, I yield back.
    Ms. Giffords. Thank you, Mr. Vice Chairman.
    [The prepared statement of Mr. Smith follows:]
           Prepared Statement of Representative Adrian Smith
    Thank you, Madame Vice Chairwoman. Nebraska is a state blessed with 
many natural resources, not least of which is sunshine. I have long 
held, and continue to believe, the United States needs to explore a 
diverse array of energy technologies.
    Solar energy is one of many technologies which hold exciting 
potential. It is one of our most ubiquitous and reliable resources. 
Although there are challenges associated with capturing and storing 
solar energy, they are not insurmountable. I believe solar energy will 
play an important role in our future energy security.
    I support policies which encourage innovation, research, 
development, and investment in renewable energy. We need to encourage 
long-term investments in solar energy, as well as wind energy, 
biofuels, nuclear power, and hydro-power. Our own domestic oil and gas 
resources should not be overlooked.
    Thank you, Madame Vice Chairman, and I look forward to working with 
you to further policies which will promote research, development, and 
investment in solar technologies and other energy resources, leading to 
better energy security and national security for every Nebraskan and 
every American.

    Ms. Giffords. Now we would like to hear from our panelists, 
our witnesses. We are going to start, with just a couple brief 
seconds of introduction. We are going to hear from Mr. Mark 
Mehos, who is the Program Manager for the Concentrating Solar 
Power Program at the National Renewable Energy Lab in Colorado. 
So, thank you so much for being here.
    We are going to hear from Mr. Tom Hansen, who is Vice 
President of Environmental Services, Conservation and Renewable 
Energy, at Tucson Electric Power, also featured in the 
``Scientific American Magazine'' article, so great to have you 
here as well.
    Ms. Kate Maracas is the Vice President of Arizona 
Operations at Abengoa Solar. We have heard a lot about your 
company and the proposed project. We are excited that you are 
here today as well.
    Ms. Valerie Rauluk is the Founder and CEO of Venture 
Catalyst, Inc. She is a passionate supporter of solar energy, 
but also speaks on behalf of the business community as well. 
So, Ms. Rauluk, thank you for being here.
    Ms. Barbara Lockwood is the Manager of the Renewable Energy 
for Arizona Public Service, APS, thank you for coming down from 
Phoenix, we welcome you.
    And finally, Mr. Joe Kastner, the Vice President of 
Implementation Operations for MMA Renewable Ventures, LLC. We 
are so pleased to have you in southern Arizona. Thank you so 
much.
    As I said earlier, our witnesses will have five minutes to 
present your oral testimony. Your written testimony will be 
inserted into the record, and when we are finished with the 
witnesses' testimony, remember that we will take turns asking 
questions of our witnesses.
    And, we will begin with you, Mr. Mehos, please.

  STATEMENT OF MR. MARK MEHOS, PROGRAM MANAGER, CONCENTRATING 
  SOLAR POWER PROGRAM, NATIONAL RENEWABLE ENERGY LAB, COLORADO

    Mr. Mehos. Okay, thank you, Madam Chairman, thank you 
Members of the Committee, for giving me the opportunity to 
speak today. I did provide written testimony and ask permission 
to provide a Power Point oral presentation. Much of my 
information is better viewed than discussed.
    So, I was asked to present information on, basically, some 
background on utility-scale solar power. I will do that. At 
NREL we have done a lot of analysis on the overall resource 
side for utility-scale solar generation in the U.S., especially 
with an emphasis on the southwest.
    I was asked to present information on what the Federal 
Government can do to facilitate deployment, and finally, what 
can the Federal Government do to kick start utility-scale 
solar.
    Real quickly on some background of utility-scale solar 
technologies. When we talk about utility-scale solar we are 
really talking about two different markets, solar with storage, 
which we call dispatchable generation, which I will discuss in 
a little bit, and solar without storage or, basically, non-
dispatchable, meaning that it will generate electricity when 
the sun is shining.
    On the dispatchable storage, we are really talking about 
three categories of technologies, and there are variations 
within these that I do not have time to discuss, but there's 
the parabolic trough up on the top of the screen, the power 
tower over to the lower left, and finally the linear fresnel, 
which is an upcoming technology over on the lower right. Each 
of these technologies are thermal-based technologies, which 
means they use concentrated sunlight to generate heat that can 
then be converted to electricity using conventional steam 
sites.
    The solar without storage, or what we call the non-
dispatchable technologies, are just that. They are, basically, 
they cannot use storage, and there is three technologies that 
can fall into this category, the dish engine, which is on your 
upper, or on the lower side of the screen now on your left, 
concentrating photovoltaic technologies, which is in the 
middle, and then finally flat plate PV technologies, just like 
those that are on the home, but in a much larger scale for 
utility-scale applications.
    On the top, most of these are built in very large 
installations, on the order of 50, 100, 200 megawatts. People 
are even talking about much larger installations. Their 
economies of scale forced them toward that side. On the lower 
part of the screen, the non-dispatchables, typically, those are 
much smaller-scale technologies, on the order of kilowatts to 
tens of kilowatts, which can then be gained together to the 
similar 100 megawatt plants for large utility-scale 
applications.
    So, I talked about the dispatchable technologies. Why do 
we, or why do utilities, like dispatchable power? Primarily, 
what we do with dispatchable power, is we collect a lot of that 
energy that is shining on our collectors during the daytime, we 
store a lot of that energy, or most of that energy, and we 
distribute that energy over a larger period of the day. So, 
what does that do for us? It gives us a much higher value for 
that energy collected. If we were just dispatching during the 
peak times of the day, that is a very high value period, 
certainly, but especially in the southwest when people come 
home and they turn on their air conditioners, and their TVs, 
and everything else, that peak load really does go throughout 
later into the evening and even into the night. And so, we are 
allowed to take on that higher value production later into the 
day, not just during the daytime. It also allows us to lower 
the cost of the technology, basically, taking what amounts to 
be a fairly high capital cost for any solar technology and 
amortizing that high capital cost over a larger number of 
hours, instead of operating annually at 25 percent of the year, 
we can operate up to 50 percent or even 70 or 80 percent of the 
year. So, it allows you to really take that energy and lower 
the cost, due to that larger amortization.
    Okay. So, you asked the question regarding what is the 
resource potential, so at NREL we have done a significant 
amount of analysis using geographic information systems as a 
start, to try to screen where the most economical locations for 
large-scale solar can make sense.
    Up in the upper left-hand corner, I show the unfiltered 
solar resource, basically, the darker red spots are where the 
highest solar resource exists. But, if I take this entire 
southwest region and compare that southwest region to anywhere 
else in the world the southwest is as high or higher than 
anyplace else in the world as far as its solar resource.
    But, that is not all we need to look at. We need to look at 
other exclusions that can lower the economic value of that. The 
first thing we want to do, on the upper right-hand corner, is 
to exclude those areas that have a lower solar resource. We 
picked six hours, six kilowatt hours per meter squared per day, 
not that in the long-term you could not build economic plants, 
but we were looking more in the near-term.
    On the lower left-hand corner, we start looking at land 
exclusions. This is utility-scale solar. Typically, plants can 
be as large as one square mile, for the APS plant three square 
miles, so we are looking at large tracts of land that we are 
not going to build in wilderness areas, we are not going to 
build in urban areas, and so we take those types of exclusions, 
and that is the lower left-hand corner.
    Finally, because we are trying to minimize costs for 
constructing the plant, we are looking at fairly flat land. 
That does not have to be the case for some technologies, the 
most aggressive case is in the lower right-hand corner where we 
have looked at just one percent slope land.
    So, when we do that, and we look at that fairly aggressive 
filtering scenario, we still have 11 times the current U.S. 
generating capacity, just in that small percentage of land that 
is left over. The current U.S. capacity is about 1,000 
gigawatts, and I am showing a solar capacity with those lands 
of 11,000 gigawatts of potential.
    Okay. So, you asked what can the Federal Government do to 
support this technology. I should say on that last map there 
are a couple items in my written testimony. One is, a lot of 
that land that I showed, while a lot of that lies on private 
lands, much of that lies on federal lands, on Bureau of Land 
Management lands, on Defense lands, so there is an effort 
within the Department of Energy to try to open access, to try 
to reduce barriers to permitting, for example, to putting some 
of these large scale solar plants on federal lands. And so, the 
Federal Government can continue to support that effort.
    Also based on that map, much of that solar resource, while 
it is located near existing load, located near existing 
transmission, much of that transmission is constrained, and so 
to the degree that the Federal Government can support regional 
efforts to try to extend that transmission into these high-
value areas, whether it is solar, or whether it is wind, or 
other renewable resources, please continue that effort.
    Probably one of the most important near-term issues facing 
large-scale solar is the extension of the 30 percent investment 
tax credit. So, this is a quick example of the cost reduction 
associated with going from a 10 percent permanent investment 
tax credit to the 30 percent investment tax credit, basically, 
about a 15 percent reduction in cost, which does not seem like 
an awful lot, but this technology is right on the margin, as I 
will show in a second, that 15 percent reduction in cost to 
make or break these systems.
    So, this is a curve based on a regional deployment system 
model developed at NREL, that competes solar technologies, wind 
technologies, against conventional technologies. I will not go 
into detail, but without an extension of the existing 30 
percent investment tax credit, in other words, just the 10 
percent investment tax credit, we see very little new 
penetration of utility-scale solar technology in the near-term. 
You do see it come on line in the long-term, as conventional 
costs start to rise, and as our costs start to reduce based on 
the R&D that happens within the laboratory system.
    If you do extend that 30 percent tax credit by eight years, 
and it is important to note that a two-year extension does 
nothing, and eight-year extension will allow, according to our 
models, and we hear this out in the public sector, quite an 
increase, up to 20 gigawatts in the near-term of this 
technology. So, the extension of the tax credit is extremely 
important.
    This just gives you a more visual representation of that, 
without the extension of the tax credit, and our model does go 
to 2050, but this is the nearer-term look. You will get some 
initial penetration that is basically driven by some of the 
State portfolio standards, and that initial penetration will 
probably happen 10 or 15 years from now, but you will get some 
initial penetration, and this, basically, the colors show 
capacity in megawatts. So, low penetration.
    If you were to extend this investment tax credit by eight 
years to 2020, in this case I am showing the data, then you are 
looking at significant penetration in Arizona, in California, 
down in Texas, New Mexico, Colorado, all of these states 
driven, primarily, by the extension of this tax credit.
    You asked what would be needed to kick start utility-scale 
solar. Right now, within the DOE program, utility-scale solar 
is about $30 million, primarily, focused on concentrating solar 
power of $170 million budget, which is mostly photovoltaic and 
distributed generation.
    NREL and Sandia, at the request of DOE, did an exercise to 
see what could happen to accelerate utility-scale solar, and we 
estimated about $50 million per year to achieve accelerated 
goals. Those accelerated goals included being competitive in 
intermediate load markets by 2015, a five-year acceleration of 
the current goal, and to be competitive in carbon-constrained 
base load markets by 2020, which was not a goal previously at 
all.
    To achieve those goals, there needs to be R&D emphasis on 
advanced thermal storage systems, and higher temperature 
systems, primarily, the troughs and the tower systems, which 
are the systems that are high temperature and allow for thermal 
storage.
    I believe that's the end of my presentation.
    [The prepared statement of Mr. Mehos follows:]
                    Prepared Statement of Mark Mehos
    Madame Chairman, thank you for this occasion to present and discuss 
information related to opportunities and obstacles for utility-scale 
solar power. I am the Manager of the Concentrating Solar Power Program 
at the National Renewable Energy Laboratory (NREL). NREL is located in 
Golden, Colorado, and is the U.S. Department of Energy's primary 
laboratory for research and development (R&D) of renewable energy and 
energy efficiency technologies. I am honored to be here and to speak 
with you today.
    I truly believe that solar power--both concentrating solar power 
and photovoltaic technologies--can provide a significant level of 
generating capacity in the United States if cost goals established by 
the U.S. Department of Energy (DOE) can be achieved. Reaching these 
goals will require a carefully balanced blend of DOE and industry 
sponsored R&D and government policies.

Introduction to Solar Technologies

    Solar energy can be converted into electricity by means of 
photovoltaic (PV) or concentrating solar power (CSP) systems. 
Photovoltaics is the technical word for solar panels that create 
electricity. Photovoltaic material converts sunlight directly into 
electricity through a device called a solar cell. When sunlight strikes 
a solar cell, electrons are dislodged, creating an electrical current 
that can be captured and harnessed to do useful work.
    Solar cells are connected together electrically to produce modules, 
and modules are mounted in PV arrays that can measure up to several 
meters on a side. Flat-plate PV arrays can be mounted at a fixed angle 
facing south, or they can be mounted on a tracking system, allowing the 
array to follow the sun in one or two axes to capture more sunlight 
over the course of a day. About 10 to 20 PV arrays can provide enough 
power for a household. However, for large electric utility or 
industrial applications, hundreds or thousands of arrays can be 
interconnected to form a single, large ``utility-scale'' PV system.
    Higher efficiency solar cells, because of their high cost, are 
better suited to operate under concentrated sunlight. Concentrating 
photovoltaic (CPV) collectors use lenses or mirrors as optics to focus 
the sunlight onto the high-efficiency cells. The main idea is to use 
very little of the expensive semi-conducting PV material while 
collecting as much sunlight as possible with lower-cost concentrating 
optics. CPV systems are being considered primarily for utility-scale 
applications.
    CSP technologies use concentrating optics to generate high 
temperatures that are typically used to drive conventional steam or gas 
turbines. Due to economies of scale, CSP is generally considered a 
central-generation technology, rather than a source of distributed 
generation.
    The three main types of concentrating solar power systems are 
parabolic trough systems, power tower systems, and dish/engine systems. 
Variants of these systems are also being considered, such as the linear 
Fresnel reflector system, which uses flat, rather than parabolic, 
mirrors to concentrate the solar thermal energy.
    Parabolic trough systems concentrate the sun's energy through the 
use of long, linear parabolically curved mirrors. The mirrors track the 
sun, focusing sunlight on a receiver that runs along the focal line of 
the trough. A heat-transfer fluid, typically a synthetic oil, flows 
through the receiver, rising in temperature as it flows along the 
length of the collector. The hot oil is then used to boil water in a 
conventional steam generator to produce electricity. Alternatively, 
water can be boiled directly in the receiver using a direct-steam 
receiver. A key advantage of parabolic trough systems is that they can 
use thermal storage, giving the systems the flexibility to dispatch 
electricity coincident with peak utility loads, which often occur late 
in the evening. Many systems in Spain, as well as the system announced 
by Arizona Public Service last month, will make use of this feature. 
Parabolic trough systems are currently the most commercially developed 
technology.
    A power tower system uses a large field of mirrors, called 
heliostats, to concentrate sunlight onto the top of a tower, where a 
receiver is located. This focused sunlight heats a working fluid such 
as molten salt or water/steam flowing through the receiver. Similar to 
oil in a parabolic trough receiver, the salt in a tower receiver is 
used to generate steam (using heat exchangers) to generate electricity 
through a conventional steam generator. As with trough systems, tower 
systems can be integrated with thermal storage. Future low-cost storage 
options should allow both troughs and towers to operate competitively 
in the near-term in intermediate load markets and in the future in base 
load markets, offering a potential alternative to coal-based 
generation.
    A dish/engine system uses a mirrored dish, similar to a very large 
satellite dish. The dish-shaped surface collects and concentrates the 
sun's heat onto a receiver, which absorbs the heat and transfers it to 
a gas within a Stirling engine or gas turbine. The heat allows the gas 
to expand against a piston (in a Stirling engine) or to power a turbine 
to produce mechanical power. The mechanical power is then used to run a 
generator or alternator to produce electricity.

Resource Potential for Solar Energy in the United States

    A 2005 study commissioned by the Western Governors' Association 
(WGA) looked at the solar resource and suitable land available in seven 
southwestern U.S. states, including California, Arizona, Nevada, Utah, 
Colorado, New Mexico, and Texas. Analysis using Geographic Information 
Systems (GIS) determined optimal CSP sites with high economic potential 
by excluding regions in urban or sensitive areas, regions with low 
solar resource, and regions where terrain would inhibit the cost-
effective deployment of large-scale plants. Even with this high level 
of exclusions, the WGA solar task force calculated a capability of 
generating up to 6,800 gigawatts (GW) using CSP technologies--almost 
seven times the current electric generating capacity of the entire 
United States. The WGA study found that, with a build-out of only two 
to four GW of CSP, the technology will be competitive with conventional 
natural-gas-fired combined-cycle plants with a cost approaching 10 
cents per kilowatt-hour.
    The southwestern United States is not the only area with great 
potential for CSP. Projects are under way in Spain and Northern Africa, 
with additional projects planned for Israel, the Middle East, Northern 
Mexico, and Australia. In total, more than 60 utility-scale CSP plants 
are under development worldwide, primarily driven by policies favorable 
to large-scale deployment of the technology.
    Two questions are now addressed that relate to the role of the 
Federal Government in the success of utility-scale solar projects in 
the Untied States.

The first question is: How can the Federal Government facilitate the 
deployment of utility-scale solar projects?

    At the request of the U.S. Department of Energy, NREL analyzed the 
impact of policy (both State and federal) and R&D on the penetration of 
utility-scale solar generating systems in the southwest United States. 
The Renewable Energy Deployment System (ReEDS) model, developed at 
NREL, was used to estimate the U.S. market potential of wind and solar 
energy for the next 20 to 50 years. The model competes these 
technologies against the more-conventional generation technologies of 
hydro, gas-combustion turbine and combined-cycle systems, coal, and 
nuclear. Future sequestration technologies are also included within the 
ReEDS model.
    Results from the model indicate that utility-scale solar 
technologies can produce nearly 120 GWs of capacity in the Southwest by 
2050. Significantly more capacity is possible if dedicated transmission 
can supply generation to load centers located outside the Southwest. 
However, a key outcome of the analysis is that initial market 
penetration is extremely dependent on the continuation of the existing 
30 percent investment tax credit (ITC). According to the analysis, 
without an extension of the ITC, new capacity will be delayed about 10 
to 15 years--until lower CSP generation costs resulting from R&D and 
international market development allow CSP technologies to compete 
against future conventional plants.
    The Federal Government can facilitate the deployment of solar power 
plants by providing access to land. Utility-scale solar projects 
require considerable acreage. The 280-megawatt (MW) Arizona Public 
Service project mentioned earlier will cover three square miles. That 
is nearly 2,000 acres to produce the power for 70,000 homes. The 
Federal Government owns large tracts of land in the West. Doing an 
environmental study of those lands and streamlining the process by 
which industry can lease tracts found suitable for solar power projects 
will shorten the time it will take to build projects on these lands.
    Finally, the Federal Government can support efforts to relieve 
transmission congestion throughout the West. Existing transmission 
lines are operating at near capacity. New lines must be built to bring 
power from solar plants located in the areas where the solar resource 
is best, often in remote sunny regions. Our transmission grid is like 
our highway system, but without the interstate highways. An 
``interstate'' grid system would facilitate the transmission of solar 
power from the Southwest to load centers throughout the United States. 
As described earlier, the United States has an enormous solar resource. 
Once we reduce the cost of the technology, the next challenge will be 
to distribute the electricity produced to the people who need it.

A second questions is: How does the level of federal investment 
required to ``kick start'' utility-scale solar compare with that 
required by other technologies seeking government support?

    NREL scientists are studying a number of renewable energy 
technologies. The country is entering a period where it must start 
making the transition to new sources of energy. DOE and NREL are 
pursuing a portfolio approach of technologies--such as solar, wind, 
biomass, hydrogen, and geothermal--that could play a role in the 
future. All these technologies have the potential to become cost 
competitive with fossil generation.
    The price tag of utility-scale solar projects is large. For 
example, the 280-MW plant mentioned above will cost more than a billion 
dollars. Fortunately, the Federal Government does not need to 
contribute directly to cover the cost of these plants. The southwestern 
states have established renewable portfolio standards that have created 
the market for utility-scale power plants. Some states have established 
price guidelines by which they recognize that they will initially have 
to pay more for the renewable power. The additional costs are passed 
along to the rate payers. Thus, the bulk of the cost for establishing 
cost-effective utility-scale solar power is being borne by the states. 
If the Federal Government were to decide that utility-scale solar power 
was important, then they could partner with the states, which have 
already kick-started utility-scale solar.
    Most of the money appropriated for solar energy R&D focuses on 
residential and commercial applications. Utility-scale solar receives 
about $30 million out of a total solar budget of $170 million. To meet 
the goals mentioned earlier, the DOE estimates that this funding would 
need to be doubled. Researchers at NREL work closely with the CSP 
industry and universities to develop new technologies that are more 
efficient and less costly. A study commissioned by DOE several years 
ago showed that reducing the cost of solar technology depends about 45 
percent on R&D and 55 percent on actually building solar projects. This 
combination of R&D and deployment could well bring the cost of solar 
power into alignment with fossil generation in the intermediate power 
markets. And with low-cost storage, the overall cost may also align 
with future baseload power markets if carbon constraints are 
considered.

Summary

    Addressing our near-term needs in solar power will require a 
national strategy that promotes the deployment of solar systems and 
processes that are ready to serve us today. At the same time, 
addressing our longer-term needs and achieving a significant 
contribution from solar power technologies will require a major new 
commitment to the research needed to deliver the next--and subsequent--
generations of CSP, PV. and other new solar technologies.
    Thank you.
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
        

                        Biography for Mark Mehos

M.S., Mechanical Engineering, University of California at Berkeley

B.S., Mechanical Engineering, University of Colorado

Principal Program Manager--Concentrating Solar Power, NREL

    Mark has been with NREL since 1986. He has led the High Temperature 
Solar Thermal Team at NREL since 1998 and has managed the Concentrating 
Solar Power Program since 2001. The emphasis of NREL's High Temperature 
Solar Thermal Team is the development of low-cost, high-performance, 
and high-reliability systems that use concentrated sunlight to generate 
power. He has participated on and conducted analysis for several task 
forces including New Mexico Governor Richardson's Concentrating Solar 
Power Task Force and the Solar Task Force for the WGA Clean and 
Diversified Energy Initiative. He is currently the leader for the 
``Solar Thermal Electric Power Systems'' IEA SolarPACES task. In 
addition to his current work, he has managed and performed technical 
work within NREL's CSP analysis, advanced optical materials, solar 
photocatalysis and dish/Stirling R&D activities.

    Ms. Giffords. Thank you, Mr. Mehos.
    Mr. Hansen, please.

      STATEMENT OF MR. THOMAS N. HANSEN, VICE PRESIDENT, 
  ENVIRONMENTAL SERVICES, CONSERVATION AND RENEWABLE ENERGY, 
                     TUCSON ELECTRIC POWER

    Mr. Hansen. Good afternoon, Chairwoman Giffords, thank you 
for the opportunity, thank you, distinguished Members of the 
Committee, for the opportunity to be here today to discuss with 
you what I consider a very important solution and a plausible 
solution to our energy challenges for the future, the ``Solar 
Grand Plan,'' as described in the ``Scientific American'' issue 
in January of 2008.
    While many energy resources are sustainable and 
environmentally neutral, only solar energy can supply all of 
our projected energy needs for the long-term sufficient needs 
to meet our long-term needs in the United States for centuries 
to come.
    The January, 2008 issue of ``Scientific American Magazine'' 
details that ``Solar Grand Plan,'' and it could realistically 
provide 69 percent of U.S. electric needs by 2050, and 100 
percent of U.S. electric needs by the year 2100.
    I should point out that my comments do not necessarily 
represent the views of Tucson Electric Power (TEP), although 
I'm employed by TEP these comments are based on my thoughts and 
my development of a totally alternative energy system over the 
last decade. So, TEP has not, at this point, taken a position 
on this ``Solar Grand Plan.''
    The three core components of the ``Solar Grand Plan'' are 
first, solar energy installations, of course, to convert the 
sunlight into electricity. The second component, and a very 
important component, is energy storage. We need to be able to 
store that energy from the sunlight to make it dispatchable for 
periods when the sun is not shining. And finally, electric 
transmission, in order to bring the power from the southwest, 
or from other sources, be they hydro sources, or hydro kinetic, 
ocean sources, wind sources, throughout the United States, to 
the customers and to the energy storage sources.
    The ``Solar Grand Plan'' assumes the deployment of a 
combination of thin film photovoltaic technologies, about 88 
percent, and thermal storage, thermal solar technologies, 
including thermal storage, about 12 percent. These technologies 
have a proven record of reliability and safety, and that is 
what I want to emphasize, the ``Solar Grand Plan'' uses proven 
technologies that are in existence today. They are a little 
more expensive than traditional technologies, but they are 
proven. They do work.
    The production of solar energy is a function of the time of 
day, time of year, and cloud cover. We need to have storage to 
be able to mitigate those intermittencies to provide utilities 
with a tool to make consistent dispatchable electricity. Solar 
energy has been developed, the modules themselves, the solar 
collectors of the thermal solar systems have been developed to 
a very high degree of reliability. What we need now is an 
effort to provide that storage, and to link the storage 
elements together with transmission opportunities.
    One great reason that we would propose using compressed air 
energy storage is because it is under ground. It uses the same 
technologies as have been used to develop natural gas storage, 
and, in fact, only uses about 10 percent of the capacity that 
has been used already to develop natural gas storage in the 
United States. Energy storage under the ground makes it more 
secure, makes the opportunity to have it widely disbursed, 
providing better opportunities for energy security in the 
United States in the future.
    Finally, the transmission component. In order to tie 
everything together, to make the opportunity to move 
electricity, just as we have in the United States with our 
interstate highway system, we need to have an interstate 
transmission system. This will probably be, while it is, again, 
one of the more technically, easily implemented elements, it 
will be probably the most challenging element from the 
standpoint of regulations and the ability and need to work 
together with stakeholders from states, at the federal level, 
and local level, to be able to implement putting in these 
right-of-ways for transmission systems.
    There are other technologies as well that need to be 
developed. The smart grid technologies, as we heard, are a very 
important part. They make the glue, if you will, to tie all the 
pieces together. But, much, again, of that work has been done 
already. These are nascent technologies, but they do exist. 
They are not far fetched, this is not non-existent technology.
    With all energy project proposals there is a price. This 
program should take, we estimate, about $420 billion, but think 
of it as another opportunity, another alternative, to carbon 
collection and storage. As we start looking at alternatives 
towards our energy future, we need to weigh the different 
alternatives. Carbon collection and storage is one opportunity, 
but so we feel is also the ``Solar Grand Plan.''
    And finally, the ``Solar Grand Plan'' strengthens our 
energy security by effectively storing electrical energy under 
ground, just as we have done with fuels at the Strategic 
Petroleum Reserve and at natural gas storage facilities.
    And, just as it took the political will of Congress, with 
strong support from the states, to make the interstate highway 
system a reality, so it will take strong leadership, vision and 
the will of Congress, in partnership with the states, to make 
this become a long-term, reliable, sustainable, energy secure 
solution for our nation.
    Madam Chair, I thank you for the opportunity to visit with 
you today, and I look forward in the future to questions.
    Thank you.
    [The prepared statement of Mr. Hansen follows:]
                 Prepared Statement of Thomas N. Hansen
    Thank you very much Chairman Lampson, Vice Chair Giffords, Ranking 
Member Inglis and distinguished Members of the Committee and staff. My 
name is Tom Hansen and I am the Vice President of Environmental 
Services, Conservation and Renewable Energy for Tucson Electric Power, 
the second largest investor-owned electric utility in Arizona. We serve 
the energy needs of nearly 400,000 customers in the Tucson area. It is 
always a great honor and pleasure to work with the Members of Congress 
and their staff in exploring solutions to the energy challenges facing 
Americans today. The production of affordable, safe electricity from 
sustainable and secure sources in an environmentally appropriate manner 
is one of those challenges. I am here today to discuss with you one 
plausible solution to that challenge--a Solar Grand Plan.
    My background includes the design, construction, operation or 
management of over 10,000 MW of generation capacity, comprised 
primarily of nuclear and coal power plants. Many of my solar advocate 
friends claim I am serving my penance for that background by working 
with solar energy. But I am proud to have played a role in developing 
the electric generation infrastructure that has served our society so 
well for many decades and will play a significant role in providing 
needed electricity for at least the next twenty years. Moreover, my 
background in the development of those traditional electric generation 
assets has given me a unique insight into the technical and operational 
characteristics of the next generation of power producing technologies. 
While many energy resources are sustainable and environmentally 
neutral, only solar energy can supply all of our projected energy needs 
for the long-term future. Solar energy is abundant, ubiquitous, 
sustainable and sufficient to meet the total energy needs of the United 
States for centuries in the future. The January 2008 issue of 
Scientific American detailed a ``Solar Grand Plan'' that could 
realistically meet 69 percent of U.S. electric needs by 2050 while 
reducing electricity related greenhouse gas releases by nearly 50 
percent. The same plan could satisfy 100 percent of our nation's 
electric needs by 2100. I am here today to discuss that plan with the 
Committee.
    My enthusiasm for the Solar Grand Plan will likely become obvious 
throughout the course of this testimony. Nevertheless, I should point 
out that my comments do not necessarily represent the views of Tucson 
Electric Power. TEP has earned widespread recognition for its 
innovative solar power programs, and the company is committed to 
expanding its use of renewable power resources. But TEP has not taken a 
position on this particular plan for solar power development.
    The Solar Grand Plan incorporates three core technologies that will 
be coordinated through smart grid technologies. The smart grid, which 
will be discussed in more detail later, would be a bi-directional 
quasi-real time communications and control system with interconnected 
energy sources, including traditional, wind, tidal, hydrokinetic, 
biomass and geothermal. It would connect with consumer electric 
devices--including plug-in hybrid electric vehicles--and incorporate 
predictive solar and wind forecasts of both short-and long-term time 
spans. While this system is incorporated in the Solar Grand Plan, the 
technology has enough flexibility to seamlessly integrate any 
traditional fueled or sustainable energy resource.
    The three core components of the Solar Grand plan are:

          Solar generation to refine the energy in the light 
        rays of the sun into electricity.

          Energy storage to preserve energy from the sun or any 
        other power source for later conversion into electricity.

          Electric transmission to link the solar generation 
        and energy storage to consumers and their equipment.

    Discussion of each core component follows:

Solar Generation: The solar generation component converts the energy of 
the sun's rays into the electric energy that will be stored or 
delivered to customers. Any of a wide variety of existing solar energy 
technologies will meet the requirements for this component of the Solar 
Grand Plan, as the final output of all solar electric technologies is 
effectively interchangeable. Fixed or tracking flat plate, crystalline 
or thin film photovoltaic (PV) modules with DC-to-AC inverters for 
interconnection to the electric grid are supported. Concentrating solar 
power (CSP) using trough, solar tower, dish/thermal engine, dish/PV 
engine or concentrated photovoltaic (CPV) technologies are all 
supported.
    Tucson Electric Power's solar development experience has 
demonstrated that deployment of a varied portfolio of solar 
technologies is needed for optimal solar generation economics, as each 
solar technology type is best suited for operation in a particular set 
of climatic conditions. For example: PV, which uses virtually no water 
in operation, is best suited to a geographic area with no access to 
water; solar trough technology, meanwhile, is appropriate for areas 
with readily available water and can be combined with desalination 
options to augment the local potable water supply. The Solar Grand Plan 
assumes the deployment of a combination of thin-film PV technologies 
(88 percent of the total) and solar thermal with storage technologies 
(12 percent of the total). Both technologies are commercially available 
and are in common use today, with a very good opportunity for future 
cost reductions.
    The solar generation technologies envisioned in the Solar Grand 
Plan have a proven record of reliability and safety. Future challenges 
for these technologies include reducing their cost through development 
of larger-scale U.S. located manufacturing facilities, optimizing the 
balance of system component costs and standardizing installation code 
requirements. Solutions to these challenges include an extension of the 
federal Investment Tax Credit for solar energy systems, expanded 
support for research and development of new solar energy conversion 
technologies at federal laboratories and universities, continued 
support for the Solar America Initiative program goals, and expanded 
federal programs for education and outreach to the American people 
regarding developments in solar energy product commercialization.

Energy Storage: A core concept of the Solar Grand Plan is the need to 
store solar energy for use when the sun is not shining. By way of 
explanation, traditional electric generation is performed by technology 
that effectively refines a form of primary energy such as chemical 
energy in coal or nuclear energy in uranium into electricity. 
Instantaneous customer demand for electricity is met through the 
conversion of just the right amount of primary energy source to 
perfectly balance the supply of electrons with demand for those 
electrons at all times. A utility's ability to meet its customers' peak 
electric demand is a function of the maximum capacity built into the 
power plant.
    Production of solar energy--effectively refining the energy of the 
sun into electricity--is a function of time of day, time of year and 
cloud cover as well as capacity of the plant. The energy of the sun at 
the Earth's surface is not dispatchable, to use a traditional electric 
system term, as the utility has no direct control over increasing the 
sun's intensity. The addition of cost- effective, reliable, efficient, 
safe, environmentally compatible energy storage into a solar generation 
system would allow a utility to control output to support customer 
loads during times when the sun's energy is not available. Energy 
storage is needed on at least two different time scales: storing excess 
solar energy in one season for consumption a season or two later, and 
storage of daytime solar output for use at night.
    Numerous energy storage technologies exist today, but only two are 
suitable for utility scale use. One of them, pumped hydro storage, 
retains energy in the form of potential energy in water stored at a 
high elevation. The energy is released when the water is allowed to 
flow to a lower elevation through a traditional hydro generator. The 
other option, compressed air energy storage (CAES), retains potential 
energy in the form of high-pressure gas in an underground cavern or 
pore structure. While pumped hydro requires a specific set of 
geographic surface features and a supply of water, the underground 
conditions that would allow CAES are available in nearly every state in 
the union and often are used today for natural gas storage. The same 
technologies used for developing natural gas storage would support CAES 
development. The compressors that would tap excess solar generation to 
pump air underground are available today, as are the combustors and 
expansion turbines needed to convert the energy in compressed air to 
electricity. Such generators effectively would employ a split-shaft 
combustion turbine, thus relying on the same technology used to 
generate power from fossil fuels today. Two CAES plants are operational 
today with decades of operating experience, and other plants are in 
development for use in balancing the output of wind generation.
    The Solar Grand Plan requires a total underground storage volume of 
less than 10 percent of the volume used today for storage of natural 
gas, a very feasible amount of underground development using existing 
technology. Surface disturbance area for CAES is very similar to that 
of natural gas storage, with an additional need for electric 
transmission access. Energy storage cycle efficiencies of CAES are 
around 80 percent using existing technologies. While existing CAES 
technologies use some natural gas to reheat the air prior to conversion 
of the stored energy back to electricity, adiabatic expansion turbines 
can be developed that will not require the use of natural gas during 
energy recovery. A comparison of CAES characteristics with those of 
other energy storage technologies typically associated with solar 
energy, such as batteries or flywheels, is very favorable for CAES. 
Existing battery technologies typically can support a limited number of 
storage cycle before they must be replaced. Meanwhile, storage of 
energy from one season to another in batteries or flywheels generally 
results in additional storage cycle losses dependent upon the duration. 
CAES can store energy with minimal loss for extended time periods, and 
capacity does not degrade with an increasing number of charge/discharge 
cycles.
    Meeting all of the Nation's electric needs with solar power would 
require a sizable volume of energy storage to manage the seasonal and 
daily variations of solar energy production. While this storage could 
involve pumped hydro, flywheels, super-capacitors or superconductive 
magnetic energy storage (SMES), CAES enjoys a significant advantage in 
that it relies on deep underground facilities. This reduces its impact 
on land use, limits direct human interaction with the stored energy and 
mitigates risk from attack by enemies of our country. While the Solar 
Grand Plan can use any type of efficient, low-cost energy storage 
system, CAES was chosen due to its existing commercial availability, 
relatively low cost and proven reliability in utility scale 
applications. Thermal energy storage in molten salts, a relatively new 
technology incorporated in plans for thermal solar generation plants, 
could become part of the Solar Grand Plan's short-term storage 
component if its reliability and cost effectiveness prove comparable to 
those of CAES.
    Again, the Solar Grand Plan has sufficient flexibility to 
accommodate any new storage technology that can improve upon the 
reliability, efficiency, low environmental impact and cost 
effectiveness of CAES. Development of the energy storage system could 
be supported by federal Investment Tax Credits to reduce the effective 
initial cost to the owner of an energy storage facility; supportive 
capacity tariff rates from regional transmission organizations; and 
continued support of energy storage technology research and 
development, including additional funding for evaluation of geologic 
potential for CAES throughout the United States through the National 
Laboratories and universities. Favorable regulatory policy ensuring 
that the requirements of permitting a CAES facility are no more complex 
than permitting natural gas storage also would help reduce obstacles to 
development of the energy storage needed for the Solar Grand Plan.

Transmission: The Solar Grand Plan includes a transmission component to 
collect and distribute the energy produced at the solar generation 
sites to the energy storage component and to energy-consuming customers 
throughout the Nation. The Solar Grand Plan does not specifically 
mention support for wind, biomass, hydro, tidal, current and other 
forms of sustainable energy production. Nevertheless, it would provide 
a national transmission backbone--similar in nature, if not in scope, 
to the National Interstate Highway system--capable of carrying energy 
from any generation source. The use of high-voltage DC lines for the 
Solar Grand Plan would leverage proven technologies to significantly 
reduce the risk of technical problems. However, the development of a 
national electricity backbone to enable the delivery of energy produced 
anywhere in the U.S. to any other part of the country will require the 
same sort of sustained political will that supported the 35-year effort 
to complete the Interstate Highway System. Policy development will need 
to address the concerns of property owners, regional and State 
development priorities and special interests. We must seek to forge a 
coordinated set of transmission development incentives that will ensure 
the full acquisition of the right-of-way required for completion of the 
transmission backbone in a timely manner.
    Funding will be needed for research analysis and development of the 
specific right-of-way alignment for the transmission backbone system. 
Strategic ``off-ramp'' locations for interconnection to existing 
regional and local transmission systems will need to be determined 
through extensive review and analysis of existing available 
transmission capacity. Cost-effective solutions for transmission 
bottlenecks to ensure efficient transfer of energy throughout the 
Nation will need to be found through additional analysis by National 
Laboratories and universities in cooperation with regional transmission 
organizations and electric utilities. All of the high-voltage DC 
transmission technology exists now to make the transmission backbone a 
reality. Nevertheless, development of a national electric transmission 
backbone will be the most difficult component of the Solar Grand Plan 
to implement because of the need to resolve a myriad of permitting and 
regulatory issues.
    Additionally, rules to allocate the system's costs to regions and 
various customer groups will have to be finalized prior to 
implementation of the transmission backbone. Technical advancements in 
high-temperature superconductors could make the regulatory challenges 
easier to resolve by providing an option for burying the transmission 
system underground in congested areas where overhead line extensions 
could be unacceptable. Federal Investment Tax Credits for companies 
investing in the transmission backbone would offer financial incentives 
for attracting investment in the transmission backbone system.

Smart Grid: To maximize performance under the Solar Grand Plan, there 
is a need for a communications and control system to coordinate the 
solar generation, energy storage and transmission components. These so-
called ``Smart Grid'' technologies include: advanced metering, meter 
database automation, quasi-real time bi-directional communications 
between customers and producers, direct load control, central 
distributed generation control and intelligent appliances.
    Customers will increasingly play a larger role in addressing the 
challenges of our energy future. Smart Grid technologies provide both 
customers and utilities with the tools to better manage the production, 
storage, delivery and use of electricity. In so doing, the Smart Grid 
changes the basic premise of electricity providers, transforming 
utilities from providers of am energy commodity to enablers of energy 
transactions. Under such circumstances, regulations to decouple 
commodity energy supply from utility revenue recovery will be an 
integral part of the development of the Solar Grand Plan.
    Innovative rate incentives could be developed to make effective use 
of a nationwide Smart Grid. For example, owners of plug-in hybrid 
electric vehicles in New Jersey might be convinced to lend use of their 
cars' batteries to store solar energy produced in Arizona. Continued 
support of the National Laboratories for development and testing of 
Smart Grid technologies and development of transaction manager grid 
control algorithms will enable the Solar Grand Plan technologies to 
become reality.

Other Considerations: The Solar Grand Plan requires the commitment of 
fairly large tracts of land for the installation of solar generation, 
energy storage and transmission. Transmission and CAES storage 
facilities would be spread out across the country, mitigating their 
environmental impact on any particular region. However, the solar 
generation component is expected to be concentrated in the southwestern 
U.S. to tap promising solar energy resources in Arizona, New Mexico, 
Nevada, Texas and California. This could create concerns about the 
environmental impact of large sections of land being effectively 
covered with solar collectors. Placing a large percentage of our 
nation's solar generation assets in one geographic area also makes them 
more susceptible to damage from a single weather related event. 
Distributing solar generation systems over a wider area may reduce that 
risk of damage.
    Funding should be made available for evaluation of optimum solar 
generation area coverage factors, heat island creation, environmental 
mitigation, wildlife habitat impacts and beneficial land uses in 
harmony with solar collectors. We also would need to consider the 
societal impact of bringing a significant number of solar equipment 
installers to live and work in currently uninhabited areas of the 
desert southwest.
    While the Solar Grand Plan envisions that most of our sustainable 
energy resources will be solar, the system would accommodate any 
generation resource--including our existing coal and gas fired power 
plants and nuclear facilities. As we transition to a new solar-based 
energy infrastructure, we must make accommodations for linking these 
existing resources into the national transmission backbone and 
incorporating their output into our energy storage plans.

Financial Support: As with all energy project proposals, the Solar 
Grand Plan has a price. An estimated subsidy of $420 billion would be 
needed to support development of plan components from 2009 to 2020. 
After 2020, the plan should be financially self-supporting as the cost 
of solar power with storage drops below the price of energy that could 
be generated from proposed traditional power plants. At that time, the 
Solar Grand Plan infrastructure would provide an economic alternative 
to construction of those new plants, and funds for continued expansion 
of the system would come from the sources traditionally used for new 
power plants today.
    A commitment to fund the solar generation portion of the Solar 
Grand Plan would encourage solar manufacturers to invest in new 
production factories in the United States. We will not fully reap the 
economic benefits of solar power development or achieve national energy 
security until the manufacturing of our basic energy Solar Grand Plan 
components occurs within this country. We will also not take full 
advantage of reducing our energy related expenses overseas if we are 
purchasing solar products produced in other nations.

Conclusion:

    The Solar Grand Plan is proposed to demonstrate that there is at 
least one feasible, affordable, realistic plan based on proven existing 
technologies that can transition our fossil and nuclear energy based 
electric energy production infrastructure into a sustainable energy 
production infrastructure. It is instructive that the Interstate 
Highway System had an initial cost of $425 billion in 2006 dollars, 
very close to the $420 billion of subsidies that would be needed to 
bring the Solar Grand Plan into reality.
    The Solar Grand Plan strengthens our energy security by effectively 
storing electrical energy underground, as we have done with fuels at 
the Strategic Petroleum Reserve and at natural gas storage facilities. 
Energy security is further enhanced by geographic dispersion of the 
energy storage facilities and through redundancy in the transmission 
backbone right-of-way alignments. Just as the construction materials 
and route alignments evolved during the 35-year construction of the 
Interstate Highway System, the Solar Grand Plan will benefit from 
advancements in technology and regulations during its development. And 
just as it took the political will of Congress with strong support from 
the states to make the Interstate Highway System a reality, strong 
leadership, vision and the will of Congress in partnership with the 
states will be essential to implementing a long-term, reliable, 
sustainable, secure energy solution for our nation.
    Chairman Lampson, Vice Chair Giffords, Ranking Member Inglis and 
distinguished Members of the Committee and staff, I want to thank your 
for this opportunity to address the Solar Grand Plan and for your 
dedication to finding solutions to the energy challenges facing our 
future.

                     Biography for Thomas N. Hansen

Education:

Lehigh University, BSEE, 1971

         Major--Electrical Engineering/Computers, Hardware and Software 
        Design

          Minor--Physics

Stanford University, MSEE, 1972

         Major--Electrical Engineering/Computers, Hardware and Software 
        Design, Laser Design, Inertial Navigation Design

         Minor--Geophysics

Work Experience:

         Tucson Electric Power Company--1992-Present

         Vice President, Power Production--1992-1994

         Vice President, Technical Adviser--1994-2006

         Vice President, Environmental Services, Conservation and 
        Renewable Energy--2006-Present

           Guiding the development of the Renewable Generation 
        Portfolio of Tucson Electric Power, including 11 MW of 
        renewable generation capacity of which six MW is solar. 
        Currently Arizona's largest single utility renewable generation 
        fleet.

         Alamito Company/Century Power--1984-1992

         Superintendent of Operations, Springerville Generating 
        Station--1984-1986

         Plant Manager, Springerville Generating Station--1987-1988

         Vice President, Operations, Springerville Generating Station--
        1989-1992

         Bechtel Power Corporation--1972-1984

         Senior Field Engineer, Navajo Generating Station--1972-1976

         Start-Up Engineer, Cholla Generating Station--1977

         Assistant Electrical Superintendent, Coronado Generating 
        Station--1976-1980

         Electrical Superintendent, Palo Verde Nuclear Generating 
        Station--1981

         Project Field Engineer, Springerville Generating Station--
        1981-1984

         Career includes the design, construction, operation or 
        management of over 10,000 MW of electric generation capacity in 
        the western United States.

Affiliations Present/(Past):

EEI Renewable Energy Working Group--Chair, 2 yrs.

Arizona Governor's Renewable Energy Working Group--1 yr.

International Energy Agency Solar Energy Task 8 Committee Member and 
        U.S. representative--2 yrs.

(WGA Clean and Diversified Energy Advisory Committee Solar Subcommittee 
        Member--1 yr.)

(Utility Photovoltaic Group Board--Member, 3 yrs.)

Professional Licenses:

Registered Mechanical Engineer--Arizona

Registered Electrical Engineer--Arizona, California

Publications:

``Energy Pay-Back and Life Cycle CO2 Emissions of the BOS in 
        an Optimized 3.5 MW PV Installation.'' J.E. Mason, V.M. 
        Fthenakis, T. Hansen and H.C. Kim. Progress in Photovoltaics, 
        May 6, 2005.

``Photovoltaic Pourer Plant Experience at Tucson Electric Power.'' 
        Larry Moore, Hal Post, Tom Hansen and Terry Mysak. 2005 ASME 
        International Mechanical Engineering Congress, November 2005. 
        IMECE2005-82328.

``Environmental Portfolio Standard Meeting Solar Electric Generation 
        Goals: The Utility View.'' Presented October 25, 2002 in 
        Phoenix, Arizona at the Arizona Corporation Commission.

``More Solar for Less $.'' Presented October 3, 2003 in Scottsdale, 
        Arizona at UPEX 2003: Solar Power Experience Conference.

``The Systems Driven Approach to Solar Energy: A Real World 
        Experience.'' Presented October 15, 2003 in Albuquerque, New 
        Mexico at the Sandia Laboratories Solar Power Conference.

``The Promise of Utility Scale Solar Photovoltaic (PV) Distributed 
        Generation.'' Presented March 2, 2004 in Las Vegas, Nevada at 
        the Power-Gen Renewable Energy 2004 Conference.

``Utility Scale Photovoltaic (USSPV) Distributed Generation.'' 
        Presented April 5, 2004 in Phoenix, Arizona at the Arizona 
        Corporation Commission.

``Springerville Generating Station Solar System: A Case Study.'' 
        Presented October 19, 2004 in San Francisco, California at the 
        Solar 2004 Conference.

``Utility Scale Photovoltaic Generation: Broccoli for Utilities--A New 
        Generation Financing Paradigm.'' Presented October 27, 2005 in 
        Phoenix, Arizona at the Arizona Corporation Commission.

``Utility Scale Photovoltaic Generation: A New Opportunity.'' Presented 
        November 8, 2005 in Denver, Colorado at the Rocky Mountain 
        Electric League Fall Conference.

    Ms. Giffords. Thank you, Mr. Hansen.
    Ms. Maracas.

    STATEMENT OF MS. KATE MARACAS, VICE PRESIDENT, ARIZONA 
                 OPERATIONS, ABENGOA SOLAR INC.

    Ms. Maracas. Thank you. Chairwoman Giffords, Members of the 
Committee, and staff, I, too, would like to express my 
appreciation for the opportunity to talk about this very 
important subject today. Thank you.
    I am the Vice President of Arizona Operations for Abengoa 
Solar, and we are a very large company based in Madrid, Spain. 
Abengoa employs over 23,000 people worldwide, and we have 
presence in more than 70 countries. Right now, we have about 40 
people in the U.S. and Spain, who are dedicated to improving 
the technology and developing solar technology in the sunny 
southwestern states.
    In December of 2007, last year, the U.S. Department of 
Energy selected us for three R&D projects aimed at improving 
solar parabolic trough technology, which you saw in Mr. Mehos' 
presentation. And recently, as we have already talked a little 
bit about, we have announced an agreement with Arizona Public 
Service to build, own and operate the 280 megawatt CSP, or 
concentrating solar plant called Solana.
    APS will purchase all of the output of the plant, and I 
think as Congressman Mitchell already mentioned, if the plant 
were in operation today it would be the very largest in the 
world.
    So, with over 500 megawatts of large-scale solar power 
plants in operation, development and construction in the U.S., 
Spain, Algeria, and Morocco, I think our company is notably one 
of the largest providers, leading providers of large-scale 
solar technology today. And, with that position in mind, we are 
grateful to be part of this important dialogue and discussing 
the role that CSP and other large-scale solar technologies can 
play in helping build our nation's energy resource portfolio.
    We will also be talking about the opportunities for removal 
of obstacles or barriers that could get in our way, and could 
otherwise prevent us from leveraging this very abundant 
resource, which as we heard comes in buckets from the sky. I 
like that analogy, I think it is a good one.
    I have been asked to address a few topics today, and they 
include, one, the efficacy of large-scale solar power as a 
significant component of the U.S. generation fleet, and barrier 
reduction opportunities for achieving this potential. Two, the 
near and long-term economic impacts of large-scale solar 
deployment. And third, the role of government in advancing 
solar thermal technologies.
    In the interest of time and efficiency, I will probably 
skip the third one, because I really cannot add anything to 
what Mr. Mehos has already commented, and I certainly concur 
with his remarks.
    On the subject of large-scale solar generation as a viable 
option for providing significant contributions to our power 
needs, my view is, certainly, that large-scale power facilities 
not only have the potential to become a leading part of our 
national resource portfolio, they are also among the smartest 
options that we can exercise, particularly, in a business-wise 
context.
    Further, I see today's family of CSP technologies as an 
important mainstream option for utility resource plans, and I 
will explain the reasons for those thoughts momentarily. Just 
one minute I will spend, before I get there, though, on the 
distinction in technologies. Mr. Mehos already pointed out some 
of the few, but the family of solar and thermal CSP 
technologies is growing rapidly and there is an increasing 
number of technologies that are becoming part of the solar 
thermal or CSP family. These technologies are advancing rapidly 
in the marketplace, but there are two basic categories of 
technology that I would like to distinguish.
    One is the category of photovoltaic or PV technologies, and 
those are the technologies that convert the sun's energy 
directly into electricity by virtue of a photo electric 
reaction that occurs on a semiconducting material. And, when a 
concentrating mechanism such as a lens is used on conjunction 
with those PV cells then we have a large-scale technology known 
as high concentration photovoltaics or ACPV, and this becomes a 
member of the utility-scale solar family, as I mentioned 
earlier, and you saw an illustration of one of those 
technologies on Mr. Mehos' slide.
    But, the solar thermal category, which is kind of the work 
horse of the large-scale family, is a bit different, in that it 
uses the sun's heat to produce steam, which in turn becomes the 
working agent in a conventional ranking cycle, the very 
familiar thermodynamic process that converts heat to energy in 
a common steam plant. So, this is very familiar, tried and 
true, mature technology.
    The significant difference between our kind of solar steam 
plant and natural goal or coal steam plants is that there is no 
fossil fuel combustion or associated carbon emission to use in 
creating the mechanical energy that in turn spins the turbine, 
and then transfers mechanical energy to an electric generator.
    So, most of my remarks today are with the large-scale solar 
technologies in mind.
    And then, returning to my comment that CSP is a business-
wise decision, I can offer that at Abengoa Solar we talk with 
many, many utilities in our sunny southwestern and western 
states, and they are beginning to articulate large-scale solar 
in a different way. It is no longer just something that we have 
to do for compliance anymore. It is no longer something that 
our utility colleagues talk about as an R&D endeavor or an 
experiment, it is something that they consider a wise part of 
the their future resource planning options.
    When we talk about advanced coal technologies, which are 
not terribly mature yet today, and what are the other options 
that could compete as we are thinking about rapidly-growing 
demand in service areas, you probably will hear from Ms. 
Lockwood today about the rapid growth that APS is experiencing 
in our state.
    When you look at natural gas volatility risks, and the 
increasing likelihood of some kind of carbon regulation or 
carbon tax, then utilities are really beginning to think of it 
differently. Although, as Tom says, everything has a price, 
there is a slight premium today above conventional generation 
costs for CSP or large-scale solar generated electricity, but 
that cost gap is closing and I think Mark's slides illustrated 
that very well. As natural gas prices rise, as other costs go 
up, and as carbon regulation becomes more imminent the gap is 
closing. Our costs will come down.
    Utilities are increasingly viewing CSP as a wise bet 
against fuel price volatility and open-ended carbon liability.
    APS, our first large-scale CSP customer in the U.S., has, 
in fact, been very, very forward thinking about the role that 
CSP will play in their future resource portfolio, and I will 
let Barbara talk about that in just a little bit. But, I will 
say that APS has really been a leader among a group of very 
proactive utilities who are thinking about this in a very 
different way today.
    And, the final portion of this first topic that I have been 
asked to address relates to those barriers that could stand in 
the way of large-scale solar deployment, and I will just be 
very simplistic about this. In my mind, there is no barrier 
whatsoever related to technology. Yes, indeed, there is room 
for improvements in cost, and performance, and efficiency, and 
R&D should continue, but in terms of will technology be the 
barrier that prevents us from going forward, it most definitely 
will not.
    In my view, the greatest barrier to increased deployment of 
solar generating facilities is, indeed, political rather 
technical, and you know where I am going with this, I am going 
to be talking about the ITC, the lack of an enduring tax 
credit, the 30 percent solar investment tax credits that we 
have talked about briefly already, is really the biggest 
hindrance that we see today in large-scale solar.
    The ITC has been in place since the passage of the Energy 
Policy Act in 2005, but it has, since its enactment it has 
really just been kept on life support with one or two-year 
extensions at a time.
    As Mark said, these one or two-year extensions do large-
scale projects really no good, in fact, they do a disservice, 
because it prevents us from developing a longer extension 
through Congress that could help create the certainties that 
capital markets need to lend money on these large projects. The 
duration of one or two years, which is shorter than the project 
development time for a large-scale solar plant, means that we 
really must see a long-term extension, at least eight years of 
the ITC, in order for this industry to move forward.
    As Congressman Mitchell mentioned, we have been very candid 
about the fact that the Solana Generating Station in the Gila 
Bend area of Arizona cannot happen without it, without the 
eight-year extension.
    So, for these reasons I guess I will just say, ITC, ITC, 
ITC over and over again, and I would urge Congress to extend 
this important measure for an eight-year period, through 
bipartisan support of the Renewable Energy and Energy 
Conservation Tax Act of 2008 which passed through the House 
last month.
    On the subject of near and long-term economic impacts of 
large-scale solar deployment, I can draw observations from a 
very large body of credible research that has been done over 
the last several years on this topic, and I will speak as a 
member of the Western Governors' Solar Task Force--or the 
Western Governors' Association Solar Task Force, as a member of 
that group I participated in a comprehensive effort to analyze 
the role that solar energy could play in helping the Governors 
meet an ambitious goal of deploying 30,000 megawatts of clean 
energy in their 19 states by 2015.
    So, our task was to understand what is the actual resource 
potential, what is the market potential, how does that match up 
with demand for energy, what is the industry's capability to 
gear up and build projects and deliver energy through solar 
resources, and also to understand the barriers to deployment, 
and then finally, what will this effort pay back in terms of 
economic benefits.
    On the topic of economic impact, we examined over a dozen 
economic studies that had been done since 2004, all by credible 
investigators, State governments, national labs, universities. 
In fact, three of those studies were supported by Mark's 
institution, the National Renewable Energy Laboratory, and 
these three looked specifically at CSP, Concentrating Solar 
Power plants, and in a variety of different scenarios and 
assumptions about different growth patterns, and sizes of 
deployments and so on, they looked at what would be the impacts 
in terms of private investment in the state, permanent and 
temporary job creation, indirect and direct effects, and so on.
    And, we convened--these studies were conducted for Nevada, 
for New Mexico, and for southern California, and so the 
assumptions were all different, as I mentioned, different sizes 
of economies, and different scales and so on, in order to just 
understand, in a general sense, what does CSP or large-scale 
solar deployment really mean, in terms of just kind of 
generalization across the board, what does one gigawatt, 1,000 
megawatts of CSP actually do to our economies. So, we convened 
an expert panel of economists to generalize these impacts, and 
our findings were that for every gigawatt of CSP added to the 
state's economy the deployment would yield $3 to $4 billion of 
private investment in the state, 3,400 to 5,000 construction 
jobs, and up to 200 permanent solar plant jobs, many of those 
in rural areas where we typically are trying to attract 
economic development, a $1.3 to $1.9 billion, 30-year increase 
in tax revenues, and that is after any tax incentives or other 
incentives are given to the project developers, and between $4 
and $5 billion in increased gross State product. And so, a 
general rule of thumb for one gigawatt of CSP. These are 
enormous positive impacts that can occur.
    Clearly, the findings indicated that the broader 
incorporation of large-scale solar plants into the U.S. 
generation fleet, not only produces those economic impacts, but 
also the benefits of sustainability and energy independence, as 
Mr. Hansen spoke about.
    Finally, on the role of government advancing solar 
technologies, as I said, I will defer. I think those points 
have already been made very well. I will say that the thing 
that government can do for this technology, in addition to what 
Mr. Mehos mentioned, and issues that will help us site and 
facilitate permitting, solve transmission congestion problems 
and so on, we have to help CSP learn to walk on its own, and, 
in fact, we very much hope it learns to run.
    Thank you very much.
    [The prepared statement of Ms. Maracas follows:]
                   Prepared Statement of Kate Maracas
    Mr. Chairman, Vice Chairman Giffords, Members of the Committee, 
thank you for the opportunity to testify today. I am the Vice President 
of Arizona Operations for Abengoa Solar Inc., a U.S. division of 
Abengoa, which is based in Madrid, Spain. Abengoa employs over 23,000 
people worldwide, with presence in more than 70 countries. Abengoa 
Solar has a team of approximately 40 people in the United States and 
Spain dedicated to researching, developing and improving solar 
technologies. In December 2007, the U.S. Department of Energy selected 
Abengoa Solar for three research and development projects to improve 
solar parabolic trough technology. And recently, we announced an 
agreement with Arizona Public Service to build, own and operate a 280 
Megawatt (MW) Concentrating Solar Power, or ``CSP'' plant in western 
Arizona. APS will purchase all of the output of the plant, known as the 
Solana Generating Station. If in operation today, Solana would be the 
largest solar power plant in the world.
    With over 500 MW of large-scale solar power plants in operation, 
development, and construction stages in the U.S., Spain, Morocco, and 
Algeria, Abengoa Solar is notably one of the world's leading providers 
of large-scale solar technology solutions today. With that position in 
mind, we are especially grateful for the opportunity to be a part of 
this important dialogue about the role that CSP and other large scale 
solar technologies can play in our nation's energy resource portfolio, 
and the opportunities for removing obstacles that could prevent us from 
leveraging our very abundant and sustainable solar resource.
    I have been asked to address a few topics today, and they include:

        (1)  The efficacy of large-scale solar power as a significant 
        component of the U.S. generation fleet, and barrier reduction 
        opportunities for achieving this potential;

        (2)  Near- and long-term economic impacts of large-scale solar 
        deployments; and

        (3)  The role of government in advancing solar thermal 
        technologies.

    I will attempt to address these topics, in that same order.

    On the subject of large-scale solar generation as a viable option 
for providing significant contributions to our nation's power needs, my 
view is that large-scale solar power facilities not only have the 
potential to become a meaningful part of our national resource 
portfolio; they are also among the smartest options we can exercise--
particularly in a business-wise context. Further, I see today's family 
of CSP technologies as an important ``mainstream'' option for utility 
resource plans. I will explain the reasons for those thoughts 
momentarily, and before I do, a brief discussion about the distinction 
between large-scale solar generation and CSP in particular is 
worthwhile.
    The family of solar thermal and CSP technologies is growing 
rapidly. An increasing number of technology approaches to solar thermal 
generation is advancing in the market place. I would like to clarify 
that there are two very basic categories of solar electricity 
generation. One is the category of photovoltaic, or ``PV'' 
technologies--those that convert the sun's energy directly to 
electricity by virtue of a photo-electric reaction that occurs on a 
semi-conducting material. When a concentrating mechanism such as a lens 
is used in conjunction with PV cells, the technology is known as High 
Concentration Photovoltaics, or ``HCPV.'' Because the lenses add great 
efficiency to the PV cells' production capacity, HCPV is currently 
being developed as a utility-scale solar option.
    The solar thermal category is a bit different, in that it uses the 
sun's heat to produce steam, which in turn becomes the working agent in 
a conventional Rankine Cycle--the very familiar thermodynamic process 
that converts heat to energy in a common steam power plant. The 
significant difference is that a solar thermal plant requires no fossil 
fuel combustion or associated carbon emissions to create the mechanical 
energy that spins a turbine, which in turn transfers mechanical energy 
to an electric generator.
    Most of my remarks today contemplate thermal CSP technologies, 
although Abengoa Solar also views HCPV as a very promising technology 
in the near horizon.
    Returning to my comment that CSP is a ``business-wise'' decision, I 
can offer that Abengoa Solar Inc. holds discussions with many utilities 
in our sunny western and southwestern states, and an increasing number 
of our utility contacts articulate that they no longer view CSP as just 
an option for Renewable Portfolio Standard (RPS) compliance, or as an 
experimental R&D endeavor. Rather, our utility colleagues consider 
their future resource planning options in the context of advanced coal 
technology and emission constraints, natural gas price volatility 
risks, and the increasing likelihood of carbon emission costs in the 
form of externalities or direct taxation. Although there is a slight 
premium today above conventional generation costs for CSP-generated 
electricity, the cost gap is closing as fossil fuel prices increase and 
carbon regulation becomes more imminent. With today's promise of 
dispatchable solar plants made available through advanced 
commercialization of Solar Thermal Energy Storage (TES) technology, 
utilities increasingly view CSP as a wise bet against fuel price 
volatility and open-ended carbon liability.
    Arizona Public Service, our first large-scale CSP customer in the 
U.S., has in fact been very forward thinking about the role of CSP in 
their future resource portfolio. APS is a leader among a group of 
proactive utilities in our nation who very definitely view CSP as a 
viable part of a low-risk resource portfolio, and as a mainstream 
element of their growing generation fleet.
    The final portion of this topic that I have been asked to address 
relates to those barriers that may stand in the way of large-scale 
solar deployments. There is no question in my mind that technology is 
not a barrier. While there is room for cost and performance 
improvements that will occur with technology advancements, economies of 
scale, repetition and associated learning curve improvements, the 
greatest barrier to increased deployment of solar generating facilities 
is indeed political rather than technical. While federal support of R&D 
must continue, the single most significant hindrance to broader 
deployments of CSP facilities in the U.S. is the lack of an enduring 
tax credit which is essential to the financial viability of CSP 
installations today. The 30 percent federal Investment Tax Credit, or 
``ITC,'' has been in place since passage of the Energy Policy Act 2005. 
But since its enactment it has been kept on life support with one- or 
two-year reauthorizations at a time. The short lifespan of the ITC does 
not stimulate the deployment of large, capital-intense solar generating 
stations, which require three to four years to build. Further, the 
large institutional entities required to provide construction and 
operating capital for these projects cannot operate with the 
uncertainty of an expiring tax credit whose duration is shorter than a 
project development period.
    In summary, are there technology improvements to be achieved for 
large-scale solar through R&D? Absolutely. Are the barriers to meeting 
more of our nation's energy needs through solar energy production 
related to technology? Absolutely not. The single most important 
barrier to achieving our solar potential is the lack of a policy 
framework that is sufficiently robust to stimulate solar deployments in 
a meaningful way. We, our industry colleagues, and our consumers urge 
Congress to extend the federal ITC for an eight year period through 
bipartisan support of the Renewable Energy and Energy Conservation Tax 
Act of 2008 that passed in the House last month.

    On the subject of near- and long-term economic impacts of large-
scale solar deployments, I can draw observations from a large body of 
credible research that has been done over the last several years. As a 
member of the Western Governors Association's Solar Task Force, I 
participated in a comprehensive effort to analyze the role that solar 
energy could play in helping the Governors meet their goal of deploying 
30,000 MW of clean energy in their 19 states by the year 2015. Our task 
was to understand the resource potential, the market potential, the 
industry's capacity, the barriers to deployment, and the economic 
impacts that would result. On the latter topic, we examined over a 
dozen economic studies conducted since 2004 by credible investigators 
such as universities, national laboratories, and State governments. In 
fact, three of those studies, supported by the National Renewable 
Energy Laboratory (NREL) examined the economic impacts that could be 
expected as a result of increased deployment of CSP plants in 
particular. The studies contemplated a variety of CSP plant growth and 
scale scenarios, and the changes to be expected in terms of job 
creation, net Treasury gains, Gross State Product, and private 
investment.
    We convened an expert panel of economists to generalize these 
impacts across different State economies, and across different 
assumptions used among the studies. Our findings were that for every 
one Gigawatt (GW) of CSP added to a state's economy, the deployment 
would yield:\1\
---------------------------------------------------------------------------
    \1\ The assumptions here are:

       GA state economy (GSP) of $250B (a median range 
---------------------------------------------------------------------------
      across states);

       GOnly direct jobs--no manufacturing or other 
      indirect jobs are considered here;

       GInvestment represents only direct capital 
      associated with the plant and assets;

       GGSP increase includes indirect and induced 
      effects.

          $3-$4 billion private investment in state;

          3,400-5,000 construction jobs; up to 200 permanent 
        solar plant jobs, many in rural areas;

          $1.3-$1.9 billion 30-yr. increase in State tax 
        revenues; and

          $4-$5 billion increase in Gross State Product.

    Those figures represent net effects, even after any tax credits or 
economic incentives are utilized to stimulate industry development. 
Clearly, the findings show that broader incorporation of large-scale 
solar plants into the U.S. generation fleet not only produces the 
benefits of sustainability and energy independence, it also pays back 
in very significant, positive economic impacts.

    Finally, on the role of government in advancing solar thermal 
technologies, it is clear that the private sector cannot achieve a 
``Grand Solar Plan'' alone. The market penetration of any new 
technology, product, or service traditionally follows a pattern of 
growth in market adoption, followed by declining prices and higher 
margins that result from economies of scale. Large-scale solar 
generation is no different in that regard. What is different, however, 
is that the capital commitments required to bring large-scale solar 
plants to market are very large, and the risk of investing in such 
markets with the hope that demand will follow is too high for private 
sector entities to bear alone. This condition describes the very 
traditional role that government has played in numerous examples of 
infrastructure development and market stimulation actions.
    The government's role in solar power thus far has been both push 
and pull. By that I imply that the creation of demand for clean solar 
energy in the market place must come from both mandates and incentives. 
Twenty six states, including Arizona, now have Renewable Portfolio 
Standards that require increasing portions of delivered electricity to 
be derived from renewable energy resources. The RPS frameworks are a 
very good start, but only speak to half of the push-pull equation. 
Governments must also step up to the plate to incentivize market 
activity, and so I repeat here that a vitally important role for the 
Federal Government will be to extend the ITC for eight years so that 
large solar power plants can be financed and be economically viable. 
Recalling my comparison to other new technologies, products, and 
services in the marketplace, CSP will also grow up and learn to walk on 
its own.
    On a final note, I will comment that we are very pleased to see the 
serious commitment to solar energy R&D that both the President and 
Congress have demonstrated in recent years. While I noted earlier that 
technology itself is not a barrier to large-scale solar power 
production, the efficiency and performance improvements that will be 
accomplished through R&D will continue to be an important part of 
ongoing cost reductions that will help large-scale solar generation to 
walk on its own. In fact, we hope it learns to run.
    Thank you very much for the opportunity to share our perspective on 
this important topic.

                       Biography for Kate Maracas
    Kate Maracas is the Vice President of Abengoa Solar's Arizona 
Operations, where she focuses on infrastructure development to support 
the siting of Concentrating Solar Power (CSP) plants within Arizona. 
She has more than 25 years of energy industry and consulting experience 
in areas including engineering, environmental management, and renewable 
energy. Her career emphasis over the last several years has been in 
large scale solar generation. Kate actively participated with the 
Western Governors' Association Solar Task Force in developing its 
report and recommendations for solar market expansion in the western 
region, and continues to work on legislative and policy efforts to 
advance CSP deployment. Kate holds a Graduate Certificate in 
International Business from the Thunderbird Graduate School of 
International Management, and a Bachelor of Science Degree in 
Electrical Engineering from Arizona State University. Ms. Maracas 
currently serves as an appointee of Governor Janet Napolitano on 
Arizona's Solar Energy Advisory Council, and chairs the CSP committee 
of the Governor's Council.

    Ms. Giffords. Thank you, Ms. Maracas.
    Ms. Rauluk, please.

   STATEMENT OF MS. VALERIE RAULUK, FOUNDER AND CEO, VENTURE 
                         CATALYST INC.

    Ms. Rauluk. Thank you, Madam Chair, Chairman Gordon, and 
distinguished Members of the Committee, Representatives 
Lipinski, Matheson, Mitchell, and Ranking Minority Leader Hall. 
I would also like to thank my colleagues regarding the insights 
I will share with you. Please note that Venture Catalyst is 
solely responsible for the opinions expressed. Thanks to 
Arizona Research Institute for Solar Energy, AzRISE, the 
University of Arizona, Joe Simmons and Ardeth Barnhardt, my 
colleagues at Sun Edison, Jigar Shah, Howard Green, Colin 
Murchie, and my colleagues at Raytheon Missile Systems, John 
Waszczak and Thomas Olden.
    Venture Catalyst has been engaged in commercialization of 
solar energy technology for the last ten years, primarily, 
under contract with the U.S. Department of Energy, Sandia 
National Labs, and the National Renewable Energy Laboratory. We 
have also worked with regional and national solar energy 
companies in thermal and photovoltaic technologies, from 
residential to utility-scale markets.
    Although fundamentally agnostic when it comes to solar 
technologies, I will address specific preferences based on risk 
factors and maximized benefits.
    Here is what I hope to cover, opportunities, obstacles, 
critical factors in the first 10 years.
    The ``Grand Solar Plan'' is possible with the right 
investment structure and technology portfolio. The path to 
progress for achieving that goal is a going-forward focus on 
Distributed Solar Photovoltaic, DGPV, I hope to use that, DGPV, 
throughout here.
    Given the dominance of PV in the ``Grand Solar Plan'' and 
the 3,000 megawatts of solar thermal projects in the pipeline, 
a similar commitment to PV should be made. At present, 800 
megawatts of PV have been cumulatively developed.
    But most importantly, the DGPV focus offers the greatest 
flexibility for resolving the biggest obstacle to achieving the 
plan financing. Strategically targeted DGPV development offers 
all of the investor groups the best return on their investment, 
especially, the rate payers, and I am going to talk about that 
in a little more detail in a minute.
    A couple critical factors for success on the path to 
progress. First of all, productively framing the concept of 
utility-scale solar. The second, continuing technical 
improvements, and third, structuring the investment for 
fairness and maximized benefit.
    I want to talk a little bit about the different 
technologies and the different formats. You have already seen 
the difference between PV and solar thermal, I want to go into 
that.
    There is two major development formats for solar energy. 
One is the central station format, and the other is the 
distributed format.
    This is an example of solar thermal projects, which because 
of economies of scale limitations are to date developed in 
large-scale central station format.
    The title of this image is ``Perfection.'' This is one of 
the many formats that solar photovoltaic projects can take, a 
utility-scale project in a distributed generation DG format. It 
does not require transmission and the associated costs 
considered connected to the distribution part of the electric 
power grid. Strategically located PV installations within the 
distribution grid can provide benefits above and beyond the 
value of clean green peak power, benefits that can extend the 
life of power infrastructure and increase the reliability of 
the local grid.
    This is another picture of that same installation of an 8.4 
megawatt in southern Colorado, and you can see the substation 
in the background there.
    Here is another way to deploy DGPV, and it has actually 
been the major development mode for PV to date, and that is 
roof-top installation.
    I would like to offer the following definition of utility-
scale solar energy and call out the key factors, large scale, 
lower cost, higher reliability, and benefits across customer 
classes.
    Here are a couple examples, two to 20 megawatt solar farms 
strategically located in the low pockets, one to five megawatt 
solar farms on the roof tops of schools, reducing school energy 
expenditures, and putting solar energy into the grid in the 
summertime for the rest of the community, and also, of course, 
the one to five megawatts in commercial government 
installations, similar to what I showed you before.
    Critical factor 2, solar energy technology is ready right 
now. You have heard that from several of the speakers. PV, in 
particular, has, and continues to achieve, incremental 
improvements across the entire value chain. Additionally, major 
advances are coming out of Arizona laboratories in the next 
three to 10-year term, specifically, in the area of PV, 
concentrated PV, or CPV, and high-concentrated PV, or HCPV. A 
solar focus on the PV family of technologies will help harvest 
additional economic benefits for Arizona and Arizona rate 
payers, and you will have to pardon my specific interest in 
Arizona.
    A major obstacle to PV deployment has been the conflict 
with preserving utility revenues. By means of both product 
design and regulatory rules and policy, the industry is 
actively addressing this conflict. A commitment to large-scale 
DGPV programs would accelerate the resolution.
    Financing, financing, as I have said, is a major obstacle 
to making this happen.
    We are asking the Federal Government, and local government, 
private capital, and, most importantly, the rate payers, from 
whence the utility renewable energy investment dollars comes 
from, are all the people involved in this transaction.
    We are asking rate payers, I think this is the most 
important thing that you need to think about as we structure 
this, we are asking rate payers to contribute to solar energy 
investment at the same time they are being asked to pay for 
fossil fuel increases. By developing many solar projects across 
numerous communities, more rate payers will experience the 
direct benefits of economic development and increased power 
security and reliability. PV, CPV, HCPV, because of greater 
scalability, flexibility, and modularity, can be deployed more 
easily across a range of situations.
    Regulatory obstacles, we know what has to be done, and have 
developed and implemented best practices in key regional U.S. 
markets. We need to nationalize those practices for a more 
rational and effective market. I would concur with many of the 
things that people have said already, the ITC is very 
important, and nationalizing some of these best practices is 
very important as well.
    Incentive design, in general we need to reallocate our 
incentives away from fossil fuel and to solar energy, and we 
know there are some best practices on how to design that.
    So, for the first 10 years, my recommendation is reallocate 
investment to the highest benefit, lowest-risk installations, 
and that is DGPV, and to aggregate smaller projects in a 
systematic program to reduce risk while delivering the cost of 
scale. And, I believe that this will effectively stretch public 
investment, and it will reduce performance and project risk.
    In the second five years, I would see that we would 
integrate higher-volume concentrated PV and high-concentrated 
PV as the cost effectiveness and reliability of those 
technologies come on line, and begin a second phase of solar 
thermal development if feasible or necessary.
    So, in conclusion, the path to progress for the Grand Solar 
Plan, make balanced, judicious, timely technology choices, 
structure the investment for fairness and efficiency across all 
of the investment groups, and match the 3,000 megawatt solar 
thermal projects in process with 3,000 megawatts of 
photovoltaic projects.
    Thank you for this opportunity to testify, and thank you 
for your leadership in this critical issue, and especially, 
Chair, Congresswoman Giffords, I really appreciate your 
leadership here. It has made a very big difference in Arizona.
    Thank you.
    [The prepared statement of Ms. Rauluk follows:]
                  Prepared Statement of Valerie Rauluk
    Madame Chairman, Members of the Committee, distinguished guests I 
am honored to offer my testimony concerning Utility Scale Solar Power. 
My comments will address the following:

        1.  Grand Solar Plan as a viable option. The technical & 
        regulatory obstacles.

        2.  Current solar energy market and expected changes over the 
        next 10 years.

        3.  Current regulatory environment and incentive structures 
        conducive to large scale solar development & recommended 
        improvements.

        4.  Distributed PV and concentrating PV compared with solar 
        thermal technology. Areas of government research that can play 
        a critical role not met by private sector. Other 
        recommendations and priorities.

1.  The Grand Solar Plan as a viable option. The technical & regulatory 
                    obstacles.

    The Grand Solar Plan calls out a vision of nearly 70 percent of our 
electricity generation from solar energy by 2050. It also calls for a 
technology mix of five times as much solar photovoltaic (``PV'') as 
solar thermal. This vision is highly probable, with the right 
development framework and investment incentives.
    Additionally, the Grand Solar Plan calls out for a development 
format of large-scale remote solar energy generation, compressed air 
storage, and direct current transmission. My colleagues at the 
University of Arizona have convinced me that compressed air storage and 
direct current transmission are more than science fiction, although 
there is much that needs to be assessed for both approaches to be 
viable. It is important to note that designing, financing and 
implementing a large-scale adoption of such strategies is no minor 
feat. As such, I would see, from my experience and understanding of 
technology adoption cycles, that such approaches will not be available 
for commercial adoption for 10 or more years. Other witnesses could 
clarify the risks, timing and benefits better than I. Beginning the 
process of assessing and designing such approaches is useful, but I 
would caution that we focus on the approaches that can deliver large 
amounts of market driven solar generation into the mix quickly, with 
the lowest risk and the greatest benefits.
    As you will see, my comments focus on the first ten years of a 
Grand Solar Plan. The first steps will be difficult. Large amounts of 
investment capital from public and private sectors will be needed. And 
the skeptics concerning solar energy and its primary role in the 
greening and cleaning of our energy system will be numerous and loud. 
That is why in the first years, we should focus on efforts that lower 
risk and maximize the benefits.
    In addressing the technical and regulatory obstacles to achieving 
the Grand Plan the following critical factors will be addressed.

          Critical Factor #1--Productively framing the 
        definition of ``utility scale solar'' and supporting with 
        regulatory requirements.

          Critical Factor #2--Technology improvements, 
        including improvements in business model.

          Critical Factor #3--Effectively structuring the 
        multi-billion dollar investment to be made by rate-payers, 
        investors and the government.

Critical Factor #1--Productively framing the definition of ``utility 
        scale solar'' and supporting with regulatory requirements
    Although the Grand Solar Plan does not make specific 
recommendations regarding the development format, it seems to imply, 
with the recommendation for large scale storage and specialty 
transmission, that solar energy should be developed under the model of 
the last 50 years: large scale, remotely located, dependent on 
extensive transmission for delivery to consumers. This is commonly 
referred to as the ``central station'' model.
    There is a more market driven way to develop solar energy and the 
successes of the last few years highlight the approach. That approach 
consists of smaller generation facilities, on otherwise unused real 
estate (roof-tops and sites of 10 to 500 acres of land, two percent to 
80 percent of a square mile), located near the load demand, and 
dispersed throughout many communities. That approach is called 
distributed generation or ``DG.''
    DG is not only a path of more rapid, less risky development, it is 
also the path for a more robust power network. There is an inherent 
resiliency in networked systems where resources are at the point of use 
(like the Internet) instead of a hub and spoke development (like the 
land-line telephone system). This resiliency can be enhanced with the 
addition of small scale, on-site intelligent controls and storage, 
increasing reliability and dependability and improving the fit between 
resource generation and needs across the local grid. When developed in 
a strategic and coordinated fashion, DG can delay or eliminate the need 
for distribution and transmission infrastructure investment.
    Although DG includes very small generating systems, much larger DG 
systems (up to 20MW in a single location) can be clearly characterized 
as ``utility scale'' as can a systematic aggregation of many smaller 
generators. Utility scale can be more productively thought of as any 
project/program offering high volume, lower-cost, reliable, and 
dependable renewable energy for 20 years plus at fixed prices for large 
numbers of customers. Utilizing this more expansive definition of 
utility scale offers more options for maximizing solar energy 
deployment at the best cost-benefit trade-off, starting now.
    Examples are:

          2 to 20MW solar farms, strategically located in load 
        pockets to strengthen the grid and increase community energy 
        security in case of transmission failure.

          1 to 5 MW solar farms on the roofs of our schools, 
        reducing school budget exposure to volatile and rising energy 
        prices for 20 years and pumping solar power into the grid for 
        community use during the summer days when community demand is 
        most pressing.

          100kW to multiple megawatts on commercial, 
        government, industrial sites/buildings.

    In Arizona alone, an immediate potential of multiple gigawatts of 
solar energy systems are available. With expected cost reductions, 65 
GW of solar energy could be developed in the U.S. over the next ten 
years (U.S. Department of Energy. Solar America Initiative, http://
www1.eere.energy.gov/solar/solar-america/).
    Central station development has its attractions. It feeds into the 
`bigger is better' syndrome. Bigger means more attention. Bigger means 
larger development fees. Usually bigger means cheaper. But what a great 
deal of research has shown, is that bigger, especially when it comes to 
power plants, can often be riskier: longer construction periods, higher 
financing cost, longer delays before a system is producing and selling 
energy to end-users, to name just a few.
    Bigger also usually means more remotely located from where the 
consumers are, a distance that results in additional costs for 
transmission: wheeling charges, transmission investment and public 
approval (nobody seems to want transmission lines in their backyards), 
and transmission losses. And last, but not least the security exposure 
of having a critical resource like power, vulnerable to hundreds of 
miles of difficult to protect delivery infrastructure.

Removing the Obstacles

    Since nearly all of our existing power generation is central 
station, and a considerable amount of central station solar power is in 
the early stages of development, our focus going forward should be to 
diversify our resource portfolio and focus on solar DG installations.

Regulatory
    Regulatory obstacles to this path are fairly straightforward and in 
fact, many states have established law, policy and procedure to remove 
them. That is how 300MW of solar energy got developed last year. But 
the patchwork has prevented a truly vibrant and efficient market for 
solar energy. Efforts at the federal level to establish the following 
best practices will accelerate the development of solar energy.

Level the playing field for incentives, subsidies and financing

    Establish incentives at the federal level that match the incentives 
given to fossil fuels. Structure for rapid and long-term deployments 
with declining levels of support to encourage systematic and focused 
cost reduction across the whole value chain. Reward system performance 
and support system diversity,

Net Metering

    Require full retail value for all solar energy produced by 
customers without restrictions on size, or special fees and tariffs.

Standard & Fair Interconnection Standards to the Grid

    Interconnection standards set the rules and fees for connecting a 
customer generator to the grid. The standard should encourage the 
development of customer systems, while maintaining the safety and 
integrity of the grid. A fair and reasonable standard has been broadly 
vetted and adopted in the leading renewable energy states and should be 
adopted nation-wide.

Solar Fair & Friendly Rates & Utility Revenue Practices

    Properly designed rates can support investment in solar energy and 
wise use while maintaining utility profits.

Critical Factor #2--Technology improvements, including improvements in 
        business model

Technical

    Cost and efficiency, especially of components have been perennial 
obstacles to widespread use of solar energy. Both of those concerns 
have been and are being addressed with incremental improvements. In 
addition, major improvements are possible in the in the six- to 15-year 
time frame as research and development initiatives currently in process 
begin focused commercialization.
    Two areas of consideration that have not received as much attention 
in the past are storage strategies and intelligent control technologies 
that facilitate integration of renewable energy into the grid. Storage 
is important for solar energy. It expands its flexibility by extending 
access to the power produced during sunlight hours. Storage schemes can 
be grand and large, like compressed-air energy storage. Because of 
scale and site limitation this approach is not being actively 
integrated into deployment projects. Other forms of storage such as 
flow batteries, inverter based micro storage, and flywheels are being 
considered. The storage industry is currently at a stage of development 
very similar to where PV was less than 10 years ago. Low volume market 
demand has meant low volume manufacturing and all of the cost premiums 
that entails. Properly incentivized storage options will bring 
investment and scale to its manufacture with the concomitant cost 
reduction. From the perspective of solar energy deployment in the near-
term, these forms of storage should receive both research and incentive 
support, while core research continues on large scale, big bite 
strategies that will not be functionally available for five to ten 
years.
    Intelligent controls are especially useful to maximize the 
potential benefits of DG deployment to the grid. Such controls could 
allocate generation resources across a distribution node to maximize 
value. Many of these controls are inverter based and would require 
software and minor hardware additions and modifications, a low cost 
solution with significant benefits. In addition to technical changes 
(including modifications of UL 1741), these benefits could be best 
achieved through a development mechanism of aggregating individual DG 
sites. There are some fundamental business model improvements that need 
to be made to integrate DG into the existing utility business model in 
a way that protects revenues and existing asset base.

Technical Improvements in business model

    One of the most important innovations supporting rapid deployment 
of solar energy has been the technical advance in business models. The 
solar industry's explosive growth in the last few years has been 
directly related to the development and use of the solar power purchase 
agreement (PPA). In 2007 over 50 percent of the national nonresidential 
market for solar electric power was developed under PPAs, up from 10 
percent in 2006 (``Solar Power Services: How PPAs are changing the PV 
Value Chain,'' Greentech Media, February, 2008). The solar PPA 
essentially finances the up-front capital cost and offers customers the 
output from PV systems at or below the cost of fossil fuel generation. 
The solar PPA developer monetizes the federal and local tax credits, 
facilitates utility incentives and renewable energy credit sales, and 
designs and implements all business processes to minimize and absorb 
the risk that the customer would otherwise be forced to assume. These 
risks include: financial, technology, system performance, construction 
and regulatory. With discipline and innovation, PPA developers have 
improved and enhanced the solar photovoltaic transaction across the 
entire value chain, bringing greater profitability and lower prices to 
the market place.
    It was this customer-centric focus, at a time when customers were 
reeling from rate increases and pricing volatility that resulted in 
such an expansion of system installations. The solar PPA using PV 
technology, offers two financial risk reduction strategies for 
customers: capital acquisition and future price protection. Under the 
solar PPA, the developer monetizes all of the incentives and tax 
credits and through aggregation, secures private sector project 
financing. Because of the nature of PV technology, especially minimal 
operations and maintenance requirements once installed, and long-term 
predictable performance output (PV panels have warranties of 25 years), 
PV can offer firm prices under contract for 20 years. This means an 
effective 20-year hedge against rising fossil fuel prices for the 
customer. It is this hedge against rising electric power prices fueled 
by resources with uncertain and volatile pricing that has made the PV 
PPAs so successful.
    The next generation of solar PPAs, currently entering the market 
continues this customer-centric focus, but with the addition of 
utility-centric features. The recent success of solar thermal 
technologies in the market place (3,000 MW of solar thermal contracts 
have been initiated with construction expected to be complete in the 
next three years) highlights the importance of utility-centric 
features. Solar thermal is a traditional steam turbine electric power 
generation process, fueled primarily by solar collectors instead of 
coal, natural gas or nuclear reaction. The familiarity helps many 
utility executives more readily consider the solar thermal option. But 
since the approach incorporates a traditional power block, it shares 
many of the risks and inefficiencies of indirect, multi-stage 
conversions of energy: large scale, remote location, transmission 
dependent, multi-year construction, and big impact financing, 
performance, and operation risks. For these reasons and more, it is not 
a technology choice and a development approach that can be relied upon 
to deliver large volume, rapid deployment of solar energy in the first 
phase. Large scale, strategic, and multi-year development of solar 
energy in the distributed generation format, especially in the next 10 
year period is essential for achieving the goals of Grand Plan for 
Solar Energy.
    Solar energy is a disruptive technology. Disruptive technologies by 
definition create risk. But disruptive technologies, like the 
automobile that replaced the horse and buggy, can offer massive 
improvements in quality of life and prosperity. What mitigates that 
risk and transforms it into opportunity is the right technology of 
doing business, the right business model. Such a model must be both 
customer-centric and utility-centric. Utility revenue and the remaining 
life of the massive investment made by investors and rate-payers in 
conventional generation, power distribution and transmission assets 
must be protected and maximized as best possible while incorporating 
solar technologies. But not at the expense of future competitiveness 
and resiliency.
    A major obstacle to massive solar energy deployment, in addition to 
cost and efficiency, has been conflict. Innovations in the solar PPA, 
coupled with other innovations in power financing entering the 
marketplace, are designed to end the current conflict between 
distributed generation and utility revenue protection while 
establishing more effective and fair financing for rate-payers. It is 
in our interest to end the conflict. Much can be gained from strategic 
deployment of DG: improved system reliability, reduction or elimination 
of transmission & distribution expenditures, reduction of local 
congestion, voltage support, low cost to no cost for non-participants, 
and reduced subsidies. Deploying and integrating generators, smart 
meters and intelligent controls, energy efficiency, virtual net 
metering, green tariffs and effective storage will permit greater 
control of load and generation. It is important to note how great the 
need is for strengthening and hardening our power grid.

         ``. . .the United States has three times as many power outages 
        of the United Kingdom and over 30 times as many power outages 
        of Japan. Both Japan and the United Kingdom have achieved this 
        reliability in part by investing in 21st century distributed 
        generation technologies-distributed solar, combined heat and 
        power, fuel cells, energy efficiency measures, and other 
        customer-centric market solutions. (as quoted in ``The 
        Materiality of Distributed Solar, ``Jigar Shah, Apt, Jay & 
        Lave, Lester & Morgan, M. Granger. (2006). Power Play: A More 
        Reliable U.S. Electric System. Issues in Science & Technology. 
        http://findarticles.com/p/articles/miIqa3622/
        isI200607/aiIn17174065)

    Finally, just as ``simple, easy'' is a useful guiding principle for 
technologies and technology systems, it is a good design principle for 
business models as well. ``Solar PPA 2.0'' can reduce and eliminate the 
need for complex and copious regulations, mandates and other policy 
requirements.

Critical Factor #3--Effectively structuring the multi-billion dollar 
        investment that will be made by rate-payers, investors and the 
        government.
    The solar energy investment envisioned by the Grand Solar Plan is 
significant and such an investment should be fair to all investors and 
maximize both direct and indirect benefits. Because solar energy 
financing consists of several mechanisms: tax advantages, utility 
sector incentives payments, and private capital different investor 
groups are coordinated in the transaction. Fairness would recommend 
that all investors receive benefits that justify the investment made. 
The federal investment for solar is no different than investments made 
over the last 100 years for general public access to energy and 
electric power. From 1943 to 1999 $151 billion was spent by the Federal 
Government for support to nuclear power, $145.4 billion; solar energy, 
$4.4 billion; and wind, $1.3 billion. (``Federal Energy Subsidies: Not 
All Technologies are Created Equal,'' Marshall Goldberg, Renewable 
Energy Policy Project, Research Report July 2000, No. 11). Clearly, for 
solar energy to become more broadly available, restructuring of the 
federal energy investment must be made.
    The rate-payer contribution is the area of greatest concern for 
assuring fairness. At the current level of financing for a residential 
rate-payer, usually less than $50 per year, when some rate-payers 
benefit more than others, although contributing benefits for all, there 
is less need for concern. But for the kind of investment that the Grand 
Solar Plan would entail, spreading the benefits across all rate-payer 
classes and all communities is crucial. The DG development approach can 
distribute the benefits across a broader range of rate-payers and 
communities.
    But the fairness issue still remains. Not all rate-payers are in a 
position to invest in solar energy systems even with the tax credits 
and utility incentives available. The new funding mechanisms must be 
designed so that those who can directly benefit, contribute greater 
investment. Recent developments in PPAs for the DG market can increase 
the fairness, if the directive to support utility scale coordinated DG 
development is made.

2.  The current marketplace for solar energy and expected evolution.

    The current solar energy market has been dominated by DG deployment 
of PV, although 3,000 MW of solar thermal projects are expected to be 
built in the next few years. PV deployment over the next five years is 
conservatively projected to increase 35 percent annually. Worldwide 
2007 deployment was just under 3 GW and is expected to increase to 11 
GW by 2012. US deployments of approximately 300 MW (SEIA as reported by 
the Wall Street Journal 1/18/08) are conservatively expected to grow in 
excess of 35 percent annually (internal proprietary analysis). The U.S. 
market is commonly considered to be the next high growth solar market, 
anticipating greater consolidation of political will and the necessary 
regulatory framework at the U.S. federal level.
    PV is on track for delivering promised cost reductions. Incremental 
improvements in silicon pricing, silicon utilization and overall system 
costs are expected to decrease annually at a consistent, but modest 
level. This is independent of any major game changing technology or 
manufacturing process coming on-line. There are cost, performance and 
manufacturing processing improvements in the pipeline, but it is 
uncertain when, and at what scale they will enter the marketplace. 
Commercialization is a highly uncertain process and although it is 
clear that more attention and investment has been directed toward PV 
improvements across the entire value chain, it is unclear how soon 
those improvements will be translated into value.
    The Grand Plan calls out thin film and expected cost reductions. In 
general, I am in agreement, though my colleagues at University of 
Arizona have pointed out some of the fundamental resource issues from 
both a supply and a toxicity perspective, with the cadmium telluride 
cells. They and others are working on next generation materials with 
great promise that avoid supply and toxicity concerns, but again, there 
are uncertainties concerning time to market.
    The greatest concern in the next three to five years may be 
financing. Solar energy financing comes from multiple sources (federal, 
utility rate payers and private capital). Difficulties in any of the 
sectors will constrain the total financing. In particular, without new 
approaches to utility contributions, in the current near-recessionary 
(recessionary) environment, there will be limits to how much of a cost 
burden can be placed on the rate-payer.
    PV and HCPV technologies should and will dominate development in 
the next ten years, especially in a DG format. With all the talk of 
large-scale projects and exporting to the rest of the country, it would 
make sense to take care of the domestic needs of potential power 
exporters first and then use the fixed cost clean power to build 
generation for export.
    The Grand Solar Plan suggests equal development on a GW basis for 
each technology for the next ten years. On that basis alone, with 3,000 
MW of solar thermal in process, the focus for the next five to 10 years 
should be on PV deployment, especially in the DG development model (PV 
because it is scalable, modular and flexible can be developed in a 
central station format or distributed format).
    Another way to think about it is to emphasize the technology that 
offers the ``two-fers'' or perhaps more elegantly ``positive 
externalities.'' These are other positive benefits that come from the 
technologies, independent of clean, cost-effective energy generation. 
Economic development and job creation is essentially the same for each 
technology, more maintenance jobs for solar thermal, more flexible job 
experience for PV. Solar thermal is not less expensive than PV, and 
there is evidence that it is more expensive when comparing scale to 
scale. Other features and comparisons will be discussed later.
    PV is scalable and flexible and it can be developed across a whole 
range of sizes from a few kilowatts to 50+MW on rooftops and ground 
mounted, using land that may not have any other productive use. 
Developed near to the customer demand, transmission costs can be saved. 
Larger numbers but smaller installations spread across more communities 
could be deployed, permitting more people and more communities to 
participate in the economic benefits of a large infrastructure 
development campaign. Large scale DG deployment also offers additional 
reliability as has been noted above.
    Scale development of any solar technology has the potential to 
bring cost down, from component manufacturing to installation practices 
to financing and other transaction costs. Utility scale solar thermal 
provides component scale benefit solely to utility scale solar thermal. 
Because the same components are used in PV small scale to utility 
scale, any wins in the PV area have benefits across the whole range 
from utility scale down to the small systems on homes or for remote 
emergency applications.
    For the next three to five years it is critical that we allocate 
solar energy investment to the highest benefit lowest risk 
installations. That would suggest a predominant role for DG, where the 
rate-payer investment can be more effectively stretched with private 
capital, and where the investment has the biggest return to rate-
payers: near the load, dispersed throughout communities, benefiting 
more communities. Larger investments, with longer construction periods, 
greater cost of construction exposure, higher technology and 
performance risks, are less beneficial under the current constrained 
conditions. Since PV can go to scale in a DG format (5 to 20MWs) and at 
the higher MW level, deliver price breaks equal to or below the current 
cost of large scale solar power, it is prudent to focus on PV 
technology and DG scale.
    As presented in the technology obstacles above, DG presents 
difficulties for utilities concerning revenue loss. With the entry into 
the market place of means to address those concerns, large volume 
strategically developed and integrated DG projects utilizing PV 
technologies will dominate in the next 5 years. In the second five, CPV 
and HCPV advances in scalability will support additional DG and more 
cost effective central station from regions like Arizona that have good 
solar resource and available land.

3.  Current regulatory environment and incentive structure & large-
                    scale solar development.

    Key to large scale development in the near-term is the extension of 
the Federal Investment Tax Credit, standard interconnection and net 
metering at the federal level, support for solar energy on federal 
lands and protection for the key solar energy financing mechanism to 
date, the Power Purchase Agreement (``PPA'').
    The rationale for the first two issues have been offered and 
discussed above. Support for solar energy development on federal lands 
could be in terms of multipliers for requirements for federal agencies 
to deploy solar energy on-site and other federal lands as was done in 
EPACT 2005 (energy production is doubled for accounting purposes), and 
in reducing the administrative burden for long-term leases, etc. The 
fourth issue, protection for the PPA, like standard interconnection and 
net metering has been addressed in many states, but not all. This 
requirement concerns the ability of PPAs to be offered by solar energy 
developers without the burden of excessive and unnecessary regulatory 
requirements and approval. Federally preempting state attempts to 
prohibit or restrict on-site generation could consist of the following:

         ``Provision of electricity from equipment which uses solar 
        energy to generate electricity shall not be considered a sale 
        of electricity for the purposes of any federal, State, or local 
        regulation governing sales of electricity or regulating utility 
        service, provided the sale is to serve load on the premises 
        where the system is located, or on contiguous property.''

4.  Distributed photovoltaics, concentrating photovoltaics, solar 
                    thermal technology comparisons, R&D funding & 
                    Congressional actions.

    Solar energy consists of two kinds of approaches: capturing the 
sun's photons (solar electric, photovoltaics, ``PV'') and capturing the 
sun's heat (solar thermal). These approaches can be developed in two 
formats: central station and distributed generation (``DG''). Central 
Station consists of large scale (20MW to GW, multiple square miles), 
remotely located, and connected to the grid via transmission lines and 
infrastructure for distances up to hundreds of miles. Distributed 
generation (``DG'') consists of micro generators of hundreds of watts 
up to 20MW and can be located near the consumer demand. DG does not 
require transmission infrastructure, and is delivered to the end-user 
directly through the service panel or in larger systems of multiple 
megawatts by means of distribution lines and equipment.
    Capturing the sun's heat requires components and equipment that is 
different depending on whether the developed in central station or DG 
format. Capturing the sun's photons, depends on similar components 
regardless of small scale or large-scale development. (This is 
particularly true for PV. For concentrating and high concentrating PV, 
smaller scale may not be effective).
    Utility scale solar thermal approaches include parabolic troughs, 
power towers, and other systems. Most systems concentrate the sun's 
heat and focus that heat on production of steam to turn electric 
generators that then produce electricity.
    PV, concentrating PV (``CPV'' to 100 equivalent suns) and high 
concentrating PV (``HCPV'' in excess of 100 suns) all use semi-
conductor material that when exposed to the photons of the sun, 
directly produce electric current. The concentrating technologies, by 
means of special lens, dishes and reflective surfaces, effectively 
multiply the potential electric current from the photon energy of the 
sun (some proposed CPV systems are hybrids and use heat for energy 
production, but they are exceptions). Such systems require tracking and 
sophisticated thermal management. The complexity is offset by the 
potential to substantially increase the 10 percent efficiency of PV to 
20 to 40 percent. As sophisticated tracking and thermal management 
technologies from other industries, especially the defense industry, 
migrate to the CPV and HCPV arena, these complexities could be 
profitably managed. As experience increases the certainty regarding 
performance, CPV and HCPV can become more viable, especially those that 
lend themselves to a scalable, modular and flexible development 
profile. (Please see pictures of systems following the text).
    A key consideration for assessing the functionality and finance-
ability of a technology, is how quickly and efficiently it can be 
deployed. Finance-ability requires long-term dependable production, 
either low cost or reasonably predictable operation and maintenance 
costs, and other minimized risk factors. The following table summarizes 
risk factors for PV and solar thermal. Due to the limited deployment of 
CPV and HCPV technologies, the risk analysis was not meaningful.

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    There is a feature of solar thermal that may make it more 
advantageous and that is storage. Adequate storage increases the 
dispatch-ability and value of solar energy generation. Large-scale 
storage for solar thermal, supported by fossil fuel generation, is 
purported to be farther along in the development and reliability cycle 
than large-scale storage options for PV. Several proposed projects with 
storage features are expected to be completed in the next three years 
and will clarify.

Development Format: Central Station and Distributed Generation

    PV (and CPV and HCPV) can be developed in a DG or central station 
format, though nearly all developments to date have been in a DG 
format. Utility scale solar thermal requires a central station format. 
As has been discussed, there are many advantages to DG, as summarized 
below:

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Other Regulatory & Incentive Mechanisms

Pricing Carbon Emissions

    Currently, pricing carbon emissions has been done indirectly, 
through an assumed green value attributed to generation from renewable 
sources. How these attributes are valued and bought and sold is 
dependent upon the regulatory framework adopted by the state where the 
project is located. Establishing market based pricing mechanisms at the 
national level, by means of carbon taxes and/or carbon trading would be 
very productive and supportive of rapid and efficient deployment of 
solar energy. Among other positive results would be a reduction in 
transaction costs.

Setting Standards & Mandates

    Although market driven strategies are always to be preferred on 
core resource issues, standards and mandates are often prudent and 
necessary to achieve certain objectives. The electric power industry is 
a regulated monopoly and does not operate in an environment where 
competitive alternatives can be easily presented and adopted. This is 
especially true in a market where many of the negative costs have not 
been systematically included, as is true for electric power. A national 
requirement or standard for renewable energy deployment could be 
helpful.

Summary of Federal Research & Development Support and Regulations

Research & Development

        1.  Storage Large scale and small scale: batteries, inverter 
        based, flywheels, compressed air storage.

        2.  Intelligent Controls for Grid Integration

        3.  Value and Integration of Distributed Generation

        4.  Photovoltaic Materials, including CPV and HCPV

Regulations

        1.  Extension of Federal Investment Tax Credit

        2.  Federalizing Standard Interconnection, Net Metering, and 
        PPA protection

        3.  Access to federal lands for solar energy deployment

        4.  Pricing Carbon Emissions

        5.  Setting Renewable Energy Requirements

    In conclusion, we are walking a tightrope of opportunity in the 
decisions we will make on cleaning and greening our electric power 
system. And the consequences of making a large, monolithic bad choice 
are no longer minor. At the end of the day, it all comes down to 
limiting our risk. Our choices must reflect a hard-nosed look at the 
risk, no matter how brutal the facts are.
    Thank you Madame Chairman and the Members of the Committee for the 
opportunity to share these observations and opinions with you.
    Thanks to my colleagues at Arizona Research Institute for Solar 
Energy, AzRISE, University of Arizona (Joseph Simmons, Ph.D., Ardeth 
Barnhardt); SunEdison (Jigar Shah, Greg Ashley, Colin Murchie, and 
Howard Green), and Raytheon Missile Systems (John Waszczak, Ph.D., and 
Thomas Olden) for their insights in preparing this document.
    Venture Catalyst Inc. is solely responsible for the opinions 
expressed here.

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                      Biography for Valerie Rauluk
    Valerie Rauluk Founder and Chief Executive Officer of Venture 
Catalyst Inc. (``Vecat''), a consultancy based in Tucson, Arizona, 
specializing in financing and community development. Emphasis in the 
last 10 years has been sustainable energy deployment, especially solar 
energy commercialization and financing. These activities were conducted 
under contract with the United States Department of Energy, National 
Renewable Energy Lab, Sandia National Labs, Arizona renewable energy 
vendors, and SunEdison, LLC. Ms. Rauluk has been in the development 
business for nearly thirty years, guiding products, services, programs 
and projects from concept to full operation. Educated at the University 
of Chicago and New York University, she served as an investment banker 
in New York during the 1980's, where she worked in mergers, 
acquisitions, leveraged buy-outs and industrial revenue bonds. Her 
experience also includes economic development for New York City 
minority businesses.

    Ms. Giffords. Thank you, Ms. Rauluk.
    Next we are going to hear from Ms. Lockwood.

   STATEMENT OF MS. BARBARA D. LOCKWOOD, MANAGER, RENEWABLE 
             ENERGY, ARIZONA PUBLIC SERVICE COMPANY

    Ms. Lockwood. Madam Chairman, Members of the Committee, and 
staff, thank you for the opportunity to provide APS' 
perspective on utility-scale solar power.
    Arizona is the second fastest growing state in the country, 
growing at three times the national average. APS serves more 
than a million customers, who at their peak consume more than 
7,000 megawatts of electricity, and electricity demand is 
growing at a rate of hundreds of megawatts each and every year.
    As has been discussed all afternoon this afternoon, in 
Arizona our most abundant resource is sunshine, and APS is 
looking for ways to put the sun to work providing electricity. 
APS is committed to making Arizona the solar capitol of the 
world.
    The focus of my comments today is on CSP or Concentrating 
Solar Power technology, which we have also heard a lot about 
from the previous witnesses today.
    As Congressman Mitchell mentioned, APS recently announced 
the Solana Generating Station. Solana is a 280 megawatt solar 
power plant, to be located just outside of Phoenix, Arizona. 
APS has signed a long-term contract with Abengoa Solar, the 
project developer and owner, for all of the electricity 
generated by Solana. If operating today, Solana would be the 
largest power plant, solar power plant, in the world.
    The plant will use nearly three square miles of parabolic 
trough mirrors and receiver pipes, and operating at full 
capacity the plant will produce enough electricity to power 
70,000 homes.
    Also mentioned frequently today, including Congressman Hall 
and Chairman Gordon, is the importance of energy storage when 
it comes to solar, and that is one of the most important 
aspects of the Solana Generating Station, is its ability to 
capture and store energy for later use. By using large 
insulated tanks filled with molten salt, heat captured during 
the day can be stored and used to produce electricity when the 
sun is no longer shining. This value cannot be underestimated. 
Because it can provide energy even after the sun has set, this 
technology provides maximum value and reliability for APS and 
its customers.
    Solana also provides significant economic benefits for the 
State of Arizona. The Solana Generating Station will provide 
1,500 construction jobs, and 85 permanent operations jobs. The 
total economic impact is much greater. All totaled, Solana will 
result in over a billion dollars in economic development for 
Arizona.
    And, Solana is not the end of APS' interest in CSP, as Kate 
mentioned earlier we believe this is a viable commercial 
technology that can provide significant energy for our 
customers in coming years. Depending on many factors, APS alone 
could envision over 1,000 megawatts of CSP in our system in the 
next 10 to 15 years.
    Today, the single biggest obstacle in the success of Solana 
is the potential expiration of the 30 percent investment tax 
credit. I am sure that is something you have heard many times 
before, and will probably hear many times again. Without this 
tax credit, Solana is simply not affordable today.
    I also need to be clear that a one- or two-year extension 
of the ITC will not be sufficient. While it may be acceptable 
for small-scale solar projects, and for wind projects, large-
scale solar is different. The approval, permitting and 
construction of the Solana Generating Station will take three 
to four years to complete. We cannot begin until we know it 
will be eligible ITC once it is complete.
    As Congressman Mitchell mentioned, if a long-term extension 
of the ITC is not granted, Solana will not be completed. If the 
ITC is extended for a sufficient period, there will be many 
other plants like Solana built in the next five to 10 years. If 
not, the industry will lose its momentum and no large-scale 
solar plants will be constructed.
    The future of large-scale solar depends on getting those 
first few plants in operation.
    Thank you, Madam Chairman, and Members of the Committee, 
for the opportunity to share this information with you.
    [The prepared statement of Ms. Lockwood follows:]
               Prepared Statement of Barbara D. Lockwood
    Mr. Chairman and Members of the Subcommittee, thank you for the 
opportunity to provide Arizona Public Service Company's (APS') 
perspective on utility-scale solar power. My comments will focus on the 
opportunity solar provides for clean, reliable electricity, and the 
challenges associated with realizing that potential.
    APS is the largest and longest serving electric power utility in 
Arizona. Arizona is the second fastest growing state in the country, 
and APS has more than a million customers who, at their peak energy 
consumption, use more than 7,000 megawatts of electricity. By 2025, APS 
will have nearly two million customers demanding over 13,000 megawatts 
of electricity. To meet this rapid growth in electricity demand, APS is 
investing $1 billion a year in infrastructure. That number does not 
include additional generation sources. For APS alone, our peak demand 
is growing at hundreds of megawatts per year, or the equivalent of one 
medium-sized natural gas plant each and every year. Meeting the growing 
needs of our customers is both a challenge and an opportunity.
    In Arizona, our most abundant renewable resource is sunshine. The 
solar resource in Arizona is virtually unlimited, with more than 300 
days of sunshine each year. In addition, Arizona has sizable quantities 
of wide-open, flat landscape that is ideal for the installation of 
large-scale solar equipment. Among the most important factors in 
considering a resource for electricity production is the reliability of 
the fuel. Arizona's solar climate provides a resource that is both 
dependable and predictable.
    APS is committed to making Arizona the solar capital of the world 
and bringing affordable renewable energy to all its customers. A 
balanced renewable energy portfolio including solar, wind, geothermal 
and biomass/biogas resources is fundamental to our operating strategy. 
For the past two decades, APS has worked with the solar industry and 
researchers around the U.S. and the world to bring lower cost and 
reliable solar electricity to our customers. In 1988, the APS Solar 
Technology And Research (STAR) center was developed to support the 
advancement of solar resources, including field operation of both 
photovoltaic and concentrating solar technologies. In addition to STAR, 
APS currently has over five megawatts of photovoltaic power plants in 
operation providing reliable solar energy to our customers.

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    APS has also supported the advancement of concentrating solar power 
(CSP). These technologies are ``thermal electric systems'' that use 
solar heat to drive generators and engines. CSP thermal systems include 
solar trough concentrator systems and central receiver (power tower) 
systems that use many mirrors to focus light on a central solar 
collector. CSP also include solar dish Stirling systems and other 
advanced solar concepts.
    In fact, APS constructed the first commercial CSP plant in the 
United States in almost 20years. The Saguaro Solar Power Plant, which 
came on-line in 2006, is a one megawatt parabolic trough facility 
located just north of Tucson at Red Rock, Arizona. This plant has 
provided critical learning for APS, the CSP industry, and researchers. 
While small in size, it has facilitated new interest in CSP around the 
country and the world.

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    But that was just the beginning of our entrance into commercial 
CSP. Also in 2006, APS stepped forward to lead a coalition of 
southwestern utilities interested in CSP. The Joint Development Group 
is a consortium of seven entities exploring the possibility of a 250 
megawatt CSP project to be located in Arizona or Nevada. Acting as 
project coordinator, APS issued a request for proposals in December of 
2007. If all goes well, the consortium project could be selected this 
summer.
    But our most significant step to date is the announcement on 
February 21, 2008, of the Solana Generating Station. Solana is a 280 
megawatt solar power plant to be located 70 miles southwest of Phoenix 
near Gila Bend, Arizona. APS has signed a long-term contract with 
Abengoa Solar, project developer and owner, for 100 percent of the 
electricity generated by Solana. Solana is the Spanish word for ``sunny 
place.''
    If operating today, Solana would be the largest solar power plant 
in the world. The plant will use nearly three square miles of parabolic 
trough mirrors and receiver pipes, coupled with two 140-megawatt steam 
generators. Operating at full capacity, the plant will produce enough 
electricity to power 70,000 Arizona homes.
    Solana also provides significant economic benefits to the State of 
Arizona. The Solana Generating Station will provide 1,500 construction 
jobs between 2008 and 2011 and 85 permanent operations jobs. Solana 
will also generate between $300 million and $400 million in tax revenue 
over the 30 year life of the plant. All total, Solana will result in 
over $1 billion in economic development for the Arizona economy.
    Finally, Solana is an emission-free source of electricity, avoiding 
nearly 500,000 tons of carbon dioxide, 1,065 tons of nitrogen oxides, 
and 520 tons of sulfur dioxide each year. It is the equivalent of 
removing 80,000 cars from the road each year. Solana will also use 75 
percent less water than the current agricultural usage of the land.
    APS selected Abengoa Solar as its partner for Solana because of its 
track record as a solar developer, its critical operational experience 
and a reputation for meeting contractual obligations.
    One of the most important aspects of Solana is its ability to 
capture and store solar energy for later use. By incorporating large 
insulated tanks filled with molten salt, heat captured during the day 
can be stored and used to produce electricity when the sun is no longer 
shining. The molten salt and heavily insulated tanks are able to retain 
heat with very high efficiency, and the stored heat can then be 
extracted in the evening or even the following day to create 
electricity.

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    The stored heat not only increases the total amount of electricity 
generated, it also adds specific operating benefits for APS. The 
ability to use stored heat on demand, also referred to as 
``dispatching,'' allows APS to respond to customer usage patterns and 
emergency energy needs more effectively. Most southwest utilities 
experience their highest customer demand during the summer months. 
While the power need is substantial in the middle of the day, peak 
energy demand occurs in the late afternoon and into the early evening 
hours. Because it can provide energy even after the sun has set, the 
solar trough with thermal energy storage provides the maximum value for 
APS and its customers.
    Diversification of generation resources is critical to maintaining 
a reliable electric system and concentrating solar power provides a 
significant opportunity to diversify energy resources. In addition, the 
costs to construct and maintain concentrating solar power plants have 
declined while at the same time equipment and labor costs, rising fuel 
prices and emissions concerns are increasing the risks of conventional 
resources.
    APS also recognizes that renewable energy strategies will become 
even more important under the prospects of carbon legislation. With 
zero carbon emissions, energy from solar power provides one method of 
addressing concerns around global warming while continuing to provide 
reliable electricity to our customers.
    And Solana is not the end of our interest in CSP. APS is currently 
engaged in a formal dialogue with our regulators, stakeholders and 
customers about our future energy sources. We are exploring the 
availability, cost, regulatory and policy implications associated with 
many different types of resources including nuclear, natural gas, coal, 
energy efficiency and renewable energy. One of several scenarios under 
discussion is one where CSP plays a central role, adding 1,350 
megawatts by 2020. Each of these efforts will help us to meet, and 
possibly exceed, the progressive Renewable Energy Standard established 
by the Arizona Corporation Commission.
    CSP, in particular the solar trough, is proven, reliable 
technology. There are no technical barriers to deployment of this 
technology today, and APS is aggressively exploring the near-term 
potential.
    In considering the long-term potential for utility scale solar, one 
topic of consideration is how to integrate large solar plants into the 
regional and national electric grid. This topic raises numerous issues 
including availability of land for large scale installation and the 
availability of transmission facilities and transmission capacity to 
deliver the energy to load centers. The lack of transmission capacity 
and how that is managed will be a significant factor in the long-term 
success of utility-scale solar. In fact, transmission is generally 
constrained in much of the west and significant new transmission 
investment is needed in the coming years for all types of generation be 
they renewable or conventional generation. New transmission is being 
planned throughout the west and in California, New Mexico, Nevada, and 
Texas specifically to access renewable resources including wind and 
geothermal. Others states and utilities, including APS, are studying 
their needs for both intra- and interstate transmission to ensure a 
robust grid to meet the needs of the West's burgeoning population. The 
studies include the ability to reach those areas of the west with 
abundant cost-effective renewable resources.
    Also, the possibility of locating large scale solar on federal land 
should be investigated and analyzed. By its nature, solar technologies 
require significant geographic footprints. A general rule of thumb for 
a solar installation is five to 10 acres per megawatt. As I previously 
stated, the Solana Generating Station requires three square miles of 
contiguous land. Considering that the Federal Government is the largest 
land owner in the U.S., a study of federal land in high solar resource 
areas that may be made available for CSP development would also be 
beneficial and appropriate.
    However, the biggest obstacle to the success of utility-scale 
solar, including Solana, is the potential expiration of the federal 
Investment Tax Credit (ITC). Solana, and projects like Solana, became 
possible when the federal ITC for solar systems was increased from 10 
percent to 30 percent in 2006. While large-scale solar is still more 
expensive than conventional resources, the 30 percent investment tax 
credit decreased the cost sufficient to make these projects a 
reasonable option. Without these tax credits, large scale solar 
projects, including Solana, are simply not affordable today. As you 
know, the 30 percent ITC is scheduled to expire at the end of 2008. The 
approval, permitting and construction of the Solana Generating Station 
will take three to four years to complete. The Solana project also 
requires well over a billion in capital investment. APS, Abengoa Solar, 
and the financial institutions providing funding for Solana require 
certainty that Solana will be eligible for the ITC once operational. If 
a long-term extension of the ITC is not granted, Solana will not be 
completed.
    A different federal tax credit, the production tax credit (PTC), 
has spurred significant development for other renewable energy 
resources, most notably wind energy. The PTC has been extended five 
times since its introduction in 1992 and each extension was for one to 
two years. Although the wind industry has worked toward longer-term 
extensions, wind energy projects, and smaller scale solar projects, 
have much shorter time frames for construction, which makes short-term 
extensions of the PTC acceptable, if not preferable. Although the solar 
ITC is typically packaged with the PTC in discussions of extensions, 
large-scale solar has very different needs related to tax credits. A 
one- or two-year extension of the solar ITC is simply not sufficient to 
make large scale solar projects like Solana a reality. In fact, a one 
or two year extension of the Solar ITC may effectively cancel the 
project. Large scale solar has little hope of realizing its potential 
without a long-term extension of the ITC. APS believes an eight-year 
extension is optimal. Eight years should be sufficient to get a number 
of large scale solar facilities completed. It is also long enough to 
establish the supporting industries like mirror and receiver 
manufacturing in the United States. Once the industry gains a foothold, 
prices will decline and incentives will no longer be necessary.
    Another critical aspect of the ITC is the fact that it is not 
available to public utilities. The restriction needlessly narrows 
application of the credit and is unfair to U.S. citizens because the 
vast majority purchase power from a public utility, as it is defined by 
the tax code. This current policy forces a third-party owner to take 
advantage of the ITC and it creates unnecessary uncertainty and costs 
to the system. It requires the utility and regional grid to consider 
the operational and financial risks inherent in any third party 
relationship thus potentially affecting the utility operating 
strategies. APS is managing these risks with Solana, but it creates a 
sub-optimum situation when it is the only strategy available.
    I was also requested to address a recently published article. ``A 
Solar Grand Plan,'' published in the Scientific American Magazine in 
December 2007, describes a world where solar energy provides 69 percent 
of the U.S.'s electricity by 2050. It includes huge tracts of land 
covered in solar and a new direct-current transmission system across 
the U.S. It also includes 16-hour thermal storage for CSP and 
compressed-air energy storage for photovoltaics, which allow the 
production of energy from solar resources around the clock.
    ``A Solar Grand Plan'' is certainly grand. It's a big, bold vision 
for a new energy era. Without analyzing the details of the plan, there 
appear to be no glaring technical issues with the proposed strategies. 
CSP and photovoltaics are proven technologies. As described, thermal 
storage and compressed-air energy storage are likely viable concepts. 
Finally, direct current transmission is already in operation today.
    No, the challenges with this plan are not technical. But there are 
enormous planning, regulatory, and policy challenges with achieving 
this vision. Most importantly, energy policy decisions are made largely 
at the individual utility and State level. Each utility and state has 
different perspectives, and different regulatory authorities, that 
control the vast majority of decisions around generation sources and 
transmission. And although I haven't analyzed the cost presented in the 
article, the execution of such a plan would clearly depend on gaining 
great cost efficiencies.
    Clearly, the potential for utility scale solar electricity is 
enormous. If, and only if, the ITC is given a long-term extension, I 
predict we will see several thousand megawatts of utility scale solar 
developed in the next five to 10 years. At least seven major projects 
have been announced since 2006. If the ITC is not extended for a 
sufficiently long period of time, the industry will lose its precious 
momentum and no large scale solar plants are likely to be constructed. 
The future of large scale solar depends heavily extending the ITC and 
getting those first few plants in operation.
    These initial plants are planned to supplement existing fossil fuel 
resources and help to satisfy our growing energy needs. In the long-
term, utility scale solar could be a viable option in replacing base 
load fossil fuel facilities as those assets are retired. But costs need 
to decline significantly to make that a viable option. Only then will 
solar be a viable option for replacing base load assets that are being 
retired. Assuming success in the near-term, the prospect for the next 
20 to 50 years is virtually unlimited.
    Thank you, Mr. Chairman and Members of the Subcommittee for the 
opportunity to share these observations and opinions with you.

                   Biography for Barbara D. Lockwood
    Barbara D. Lockwood is the Manager of Renewable Energy for Arizona 
Public Service (APS) where she is responsible for APS' renewable energy 
programs including large-scale generation and customer programs. Ms. 
Lockwood joined APS in 1999. Ms. Lockwood began her career in the 
chemical industry at E.I. DuPont de Nemours in various engineering and 
management roles on the east coast. Subsequent to DuPont, Ms. Lockwood 
moved into consulting and managed diverse projects for national clients 
across the United States.
    Ms. Lockwood holds a Bachelor of Science in Chemical Engineering 
from Clemson University and a Master of Science degree in Environmental 
Engineering from Georgia Institute of Technology. Ms. Lockwood is a 
registered professional chemical engineer in Arizona and California.

    Ms. Giffords. Thank you, Ms. Lockwood.
    And finally, Mr. Kastner.

      STATEMENT OF MR. JOSEPH KASTNER, VICE PRESIDENT OF 
   IMPLEMENTATION AND OPERATIONS, MMA RENEWABLE VENTURES LLC

    Mr. Kastner. Thank you, Madam Chairman, and the 
Subcommittee Members, for providing this opportunity.
    As many of your questions addressed the Nellis Air Force 
Base project I would like to begin by recognizing Lieutenant 
Colonel Karen White, who is in the audience today. Lieutenant 
Colonel White was instrumental in making the Nellis Air Force 
Base project a success, and it is great to have her here.
    Ms. Giffords. Welcome, Colonel, thank you for being here 
today. We appreciate it.
    Mr. Kastner. On behalf of MMA Renewable Ventures and the 
solar industry, I am happy to provide the following comments 
related to the development and financing of utility-scale 
solar.
    In 2007, MMA completed the project development and third 
party financing of over 22 megawatts of solar, including the 14 
megawatt facility at Nellis Air Force Base, the largest PV 
installation in North America.
    We are actually pursuing domestic opportunities in other 
renewables and our parent company MMA has built this business 
largely around sustainable and socially-responsible investment 
opportunities, including affordable housing, renewable energy, 
and sustainable land investments.
    Ms. Giffords. Mr. Kastner, I don't mean to interrupt, but 
can you move the microphone a little bit closer?
    Mr. Kastner. Sure.
    Ms. Giffords. Okay.
    Mr. Kastner. The Nellis project involves a public/private 
partnership that is advantageous because the affiliated public 
entities could not avail themselves of the Federal tax 
benefits. The project was enabled by the following commercial 
arrangements:

        1. LA 20-year site lease with the United States Air 
        Force;

        2. LA power purchase agreement with Nellis Air Force 
        Base;

        3. LAn agreement to sell Nevada Power the renewable 
        energy credits associated with the project for 20 
        years;

        4. LAn installation contract with Sun Power 
        Corporation;

        5. LAnd finally, financial arrangements that included 
        construction financing from Merrill Lynch, permanent 
        debt financing from John Hancock, and tax equity 
        financing from Citicorp, Allstate and MMA Financial.

    The combination of these complex legal and financial 
arrangements enabled the project. We believe that this type of 
public/private partnership provides a commercial approach that 
can be used at a variety of sites of varying size and scale in 
the U.S.
    All fuel-less electric generation technologies are more 
capital intensive than conventional combustion-based 
technologies. And thus, they require long-term stability and 
certainty in financial, legal and regulatory environments, in 
order to mobilize the long-term investment. The following 
concepts are key to providing stability and certainty for solar 
projects.
    As has already been mentioned, first and foremost, a long-
term extension is needed for the current 30 percent investment 
tax credit. The ITC is critical to the development and 
financing of utility-scale solar projects and DG projects, and 
necessary to ensure continuing domestic project development.
    History has shown that the short-term tax credit, subject 
to the uncertainty of congressional reauthorization, can 
actually be detrimental to the development of renewable energy. 
Uncertainty around the extensions of the production tax credit 
for wind power increases the cost of capital for projects and 
causes the inflation of equipment costs due to supply 
constraints. We would expect the same fate for solar without 
the long-term extension of the tax incentive.
    Stability and certainty are also critical for the 
commercial arrangements which enable the projects. In the case 
of the Nellis installation, a change in law risk within the 
standard REC contract had the potential to make the project 
somewhat less than financeable. If the Public Utility 
Commission of Nevada had not issued an order that provided 
assurances regarding this change in law risk the project may 
not have been financed.
    In most states where solar PV projects are being 
implemented, they are enabled, at least in part, by State 
renewable portfolio standards. This is certainly true for the 
Nellis project.
    The geographic reach and timing of such programs would be 
enhanced through a Federal initiative. The National RPS would 
provide certainty by guaranteeing a minimum degree of market 
demand for renewable energy. Such an initiative must provide 
ample flexibility for State programs that surpass federal 
minimum standards and encourage the dissemination of best 
regulatory and utility procurement practices, including 
standardized contracts that provide sufficient long-term 
certainty for mobilizing capital markets.
    Such an initiative should also support diversification 
through the development of promising technologies in 
appropriate regions. A specific solar requirement from the 
Nevada RPS helped to enable the Nellis project, and is why it 
occurred in Nevada, and not in Arizona or New Mexico.
    Lastly, a federal cap and trade system, or emission tax, 
would help to internalize the environmental and social costs of 
emissions caused by burning fossil fuels. This would also help 
to create a level playing field for all generation types.
    In conclusion, investors are beginning to respond to the 
market-driving incentives for solar energy provided by Federal 
and State government. The Nellis project is a great example of 
how these types of incentives can be combined to create a 
viable project opportunity.
    These types of opportunities will only reach the volumes 
required to significantly reduce the costs of solar energy if 
the incentive programs are structured to ensure the creation of 
a stable, long-term market for investment. The market for these 
opportunities could be expanded greatly through various actions 
at the federal level, including a national RPS and the adoption 
of a market mechanism or tax for internalizing external costs 
of emissions from conventional energy sources.
    Thank you.
    [The prepared statement of Mr. Kastner follows:]
                  Prepared Statement of Joseph Kastner
    Good Morning. On behalf of my company, MMA Renewable Ventures, LLC 
and the solar industry, I am happy to provide the following comments 
related to the development and financing of utility scale solar 
projects.
    In 2007, MMA Renewable Ventures completed the project development 
and financing of more solar photovoltaic projects in the United States 
than any other company in the U.S. as measured by total capacity 
installed (more than 22 MWp) from over 20 discrete projects. We are 
especially proud of the development and financing of the 14MWp solar 
photovoltaic (PV) project on Nellis Air Force Base--the largest such 
project ever built in North America and one of the largest in the 
world.
    In a significant portion of these projects, the land owner and 
power purchaser has been a public entity such as a Federal Government 
department, municipality, or transit district. As you know, such 
entities cannot avail themselves of the federal investment tax credits 
(ITCs) and accelerated depreciation benefits offered under the Internal 
Revenue Code. In all of these transactions, MMA Renewable Ventures 
served as the third party project developer and financing party which 
develops the projects, negotiates the power purchase agreements, 
secures the necessary land rights, negotiates engineering, procurement, 
and construction contracts, negotiates interconnection agreements with 
distribution utilities, and obtains construction and permanent 
financing (debt and tax equity). Consequently, we are intimately 
knowledgeable and experienced with every aspect of project development 
and finance of solar PV projects.
    In addition to solar PV projects, MMA Renewable Ventures is 
actively pursuing and developing wind, biomass, biofuel, and energy 
efficiency opportunities in the U.S. market. We expect to add energy 
efficiency projects to our portfolio of operational assets in 2008 and 
wind, biomass, and biofuel projects within the next two calendar years. 
Similar to solar, many of these opportunities are dependent upon an 
extension of currently existing tax credit provisions, in this case the 
production tax credit (PTC) in Section 45 of the tax code.
    MuniMae, the parent company of MMA Renewable Ventures, has built a 
business largely around sustainable and socially responsible investment 
opportunities. Historically, this has involved affordable housing and 
more recently renewable energy and sustainable land investments.

Description of the Solar Project at Nellis AFB

    The development and financing of the solar project at Nellis Air 
Force Base (AFB) was based on the following commercial arrangements:

        1.  Nellis AFB has leased 140 acres of property to a special 
        purpose entity called Solar Star NAFB, LLC, owned and operated 
        by MMA Renewable Ventures, for a period of twenty years 
        beginning January 1 following the start of commercial operation 
        for the project;

        2.  Solar Star NAFB has in turn agreed to sell the power output 
        of the plant to Nellis AFB for a coincident term;

        3.  Solar Star NAFB has also agreed to sell the renewable 
        energy credits (RECs)--the tradable credits representing the 
        environmental attributes, benefits and other values of 
        renewable energy--to Nevada Power for the same 20-year term. 
        Nevada Power purchases such credits in order to comply with the 
        Renewable Portfolio Standard required under Nevada's Renewable 
        Energy Law;

        4.  On behalf of Solar Star NAFB, MMA Renewable Ventures 
        negotiated an engineering, procurement, and construction 
        contract (EPC Contract) with PowerLight Corporation, which is 
        now SunPower Corporation, Systems (SunPower). Under the EPC 
        Contract, SunPower purchased more than 70,000 solar modules and 
        54 inverters, constructed the tracking systems, assembled racks 
        of modules, transported equipment, arranged labor on the site, 
        and interconnected all the system components;

        5.  On behalf of Solar Star NAFB, MMA Renewable Ventures 
        arranged for construction financing from Merrill Lynch, debt 
        financing from John Hancock Insurance Company, and equity 
        financing from CitiCorp North America, Allstate Insurance 
        Company, and MMA Financial.

    The sum total of these complex legal and financial arrangements 
enabled the construction of the largest PV plant in North America. 
While the specifics of each party and arrangement may vary from project 
to project, we believe that this public-private partnership model 
provides a commercial approach that can be used at a variety of sites 
of varying size and scale.

Recommendations for Promoting Utility-Scale Solar Projects

    Utility-scale solar projects represent the greatest opportunity for 
solar electric generation technologies to reach cost parity with 
conventional gas and coal-fueled electric generation. When equipment, 
labor, and capital are deployed to build solar projects at a scale 
counted in tens of megawatts, gains from economies of scale including 
the spread of transaction costs can deliver lower cost solar power. 
Additionally, this will spur the cost efficiencies required to make the 
deployment of distributed generation more competitive with retail 
electricity rates requiring minimal subsidies.
    In order to promote the development of projects of such scale, 
project developers and financial entities need to have a relatively 
stable financial, legal, and regulatory environment. All fuel-less 
electric generation technologies are more capital intensive than 
conventional combustion-based technologies, requiring long-term 
stability in the business environment to mobilize capital. The 
following concepts/initiatives are key to the development and financing 
of utility-scale solar:

1. Long-Term Federal Tax Incentives
    The current 30 percent investment tax credit (ITC) for solar 
projects expires at the end of 2008. At present, these federal 
incentives are critical to the development and financing of utility-
scale solar projects. Without the federal tax benefits, utility-scale 
solar projects will not be viable because the cost of energy will 
simply be too high.
    The effectiveness of existing incentives is significantly limited 
in driving development of utility scale projects with long lead time 
particularly given the pace of development and consumer adoption of 
energy technologies. The existing tax credits or incentives are short-
term, piecemeal programs subject to the uncertainty of the 
Congressional reauthorization and/or appropriations processes. For 
example, the production tax credit for wind and other types of 
renewable energy, established in 1992, has been subject to three 
expirations and several short-term extensions (some retroactive). 
Uncertainty around the ITC extension increases the cost of capital due 
to the risk of meeting a deadline and leads to a boom and bust cycle 
which has caused the inflation of equipment costs purely from supply 
constraints.
    Congress should pass a long-term ITC to drive substantial private 
sector investment in clean energy technologies. Investors need stable, 
long-term, and predictable incentives. MMA Renewable Ventures supports 
a minimum seven-year timeframe for clean energy tax credits because 
this is the minimum period necessary to enable rational investment 
decisions and deployment of resources in utility scale projects. The 
federal regulatory environment's support for energy technologies can be 
significantly improved by establishing consistency and predictability.
    At the bottom line, those of us who are actually building and 
financing utility-scale solar projects need greater certainty of the 
federal tax benefits. In addition, the ITC could benefit from the 
amendment of several rules within the IRS code:

          Eliminate the basis adjustment so that one-half of 
        ITC is not ``recaptured'';

          Make renewable energy investments eligible for 
        Community Reinvestment Act (CRA) consideration. Structured 
        correctly, this could serve to catalyze both distributed and 
        utility-scale solar projects in low and moderate-income 
        communities and/or serving public facilities. It would also 
        serve to attract additional institutional investors into the 
        space and help to create ``green-collar'' jobs in lower-income 
        communities;

          Create an ``economic substance'' carve-out for solar 
        tax credits similar to what was done for low-income housing tax 
        credits;

          Raise the production tax credit (PTC) for solar to 
        make it competitive with the ITC and give investors a choice of 
        either one. The PTC structure is a better fit for some 
        investors and will encourage more capital to enter the solar 
        space;

          Match the residual value exemption currently 
        available to the low income housing sector, allowing for no 
        constraints at resale after the tax benefits have been 
        monetized;

          Abolish the possibility for ITC recapture in the 
        event of a catastrophic loss without replacement by the end of 
        a calendar year;

          Allow tax equity to enter project after the system as 
        reached commercial operation under any financing structure.

2. A Stable Legal Framework
    One of the important prerequisites for investors in utility-scale 
solar projects is certainty the commercial arrangements will remain 
intact for the full term of the financing. Utility purchasers, 
commissions, and State and federal regulations all need to provide 
certainty and assurances that the various commercial arrangements will 
not materially change throughout the life of the project.
    For instance, in reviewing the standard contracts proposed for the 
Nellis AFB project it was determined that certain elements in the site 
lease and the streams of revenues from the power purchase arrangement 
with Nellis AFB and the REC Agreement with Nevada Power made the 
project somewhat less than financeable. The most significant instance 
involved the change-in-law risk associated with the REC agreement. If 
the Public Utility Commission of Nevada had not issued an order that 
approved the contract and an associated stipulation that provided 
assurances regarding change-in-law risk, the project might not have 
been financed.

3. A National Renewable Portfolio Standard
    Today, renewable energy resources provide a fraction of total U.S. 
energy, with the potential for significant growth. More than twenty-
seven states and the District of Columbia utilize a wide variety of 
renewable portfolio standard (RPS) mechanisms to drive a greater 
reliance on renewable energy. A basic RPS requires the electric 
utilities (investor-owned utilities and publicly-owned utilities) 
within a state to procure a percentage of their electricity output 
necessary to meet load from renewable energy sources in a specified 
timeframe. Current State policies require varying percentages of 
renewables, typically targeting a goal of one percent to five percent 
in the first year, increasing each year to achieve a goal of five 
percent to 20 percent over approximately 10-15 years.
    In general, a utility can meet RPS requirements by incorporating 
renewable energy into its fuel mix in one of four ways: (1) building 
renewable energy facilities; (2) purchasing power directly from an 
existing renewable energy source; (3) buying RECs; or (4) by 
encouraging production of distributed renewable energy, efficiency, or 
conservation. The specifics of each RPS program vary widely state to 
state from the goal, to the criteria, to the method of implementation. 
Many State programs set standards for specific technologies to ensure 
diversity of electricity supply by supporting the development of 
promising technologies that may not currently be the most economic.
    A national RPS would set the minimum standard for wholesale 
renewable energy usage throughout the United States. This would serve 
the important function of guaranteeing a minimum degree of market 
demand for renewable energy generation. Every state would be required 
to develop an energy regulatory strategy that includes a base level RPS 
with performance-based metrics that would drive investment in, and 
adoption of, viable, cost-effective renewable energy technologies. 
Specifically, Congress would mandate the establishment of minimum State 
renewable energy procurement standards with ample flexibility for State 
programs that surpass the federal minimum standards, encouraging 
dissemination of best regulatory and utility procurement practices, and 
providing states with incentives to increase reliance on renewable 
energy, reward energy efficiency, and to provide for a national REC 
market. For the reasons stated previously regarding stability, it is 
important that a national RPS is cognizant of existing State programs 
to ensure long-term investments already undertaken are not adversely 
affected. The federal RPS would require sufficient non-compliance 
measures in order to provide a strong incentive for utility compliance.
    A national RPS can be a market driving, demand side solution for 
addressing the broader goals of energy policy through development of 
diverse, secure renewable energy sources and energy efficiency, while 
at the same time encouraging technological advances throughout the 
energy supply chain. The future of renewable energy production in the 
United States resides in this synergy of governmental policy and 
emerging technologies--and without each, the aim of diversified, 
sustainable, and efficient energy production is simply impossible in 
the foreseeable future. By setting these aggressive goals for renewable 
energy production targets, the government will drive innovation and the 
market will create solutions.

4. Valuing Carbon Emissions and Other Externalities
    The current cost of conventional fossil-fuel electricity does not 
include the environmental and social costs associated with the emission 
of carbon, mercury, and other pollutants into the atmosphere. Either a 
cap-and-trade system or emission specific taxes would complement long-
term subsidies and the establishment of minimum market demand by 
internalizing the impact of burning fossil fuels into the price of 
electricity. This would tend to make solar energy more competitive with 
fossil fuel-fired electricity and further boost investment.

Market Differences in the Southwest

    The southwestern portion of the U.S. including California, Nevada, 
Arizona, and New Mexico has the strongest solar resource in the 
country. The State of Nevada has an RPS-driven REC market that provides 
a large part of the economics for the Nellis solar project. The RPS 
rules for the state have specific requirements for solar and applies a 
multiplier to RECs (termed Portfolio Energy Credits under the Nevada 
RPS) produced by solar facilities. RPS programs in the other three 
states exist, but are not necessarily structured properly for 
significant market penetration of utility-scale solar projects.

California
    California has catalyzed solar development through the California 
Solar Initiative (CSI) program which utilizes a short-term production 
based incentive. This direct subsidy has spurred the development of 
distributed generation projects (mostly less than one megawatt), but is 
not applicable for utility-scale projects. It is expected that 
California will introduce a tradable REC program for the existing state 
RPS in the near future that will encourage distributed generation 
projects currently suffering from subsidy levels declining faster than 
capital costs for key equipment. California utilities have utilized a 
request for offer (RFO) process fulfilling their RPS requirements. 
Since there is no solar set-aside, most of these contracts have been 
awarded to other renewable technologies that are currently more cost 
effective than solar. Contracts which have been awarded to solar 
projects under the RFO process have largely gone to earlier stage solar 
technologies that have yet to be implemented. The California Public 
Utilities Commission recently announced a feed-in tariff based on the a 
revised calculation methodology for the ``market price referent'' that 
sets the ceiling price for contracts awarded in the RFO process. The 
new methodology attempts to take into account the time-of-use benefits 
associated with the solar production curve matching well with the 
state-wide demand in California. The current consensus is that the 
announced feed-in tariff does not provide adequate levels of 
compensation for solar PV projects.

Arizona
    There are certain regulatory hurdles that impede the development of 
solar and other clean technologies in Arizona. Low energy rates and 
tariff structures that do not adequately incentivize the peak-producing 
benefit of solar negatively impacts the economics of solar. Net-
metering policies are essential to opening up the market to more wide-
spread adoption, instead of limiting potential customers only to those 
who have 365 day operations, and large load centers. Under the current 
net-metering rules only small systems are rewarded, otherwise solar 
generation that exceeds on-site usage is not compensated for. Like net-
metering, interconnection standards must be standardized across the 
state and have a minimum of 2MW to sufficiently promote industry 
adoption. Lastly the available incentives are insufficient. APS has 
taken the lead in establishing a PBI program, which is an important 
step, and for the most part well-designed (20 year PBI structure), 
however the total available funding is only enough to fund a few MW per 
year--which is not enough to entice the solar PV industry to undertake 
the cost and risk of entering a new market.

New Mexico
    New Mexico has shown true leadership in the aggressive RPS goals 
and high net metering limits. This includes solar specific requirements 
that must be fulfilled beginning in 2011. The law also includes a 
``Reasonable Cost Threshold'' which limits the payment of power from 
solar installations to currently unfinanceable levels.

Conclusion

    Investors are beginning to respond to the market driving incentives 
for solar energy provided by Federal and State governments. The Nellis 
AFB project is a great example of how these types of incentives can be 
combined to create a viable project opportunity when a third-party can 
enter and efficiently monetize the tax benefits. These types of 
projects will only reach the volumes required to significantly reduce 
the cost of solar energy if the incentive programs are structured to 
ensure the creation of a stable, long-term market for project 
developers, installers, equipment manufacturers, and investors. The 
geographic market for these opportunities could be expended greatly 
through several actions at the federal level including a national RPS 
and the adoption of a market mechanism for internalizing the external 
costs of emissions from conventional sources of energy.

                      Biography for Joseph Kastner
    Joseph Kastner is Vice President of Implementation and Operations 
for MMA Renewable Ventures LLC. He is responsible for sourcing and 
developing qualified renewable energy projects that fit the investment 
profile of the company and oversees the management of assets under 
construction and operation. Prior to joining MMA Renewable Ventures, he 
was responsible for project implementation, operation and maintenance 
as the renewable energy division manager for NUON Renewable Ventures 
USA LLC, a U.S.-based subsidiary of the Dutch utility NUON bv. Prior to 
NUON, Mr. Kastner worked as a consultant to commercial and residential 
building owners and investors in the areas of energy efficiency and the 
use of photovoltaic and thermal solar energy systems. Mr. Kastner has a 
Master's Degree in Energy Engineering from Stanford University, a 
Master's Degree in Environmental Science and Management from the Donald 
Bren School at the University of California-Santa Barbara, and a 
Bachelor's Degree in Mechanical Engineering from the University of 
Minnesota.

                               Discussion

    Ms. Giffords. Thank you, Mr. Kastner.
    We appreciate the testimony from all of our witnesses, and 
now we are going to turn the floor over to the Members of the 
Committee to have a chance to ask you some questions.
    I know that Mr. Hall has to leave shortly after 2:00, so I 
believe if I can get my questions in first, Mr. Hall, then we 
will move to you, and I know you have to catch your plane.
    In terms of the technology on the table, it is set for a 
briefer period than the five minutes, so what we will do is, 
halfway through you will see the light turn on, but when you 
see it getting orange and then red, if you can please either 
close up the questions, we'd like to be able to move rapidly 
through a round of questions.

            The Grand Solar Plan: Jobs and Economic Benefits

    So, I would actually like to kick off with Mr. Hansen, who 
talked about the Grand Solar Plan. For those individuals who 
have not had a chance to read the ``Scientific American'' 
article, we can provide that through the office here, and I 
will make sure that Members of the Committee have access to it 
as well, although I believe that most Members have had a chance 
to read it. It is very compelling. But, there we go, that is 
the front cover. There we go.
    I would like to dig a little bit deeper in terms of the 
economic benefit. You talked a lot about what it would bring in 
terms of the energy, and the power, and sustainability, but 
could you speak a little bit in terms of jobs and actual 
dollars?
    Mr. Hansen. Madam Chairman, I tried to pack about 10 years 
worth of information into five minutes, so it was difficult.
    The Solar Grand Plan, looking from the year 2009 to 2020, 
is the period when the incentives, the subsidies so to speak, 
to help move the technology forward, would be needed.
    It is our belief that after 2020 that those technologies 
would be compatible economically with traditional generation 
methodologies--coal, natural gas, et cetera. So, beyond 2020 
the economics would look very similar to how the current 
economic situation is for development of new electrical 
generation.
    Between now and that point in time, I believe our study 
indicated there would be about 150,000 jobs that would be 
generated. And, really, we are looking for the Abengoa type of 
projects to be part of this Solar Grand Plan. There would be 
some additional drilling required, some people that would be 
required to additionally add that capacity for storage in the 
ground, but that would be, again, existing technology, it would 
provide more jobs for the natural gas drillers, if you will, to 
provide that kind of storage in the future.
    All of the details have not been shaken out yet, we need 
more time to be able to put it together. We actually do have 
another paper coming out. It is out for peer review at the 
present time, that will have more information of the details of 
how many jobs and where those jobs would be located. The 
transmission system, the energy storage systems, they will not 
be just in the U.S. southwest, they will be throughout the 
United States. So, it will bring benefits to all of the United 
States, not just the southwest.

                   Nellis Air Force Base Partnership

    Ms. Giffords. And, going back to Mr. Kastner, and I want to 
just make it clear for everyone who understands, that Nellis 
Air Force Base launched in a public/private partnership not 
more than a couple of years ago, and I believe it took you 
about a year to complete this project. But, 40 percent of the 
energy consumed on Nellis Air Force Base is now powered by 
solar energy, which is extraordinary when you think about a 
very short period of time and ability to move so quickly in 
that.
    The Mayor and I will be visiting Nellis Air Force Base in a 
couple of weeks, and we will be bringing members of the 
community along with us as well. But, can you talk a little bit 
about, from a policy standpoint, several of us are from the 
southwest, from southwestern states, you know, what did it 
really take in terms of leadership to be able to implement that 
project, tax credits, and how you can see that expanding in 
different states as well?
    Mr. Kastner. Yes. I mean, the key driving force for the 
economics is the renewable energy credit contract with Nevada 
Power, and that was really catalyzed by the renewable portfolio 
standard within Nevada that requires a certain amount of solar 
to be produced within the state.
    Nevada Power issued an RFP for qualifying for these 
contracts before the Nellis project, during the conception of 
the Nellis project, and that is what, you know, really brought 
it forward, provided an RFP by the Air Force to do the project, 
knowing that this contract was available.

               International Competition in Solar Energy

    Ms. Giffords. And, a general question I want to address to 
Ms. Maracas, and to Ms. Rauluk. I see behind you we have some 
representatives from the Solon AG Company, a German company 
that has been investing here in southern Arizona, and I want to 
thank you for that. I know that the United States southwest is 
now competing, not just with areas like Nevada, or California, 
or New Jersey, but we are now competing with different 
countries as well.
    Can you please touch on some of that international 
competition, and how we here, you know, in the United States 
are going to be able to be a major player 10, 15, 20, 25 years 
from now?
    Ms. Maracas. Yes. I think that is a very relevant question, 
and it is worth adding, I think, that one of the reasons that 
large-scale companies like Abengoa, Bright Source, Solar 
Millennium and others, are now coming into the U.S. market, is 
because there have been over recent years a number of very 
favorable policies in European markets that have really spurred 
activity.
    In Spain, there is a feed-in tariff that is, essentially, a 
guaranteed something like 21 Euro cents per kilowatt hour that 
is paid to anybody who generates 50 megawatts, or less than 50 
megawatts, and just, essentially, develops a project that goes 
into the nationalized grid in Spain.
    So, of course, with that kind of an incentive, lots and 
lots of activity has been spurred in the Spanish marketplace. 
Other countries in Europe have similar measures, and the 
markets are growing rapidly in those countries.
    Well, that has enabled companies to, like I just mentioned, 
to develop economies of scale, achieve technology advancements, 
and make the technology more affordable in the U.S. market.
    As Mark pointed out earlier, we have the best solar 
resource on the planet. In all of Spain, Spain's solar resource 
would not have even shown up on Mark's map. And so, and I am 
quite serious, this is about 6.25, is that right, is kind of 
the high number that they strive for in Spain, compared to the 
7.5 or eight kilowatt hours per square meter today that we have 
in this area in our home state.
    So, the combination of a really desirable solar resource in 
the southwestern states, and, particularly, our home state, 
that and the credible developers who are not coming into the 
marketplace, I think create a really good recipe for expanded 
growth here.
    Ms. Giffords. Okay, thank you.
    And briefly, Ms. Rauluk.
    Ms. Rauluk. I think it is important to remember, it is 
useful to have a feed in tariff or something that provides the 
extra value for the kilowatt hour that is produced from solar 
energy. That is a needed link in the marketplace. And, that is 
why Europe has really gone beyond what we have done in the 
U.S., because their value attributed to the kilowatt hours is 
significantly higher than it is in the United States.
    But, I think we have to remember that who pays that, 
because that dollar amount for the extra value that you are 
paying for has to come from the rate payers, effectively, and 
there is really a limit to how much you can ask the rate payers 
to pay.
    In Europe, it was a little bit easier. First of all, they 
have fundamentally higher electricity rates. So, if you are 
adding a penny to the kilowatt hour it is not a 10 or 20 
percent increase, but it is, you know, less than that, and also 
the electric power industry is structured a little more simply.
    So, my greatest concern is, I would love to see that the 
incentives available in the United States would be in excess of 
.20, .30 cents a kilowatt hour, you would get massive amounts 
of solar energy put in place. But, fundamentally, somebody has 
to pay, and, you know, how do we do that, and that is something 
we really need to think about.
    Thank you.
    Ms. Giffords. Thank you.
    Mr. Hall.

             Why Does Solar Energy Need So Much Assistance?

    Mr. Hall. I guess to follow up, Ms. Rauluk, why does solar 
need so much assistance to be a viable source of energy?
    Ms. Rauluk. Well, sir, there is a couple of reasons, one of 
which is that you are paying for all of your fuel up front, so 
that is the number one thing. But, fundamentally, the solar 
energy industry is relatively small compared to other energy 
industries and scale really, really is important.
    So, the incentive structure, the way it has always been 
envisioned, and this is something that we have been doing in 
the U.S. for the last five to eight years, the incentive 
structure is to bring the scale of the industry and all of the 
manufacturing efficiencies, et cetera, et cetera, to bear on 
the problem and bring the cost down.
    And, basically, we are realizing, though, efficiencies in 
both cost and performance, and this is a relatively medium-term 
incentive structure that we are talking about, and I would like 
to point out that there is not an energy system on the planet 
that has not been heavily incentivized because it is an 
important matter. We need to have reliable energy sources.
    So, to do this for solar is really no different than what 
we have done for oil and gas, and I could go on into the list.
    Mr. Hall. Well, I guess I was listening for you to say the 
reward would be great if we really could conquer this solar 
thrust, but you know the cost of solar energy can, if I was 
listening to the testimony right, can only come down and become 
competitive if the Federal Government, through carbon 
regulation, forces fossil fuels higher.
    Is that what I am hearing? Is that your recommendation?
    Ms. Rauluk. Actually, I think in some markets solar energy 
is competitive right now. If you have a market where peak power 
prices are in excess of .14-.15 cents a kilowatt hour, which 
they are in some markets, there are ways that you can put the 
installation together where it actually is fairly cost 
effective.
    Mr. Hall. I think the rewards would really be great if and 
when we can conquer the problems with solar energy. It is 
unlimited, the reward would be unlimited. But, I see across 
this country a major war against fossil fuels at this time. I 
am from a fossil fuel state. Texas is one of ten states that 
produces energy for the other states. I see a thrust toward 
knocking out fossil fuels. If we knocked out fossil fuels, even 
in the next five years, these lights go out on us.
    We get 60 percent of our energy from countries that don't 
like us. Our goal ought to be toward trying to lessen that 
percentage so we are not dependent on people that hate us and 
fly our airplanes into our buildings to kill our people. We 
need to really be addressing that, and solar can really help to 
do that, if we could find the money to put in there. But, I do 
not think we can find it by knocking down fossil fuels, when it 
is all we have now, and all we get from Saudi Arabia, 40 
percent of our energy comes from them, is solely, totally, 
completely fossil fuels.
    I think if we are going to declare war on something, we 
need to declare war through technology, finding cleaner fossil 
fuels and finding a way to do better while we seek solar. I am 
very fond of solar, and I think it has unlimited possibilities.
    Mr. Mehos, in your testimony you indicate that without the 
continuation of the investment tax credit new capacity is going 
to be delayed by about 10 to 15 years. How quickly do you think 
the capacity could be developed if the tax credits were 
extended? I know you cannot say it is going to be six years, 10 
days, and 45 hours, but just give me a good estimate of it.
    Mr. Mehos. I think the best answer to that is to look at 
what Arizona Public Service and Abengoa are doing with the 280 
megawatt project. That plant probably has a construction period 
of, oh, let us say around two years, not knowing that 
specifically. But, with the investment tax credit, if that 
begins to roll along, what we will see are those sizes of 
plants being built yearly, and probably multiples of those 
plants.
    So, if I had to guess, I would say 500 megawatts to a 
gigawatt per year, even in the near-term, and let us say the 
near-term is in that five to 10, once we get past this four-
year threshold, then every year after that 500 megawatts to a 
gigawatt or more per year.
    Mr. Hall. In your testimony you also indicate that without 
the tax credit, solar would not be very competitive with 
conventional energy plants for quite a while.
    Should the tax credit not be available, what do you 
envision the cost to consumers would be compared to 
conventional sources of energy that we have right now?
    Mr. Mehos. Without the investment tax credit, using 
concentrating solar power as a proxy for solar, and it is 
probably the least cost technology of those at this point, the 
conventional cost from our concentrating solar power plant is 
probably on the order of .17 or.18 cents, let us say, a 
kilowatt hour, without the investment tax credit.
    If we compare that to conventional technology in the 
intermediate load markets, that is about a 50 percent capacity 
factor.
    For a combined cycle plant, you are probably looking at .10 
or .11 cents per kilowatt hour. So, we are looking at, roughly, 
50 or 70 percent higher.

               Environmental Effects of Using Solar Power

    Mr. Hall. Ms. Lockwood, I think my time is about up. In 
your testimony, you indicate that since the Federal Government 
is the largest landowner in the United States we should study 
the use of available land resources for CSP development.
    Now, what are the effects to the environment from the use 
of solar power?
    Ms. Lockwood. Congressman Hall, the effects to the 
environment depend on the particular location that you are in. 
The most obvious and clear impact is the amount of land that is 
consumed.
    We are fortunate here in the desert southwest that we have 
large tracts of unused land that is very well suited for solar 
power. We certainly have to consider homes of exotic species 
and other types of environmental impacts when you are looking 
at siting solar, but we have large tracts of land that are very 
well suited for this technology today.
    Mr. Hall. The use of all of these aides to the pursuit of 
solar power, you mentioned that, and I would ask you, would you 
support the use of closed military bases, you know, BRAC closes 
a lot of bases around the country, I think every 10 years, and 
this is just a suggestion to you to be thinking about, because 
you seem to be championing that. Do you support the use of 
closed military bases for development of large-scale solar 
projects?
    Ms. Lockwood. Congressman Hall, I believe that is a 
perfectly valid opportunity for putting that land to use.
    Mr. Hall. I know BRAC has a provision for refineries being 
built where you lose a BRAC. I don't know what your State law 
is, what BRAC closed down for the State of New Mexico, but we 
lost several in Texas, and they were cut down all over the 
United States.
    Ms. Giffords. Mr. Hall, we do not allow them to close in 
southern Arizona either, and you realize that.
    Mr. Hall. Yes, I know you would not allow that. You get the 
pitch forks out.
    But, we put a provision in there. EPA is the major problem 
to getting permits to do things, and we had a provision in 
there at one time that if we made a request to EPA and they did 
not deny it in 30 days it was granted. And, I know you would 
like that, wouldn't you? We liked that. I don't think it made 
it through the Senate--very little gets through the Senate 
nowadays. But that is a good way to get refineries. Refineries 
are the reason gas is going higher; there are no refineries. 
Companies like Exxon and others do not want to put money into 
it, it takes 29 or 30 years to get their money back.
    EPA would do nothing and we cannot appeal from nothing. So, 
we would rather have them turn us down in 30 days, and then we 
can appeal it, or grant it in 30 days and you go on with it. 
That is something that you might think about as you support the 
use of closed military bases, because I agree with you on that.
    I think my time is up. I wish I had more.
    Ms. Giffords. Thank you, Mr. Hall.
    Vice Chairman Lipinski.

                Increasing the Efficiency of Solar Cells

    Mr. Lipinski. Thank you, Chairwoman.
    First of all, I want to note that it is good to see, we 
have almost as many engineers on this panel as we have in the 
House of Representatives. I am one of the few engineers in the 
House. I also notice we have two Stanford alums here--I have an 
engineering degree from Stanford--and one from Berkeley 
unfortunately.
    But, I want to start out in a little different direction in 
terms of the technology involved right now, and where we are 
going with that. I co-hosted a nanotechnology showcase a couple 
weeks ago in Washington to see some of the new products that 
are coming out using nano technology. And, I know at the 
University of Illinois they have done some work and found that 
by placing silicon nano particles onto silicon solar cells they 
can increase the power by about 60 percent and increase the 
life of the cell.
    Where is this work right now, in terms of improving PV 
cells, and how much of a difference is that going to make in 
the near future, near to short-term, to mid-range future, in 
terms of how efficient solar energy is? Whoever wants to tackle 
that one.
    Mr. Hansen.
    Mr. Hansen. I will try to take that one, thank you.
    TEP did invest in a manufacturing company, Global Solar, 
and I was involved in the technology looking for that, so I 
have some background in photovoltaics. In fact, I have a 
preference for photovoltaics as opposed to concentrating solar 
power.
    You know, back in 1957, when silicon and gallium arsenide 
were used to develop photovoltaics, they were the predominant 
metals, if you will, for the use at that time. Since then, we 
now have those and efficiencies have improved from the less 
than one percent in 1957 to the 15 to 22 percent for silicon-
based. Gallium arsenide-based are now almost at 40 percent, and 
we do have some materials over 40 percent efficiency. The--are 
more for silicon and sigs of copper--desalinate have all 
improved their efficiencies over the last decade. All the work 
with global solar weighs efficiency for long-scale production 
runs from two percent to over 11 percent. So, all of these 
technologies are improving.
    I think we need to be careful not to focus on the 
efficiency when we talk about utility-scale, but to focus on 
cost per installed kilowatt. We have a lot of land in Arizona. 
I do not live in Tucson, I live in Apache County in the 
northeastern part of Arizona, when I travel from my home to our 
coal-fired power plant, and our solar plant, we have about 4.5 
megawatts of solar photovoltaics there, I pass by approximately 
150 square miles of land that has about, as I like to say, 
eight bushes and one house on it, and there is a lot of room, 
it is fairly flat land. We have space in Arizona.
    Efficiency deals with space. Cost is going to be the 
driver. We need to be improving efficiency, but we need to keep 
our eye and our focus on reducing the costs. The nano 
technologies that are now being developed, and some of the 
organic dye technologies as well, and some of the more advanced 
thin films, do show promise to be able to reduce the cost of 
the photovoltaics to dramatically lower numbers, talking in 
numbers that are less than a dollar per watt, whereas, 
conventional technologies today are typically at the module 
level in the neighborhood of $4 to $5 a watt, some as low as 
$3.50. This is what will drive the cost, and that is really the 
issue on photovoltaics, is the cost. We need to bring the cost 
down.
    Ms. Rauluk. I would like to mention a couple of things. 
First of all, and I am not an expert in all of the technology 
improvements and innovations that are in the pipeline right 
now, but just from my discussions and work with my colleagues 
at the University of Arizona and Raytheon Missile Systems, 
these folks have viable technologies that are, I would call it, 
in the final stages of R&D. So, there are some very exciting 
and interesting things in the PV, the concentrating PV, or CPV, 
and the highly-concentrated PV area that are coming out of the 
laboratory.
    Now, there are incremental changes, incremental 
improvements that are happening with PV, and when people look 
at, well, what is the efficiency and the cost, and how is this 
all working out, no one is thinking about, well, what is coming 
out of the labs, because the commercialization process is a 
difficult process with some uncertainties attached to it.
    But, let me just point out that, you know, a lot of people 
say, well, let us not do anything until the technology is 
really great, and then we will just go and one of the things 
that supports the technology in the labs right now is the 
recognition of a marketplace existing and viable. So, when 
these technologies are coming out of the lab, which I expect 
they will within the next three years, they will need to get 
financed by venture capital and then second-stage financing, et 
cetera, et cetera, and people are going to look at that and 
say, well, where is the market? So, even if we have a good 
technology, it is important that we do not wait until we get 
these things coming out of the labs, but that we have a 
systematic and reliable investment plan for the future.
    Mr. Lipinski. Thank you. I see a red light, and I will 
yield back. If we have a second round, I will have another 
question.
    Ms. Giffords. Okay, thank you.
    Mr. Lipinski. Thank you.
    Ms. Giffords. Mr. Matheson.

                   Accelerated Technology Innovation

    Mr. Matheson. Well, thank you.
    I am not an engineer. I am, my background is in finance, 
but I used to be an independent power developer, and developed 
co-generation facilities. And, now I sit in Congress, where we 
try to come up with public policy ideas to help foster these 
new technologies.
    And, it seems to me that we need to be looking at this on a 
couple of different paths at the same time. I have heard all 
the witnesses talk about the need for, lack of a better term, 
federal subsidies to help create large-scale commercial 
applications of technology.
    What I am curious about is another path that we also ought 
to be talking about, I think, and that is the notion of how do 
we get these technologies to be more efficient so that they are 
commercially viable, perhaps, with less subsidies, or, perhaps, 
with no subsidies.
    And, Mr. Mehos, your last slide, at the end of your 
presentation, the kick-starting utility-scale solar slide, you 
mentioned that there is an exercise for DOE that is estimated 
at $50 million a year to achieve the accelerated goals. And, 
that was what I was wondering about, is that program. It sounds 
to me, you can confirm this for me, but DOE has identified a 
path to help accelerate this technological innovation, and I 
think as Members of the Science Committee that is, obviously, 
something we have great interest in as well.
    So, can you share with us a little bit about what that 
accelerated effort entails?
    Mr. Mehos. Sure. The accelerated effort, as I briefly 
mentioned, in along two paths. It is continued technology 
development on the specific technologies, trying to achieve 
higher temperatures, and I will describe that in a second.
    The two technologies in the concentrating solar power 
program that achieve these higher temperatures are the line 
focused parabolic trough technologies and the more point-
focused central receiver technologies, as well as the point-
focused disturling technologies. But, of those first two, the 
parabolic trough and the central receiver technologies, going 
to higher temperatures achieves a couple of things. One, it 
allows you to operate your cycle at higher efficiencies, that 
does decrease the levelized cost of energy. As importantly, or 
maybe even more important, as you go to the higher temperatures 
we are dealing with high amounts of thermal storage materials 
having a higher delta T difference between your hot temperature 
and your cold temperature to work with, significantly decreases 
the amount of thermal storage that you are working with, and 
that, in itself, also decreases the cost of thermal storage, or 
of the levelized cost of energy.
    So, those are two of the higher pathways, higher 
temperature pathways, that lower your cost.
    We are working on a number of other avenues. We are looking 
at higher temperature materials, higher reflectivity materials, 
better absorbing, less emitting materials. We had a study some 
time ago now, I think back around 2002 with Sergeant Inlundy, 
basically, identified three mechanisms for reducing the cost of 
solar power, none of which were power peaked. The first one is 
the research I described. That results in about a 30 percent 
reduction in the cost of electricity. The second one is just 
increasing the size of your plant, the type of work that APS 
and Abengoa are working on, going from smaller to 280 
megawatts. And, the last one is learning, it is deployment, and 
the more you deploy these technologies, actually, this does get 
into policy, then the lower the cost of the technology over 
time.

                    Financing Technology Development

    Mr. Matheson. And, is it fair to say that, I mean, 
obviously, one of the variables that helps this process go is 
if Congress appropriates the funds so that this effort can 
happen. Dollars, you know, money is part of making this 
technology develop.
    Mr. Mehos. Yes.
    Mr. Matheson. Are there other policy options that also need 
to be considered or adjusted that Congress hasn't done that 
could help facilitate the development of these technologies?
    Mr. Mehos. Yes, I believe so. I think in project finance 
one of the key issues is risk. When we start talking about $1 
to $2 billion projects, I mean, the risk associated with that 
is relatively high. The parabolic trough technology is actually 
fairly low risk, but still project finance can be an issue.
    And, as you look toward some of these higher temperature 
technologies, like the central receiver, or the disturling 
technology as an example, the policy of loan guarantees, or 
federal loan guarantees, comes to play there.
    Mr. Matheson. Okay, that is helpful.
    One other slide that I wanted to ask you about. You showed 
the difference of whether the 30 percent ITC is extended or 
not, and the roll out of solar technology. It is probably 
impossible for you to estimate, because we do not have a policy 
in place yet in this country, but did you consider if the cap 
on trade program is put in, and there is a price associated 
with the carbon, how that would affect the curve when you are 
developing those drafts?
    Mr. Mehos. No, that's a good question, and we have 
considered it, we do not have the ability to model that yet.
    Mr. Matheson. Yes.
    Mr. Mehos. That is one of our outcomes this year, we will 
be able to model those types of systems.
    Mr. Matheson. Mr. Hansen, this is a little off target, but 
you mentioned smart grid when you were talking, and, you know, 
the Congress just passed smart grid legislation in the energy 
bill that passed last year. Do you feel like the legislation 
that Congress passed was helpful for smart grid? Are there 
other things we should be doing beyond what was in that 
legislation, or do you have any thoughts on that?
    Mr. Hansen. Good question. What you passed is very helpful. 
It is a good start. What we need now is additional, kind of 
what Valerie just alluded to, we need scale. That is up to the 
utilities.
    Over time, over working with our individual State 
regulatory entities, we will be able to get recovery for those 
additional costs.
    Mr. Matheson. Right.
    Mr. Hansen. I think the Federal Government has stepped up 
to the plate and given us the tools that we need from the 
federal level. I think we now need State level to step up to 
the plate.
    So, I appreciate the efforts you had last year. Thank you.
    Mr. Matheson. Great. Thanks.
    Madam Chair, I see my time is expired.
    Ms. Giffords. Thank you, Mr. Matheson.
    Mr. Mitchell.

                       Land Usage for Solar Power

    Mr. Mitchell. Thank you.
    One of the things that was mentioned earlier was that to be 
successful large-scale solar facilities need land, and the 
Solana project is three square miles. Is there any possibility 
that we can be able to, with technology, lessen the need of 
land? You know, also mentioned was that the reason that there 
was a market in the southwest for solar was because we had the 
land, and that we had high renewable portfolio standards.
    One of the fights we had over this last energy bill was 
over the national portfolio standards, and it was knocked out 
mainly because there were states that said they really didn't 
have the land, or they didn't have the sunshine, and as a 
result the portfolio standards are really out here in the 
southwest.
    Is there anything we can do maybe to help establish a 
higher portfolio standard nationwide at the same time maybe not 
use as much land as we are going to be able to use here?
    Anybody.
    Mr. Hansen. If I may, again, going back to the question 
asked earlier about efficiency, improving the efficiency, 
raising the efficiency of photovoltaics, raising the 
temperature of the collection on concentrating solar, will 
reduce the amount of land that is required.
    Every state has the ability to produce some level of solar. 
There was a study done a few years back by Black and Beech on 
the State of Pennsylvania. I went to school in the State of 
Pennsylvania, I grew up in New Jersey. I don't remember seeing 
the sun a whole lot of the time, but, quite frankly, the result 
of that study indicated that the only renewable resource that 
could meet all of the energy needs of Pennsylvania was solar. 
So, every state does have the ability to put in solar.
    The roof tops are available, without having to use any 
land. There is a wide range of solar technologies available. 
TEP's experience is with about 12 of those at this present 
time, and what we have found is that different technologies 
have advantages in different climatic zones, as I said in my 
written testimony. All of the technologies need to be 
developed, so that we, as a United States, have a portfolio of 
opportunities. We, as utilities, can pick and choose among 
these different technologies as to what is most appropriate for 
our state.
    I am not going to weigh in on the issue of a national 
renewable energy standard. I think the State of Arizona has 
stepped up to the plate and done an excellent job leadership-
wise in developing one that is appropriate for Arizona. But, I 
do think that over time, with the federal level support, with 
the national labs, and with universities, the funding can be 
provided to improve the efficiency, to improve the overall 
storage capability, for energy in the future that is going to 
drive things like the solar, Grand Solar Plan and these other 
technologies to economic fruition, so that they will, in fact, 
become economically compatible with coal and natural gas.
    Ms. Rauluk. One of the reasons why distributed generation 
has value is that you don't need really large contiguous pieces 
of land. And, in fact, you can, Mr. Hansen already mentioned, 
you can put photovoltaics on roof tops, but you can also put 
photovoltaics in smaller pieces of land and every community has 
pieces of land that may be old industrial sites, next door to 
an old industrial site, maybe it is a buffer for an airport, 
whatever, that are not, you know, several square miles, but are 
maybe a half a square mile, or even less than that, and you can 
use that land for a distributed application, because it can 
scale down to that.
    So, I think that the amount of contiguous land doesn't 
really constrain us when we are talking about a distributed 
format, and there are plenty of opportunities to do that.

                        Price of ``Green'' Power

    Mr. Mitchell. One last question, maybe this is Ms. 
Lockwood.
    You know, some people pay an extra little premium to 
encourage green production of power. Is there any way that 
anybody is going to take advantage of that once Solana comes on 
line, or is it all just going to the grid and everybody still 
pays the same price?
    Ms. Lockwood. Congressman Mitchell, we very much believe in 
the power of our customers to drive the policy and our resource 
choices. So, absolutely. Solana is several years away, but we 
do envision a way that our customers can choose to pay a small 
premium and have all or part of their energy served by Solana.
    Ms. Giffords. We only have a few more minutes left, and 
since I am going to afterwards ask our witnesses to come up, I 
am going to defer my questions, maybe just one additional 
question from each of the Members before you have to leave.

              Utility-Scale Versus Distributed Generation

    Mr. Lipinski. Yes, I will lead off here. I just want to 
know, we are in heaviest discussion here about utility-scale 
mostly, but also distributed generation. Is there any conflict 
or tension between the two, in terms of one obviating the need 
for the other? I just want to throw that out there and see some 
smiles on faces about this. It must be something that you deal 
with regularly.
    Mr. Hansen. If I may, they can be compatible with each 
other. TEP's studies have indicated that for us to produce 10 
percent of our annual energy from solar we need about 610, 620 
megawatts of solar installed.
    If every home in Tucson were to have about a three kw 
system, which is realistic in size, that would give us about 
that 600 megawatts of solar.
    It is at about that point when the energy storage becomes a 
critical component, if we are going to move solar beyond that 
10 percent of our annual energy. That is why TEP has always 
been trying to develop a balance of distributed generation as 
well as utility-scale.
    Even if every home in Tucson were to install nine kilowatts 
of photovoltaics, that is 30 percent of our energy. The other 
70 has to come from someplace, and we are proposing, at least I 
am proposing in the long-term, that that comes from the 
utility-scale solar, such as the 280 megawatt system that 
Abengoa is planning to put in. But, it could also be from 
photovoltaics.
    In the long-term, the two systems have to mesh, and the 
glue that makes them mesh is the storage. Even distributed 
generation without utility-scale solar is going to require some 
level of storage to even out the day to night intermittencies.
    The other part of the puzzle that is hard to understand for 
some people who have not lived in the southwest is that most of 
the solar energy is actually produced in the springtime in 
Arizona, away from our monsoon storms. But, of course, most of 
the consumption is in the summertime, so we have to shift about 
three months worth of solar energy into the summertime. It 
actually works out to be approximately 10 percent.
    One other factor I think that needs to be considered for 
the future, is plug-in hybrid electric vehicles. Our 
calculations indicate that with an additional 10 percent of 
energy per year we could provide all of the energy that is 
needed for all of the passenger vehicles in the City of Tucson. 
So, that does not include heavy trucks, and airplanes, and 
locomotives, but your normal passenger vehicles. That, again, 
could be derived from solar, and could provide an additional 
opportunity for storage if we go back to that smart grid 
development and how to integrate them as part of this storage 
philosophy.
    Mr. Lipinski. Ms. Rauluk.
    Ms. Rauluk. I have alluded to this in my spoken comments, 
and I have a more detailed explanation of it in my written 
comments, but there is a fundamental conflict right now in the 
way in which we contractually do these things between 
distributed generation and the utilities revenues, because the 
distributed generation is on the customer's site, and they are 
effectively purchasing less energy from the utility by 
generating their own energy.
    And then the question arises, well, how do you assure the 
preservation of utility revenues and the assets that they 
support, because this is not about getting rid of the utilities 
or getting rid of the fossil fuel generation by any means.
    So, there are things we need to do contractually and from a 
regulatory point of view, and the industry is well into the 
phase of doing that and creating the mechanisms that, 
basically, do not conflict, do not have the utility having a 
natural and inherent animosity towards distributed generation, 
but that it is a part of the whole system and is valuable for 
the whole system.
    Mr. Lipinski. Ms. Lockwood.
    Ms. Lockwood. Congressman Lipinski, I do not know that I 
disagree with anything Mr. Hansen or Ms. Rauluk said, but for 
us in Arizona, in particular, for APS, it is about growth, and 
we are growing so fast, our energy consumption is also growing 
so fast, that we need all resources to meet our energy needs 
into the future.
    We believe that both are required to get where we need to 
go, and do not believe there is a fundamental conflict. Now, 
there is some theory that there is only so much subsidy or 
incentive to go around, and I think that is where a lot of the 
debate comes in. Does it go to large scale, or does it go to 
distributed? And, that is a healthy debate. That is something 
that we need to be talking about. There are different economics 
when you look at those different sides of the issue.
    For utility scale, we very much look at it in comparison to 
the other resources that we have. Even without carbon today, 
large scale is getting--large-scale CSP, solar thermal--is 
pretty competitive. Our Solana plant is about a 20 percent 
premium over our conventional resources, what we would have 
expected to pay for fossil fuel resources into the future for 
that project.
    On the distributed side, you look at it not what you pay 
for other large-scale generation, but you look at what the 
customer is paying and the offsets for that customer, and how 
that works within your rate structure also.
    So, from our perspective we need them all, and we need to 
make sure that we are looking at policies that facilitate them 
all in the appropriate way and the appropriate manner, also 
considering the economics and how the impact to the rate payer.
    Mr. Lipinski. Thank you. I thank all the witnesses for 
their testimony. It was extremely helpful today, and thanks to 
Congresswoman Giffords for bringing this together.
    Ms. Giffords. Thank you.
    Mr. Matheson.

          Compressed Air Storage and Greenhouse Gas Emissions

    Mr. Matheson. Why, I'm nervous about going over the 
deadlines that Madam Chair set. Let me ask one real quick 
question. I have got to chance this.
    I was reading about the Grand Plan, and, you know, one of 
the great benefits of solar in a world where we are concerned 
about climate change and global warming is that we move away 
from fossil fuels.
    But, I did note that in the energy storage component of the 
Grand Plan, we are going to use compressed air, there would be 
some degree of natural gas used. Do you have a sense of what 
that means in terms of greenhouse gas emission?
    Mr. Hansen. The use of the natural gas for the reheat on 
the turbine, and this is, before I say that, this is a 
technology that can be changed. You can make turbines that do 
not have to have this natural gas input.
    Mr. Matheson. Oh, okay.
    Mr. Hansen. Alternatively, you could be using biomass or 
some other type of fuel, bio-diesel, et cetera, to do it, but 
it is approximately one-sixth of the input that otherwise would 
be required from natural gas or coal under a normal 
conventional technology.
    Mr. Matheson. Okay, thank you.
    That is it.
    Ms. Giffords. Thank you.
    Mr. Mitchell. I don't have a question. I would just like to 
thank everyone, because it was very informative, and not only 
the written material but your testimony.
    So, thank you all very much.
    Ms. Giffords. Well, before we bring this hearing to a 
close, I want to again thank our witnesses for the generous 
time and for really a very, very interesting discussion.
    The Science Committee is, I believe, the bipartisan 
Committee in Congress, and we have been able to do many things 
just in the last a little over a year, that I think this 
country would be very proud to know, if they had a chance to 
hear about it.
    Unfortunately, usually when we have committees the bells 
ring frequently, so we will have wonderful testimony, and then 
we will have to jump up, run over and vote and come back. So, 
what a luxury to actually have a chance to really focus on the 
information that you have presented before us today.
    The record is going to remain open for additional 
statements from the Members and answers to any follow-up 
questions the Committee may ask of our witnesses.
    I would also like to thank the bipartisan Science and 
Technology Committee staff for being here, for coming out from 
Washington to help conduct this hearing. Also, members from my 
staff, Tamarack Little, Wyatt King, Jacqueline Jackson, are 
just a couple that have worked so hard to bring this committee 
here to southern Arizona as well.
    I want to thank the solar experts, and there are many in 
the room today, and, hopefully, we will have a chance to hear 
from you in a couple of minutes, because we are going to ask 
our witnesses to come forward and to answer questions from the 
general public as well.
    But, to the public, thank you for caring so much about the 
future of the southwest, the future of our country, and the 
future of how we can take this tremendous potential, harness 
it, and turn it into some real energy.
    So, with that, the witnesses are excused and the hearing is 
adjourned. Thank you.
    [Whereupon, at 2:37 p.m., the Subcommittee was adjourned.]
                              Appendix 1:

                              ----------                              


                   Answers to Post-Hearing Questions




                   Answers to Post-Hearing Questions
Responses by Thomas N. Hansen, Vice President, Environmental Services, 
        Conservation and Renewable Energy, Tucson Electric Power

Questions submitted by Representative Adrian Smith

Q1.  You spoke about the need for transmission and storage for solar 
energy. When built, do you envision this infrastructure would be 
available to other renewable energy technologies, such as wind, an 
important Nebraska resource?

A1. Most definitely. I envision a large number of storage facilities 
distributed around the country. The storage should ideally be located 
locally with respect to where the electric consumers are located, 
effectively on a regional basis, with one storage facility serving at 
most five million people. Locating underground energy storage locally 
provides the optimum solution for energy security for the residents in 
that area. The nationwide electrical transmission system would allow 
for the movement of wind energy produced in Nebraska to be stored in 
Nebraska or California or Maine. Just as our Interstate Highway System 
enables goods produced in one area to be efficiently delivered in 
another region, the interstate transmission system would efficiently 
enable solar, hydro, wind, geothermal, tidal, current and biomass 
energy to be moved around the Nation in a controlled manner to maximize 
efficiency of production and delivery. The combination of properly 
sized local storage with national transmission would allow management 
of the overall system to minimize congestion.

Q2.  As a Member of the House Science and Technology Committee, I have 
a keen interest in NASA and the space program. Could solar energy 
collected in space be a viable source of energy for the U.S.? What are 
the benefits and challenges of this technology?

A2. This concept has been discussed for decades and is, in my opinion, 
technically viable although some components of the technology need to 
be improved in terms of reliability and efficiency. One big advantage 
includes better solar intensity above the atmosphere and 24/7 solar 
production potentially without day/night cycles or clouds to block the 
sun. This results in much higher specific energy production per unit 
area of solar collector reducing the size of the solar collector by 80 
percent or more. Building a multi square-mile solar collector in space 
will be challenging in terms of providing sufficient resources of 
material and people to a synchronous orbit. Wireless transmission of 
energy from space to Earth would require very accurate targeting 
systems and dedication of a few square miles of receivers and buffer 
zone on the ground to convert the beamed energy back into grid power at 
high efficiency. However, a large single energy receiver at the Earth 
end of a space solar energy collection system could be at risk from an 
act of terrorism, while multiple receiver zones would present more risk 
of component failure and resulting repair, in addition to an increase 
in initial cost. It also may be challenging to convince people that it 
is safe to live near a receiver zone. A space bound energy collector 
would be at greater risk of damage from collision with meteorites 
without protection from the atmosphere. Maintaining optimal orbital 
geometry to enable a space bound solar collector to keep sight of the 
sun at all times while also keeping its energy beam to Earth on target 
will be technically challenging, but not impossible. Interestingly, 
given that the space located solar collector would produce energy at a 
constant rate, energy storage would still be required to balance the 
constant energy input with a variable energy demand. The national 
transmission system would be required to allow for delivery of the 
space produced energy from a single, or small number of multiple, Earth 
side satellite energy receivers to all U.S. energy consumers. Some 
larger questions that still need to be answered are economic: What is 
the total cost of such a space located solar energy production system? 
What is the energy balance--will it take more energy to place the 
energy system in orbit and maintain it than the system will produce 
over its lifetime? Will more valuable jobs be created for Americans 
with a space bound energy collection system or a terrestrial located 
energy collection system? Both the space bound and terrestrial solar 
energy collection concepts deserve further consideration, although 
terrestrial solar energy collection technologies are fully developed 
and available commercially today.
                   Answers to Post-Hearing Questions
Responses by Valerie Rauluk, Founder and CEO, Venture Catalyst Inc.

Questions submitted by Representative Adrian Smith

Q1a.  You spoke about distributed generation systems, in which smaller 
generation systems (rooftop units and 10-50 acre land units) spread 
electricity generation over ``unused real estate'' and reduce risk of 
large scale power outages. Would the Federal Investment Tax Credit 
provide incentive for individuals to install smaller generation systems 
(e.g., rooftop units) and to become a part of a distributed generation 
network? If not, how could the Federal Government encourage this type 
of development?

A1a. Yes, the FTC does provide incentives for individuals interested in 
a distributed generation application and participating in a network.

Q1b.  
    How would you envision the development of distributed generation 
systems? Who will pay to connect these smaller generation systems into 
a cohesive network?

A1b. In addition to extending the FTC set to expire at the end of this 
year, the Federal Government could further encourage such installations 
by setting distributed generation requirements for utilities nation-
wide and to encourage incentives and research and development 
(especially commercialization R&D) for distributed systems and the 
intelligent controls and storage options that increase a DG network's 
value and resiliency.

Q2a.  As a Member of the House Science and Technology Committee, I have 
a keen interest in NASA and the space program. Could solar energy 
collected in space be a viable source of energy for the U.S.?

A2a. Theoretically, it could be subject to resolving certain 
technological challenges. However, in the near-term, there are many 
cost-effective opportunities for harvesting solar energy on the surface 
of the planet.

Q2b.  What are the benefits and challenges of this technology?

A2b. The chief challenge is delivering the collected solar energy to 
where people can use it, in electric power parlance, the ``load.'' The 
cost of delivering to the load from remote locations on Earth is one of 
the fundamental challenges and costs and is why solar energy in a 
distributed format is more beneficial than central station 
applications. Energy generation from space would create even greater 
costs and challenges. However, there may be some benefits to doing so. 
I have not reviewed the literature concerning this option and cannot 
offer any insights into the benefits.
                   Answers to Post-Hearing Questions
Responses by Joseph Kastner, Vice President of Implementation and 
        Operations, MMA Renewable Ventures LLC

Questions submitted by Representative Adrian Smith

Q1.  As a Member of the House Science and Technology Committee, I have 
a keen interest in NASA and the space program. Could solar energy 
collected in space be a viable source of energy for the U.S.? What are 
the benefits and challenges of this technology?

A1. It is my understanding that the DOE studied the collection of solar 
energy with photovoltaic panels is space several decades ago. Some of 
the large hurdles for this idea include providing a safe, efficient 
means for transmitting the electricity to a terrestrial collection 
point (the DOE contemplated using microwaves) and the mobilization of a 
large-scale construction project in space (to make it worthwhile the 
array would be many times larger than the International Space Station). 
Such a large array would also be quite susceptible to space debris.















                              Appendix 2:

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                   Additional Material for the Record


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