Want the news summarized?
Subscribe to The Morning Report.
Wednesday, Jan. 21, 2009 | San Diego Mayor Jerry Sanders devoted a significant portion of his State of the City speech last week to clean technology and what it means to the city now and in the future.
He said San Diego is poised to become a hub for the clean tech industry, and talked about how it will help combat global warming and alleviate the region’s chronic water shortage. But most importantly, he said, it will boost the economy.
“Clean technology will add strength and diversity to our economy — and create jobs for San Diegans,” he said. He went on to compare it to biotech, which boomed in the early 1990s, and helped pull the region out of recession.
That was about as much as the mayor offered, however, in the way of details. He didn’t give any estimates on how many clean tech companies will emerge in San Diego, how many jobs they will create or how much money will ultimately be pumped into the local economy.
He didn’t cite these numbers because he doesn’t know them. And neither, really, does anyone else. Economists, industry pros and even Sanders’ staff agree that the ultimate economic impact of clean technology on San Diego is unknowable at this point.
“The short answer is that no, there have not been studies on this,” said Lisa Bicker, president of CleanTECH San Diego, a green industry association. “In five years this will be a different conversation, but right now we don’t have those measures.”
Sanders and industry proponents see a robust industry emerging from a combination of innovation and government programs. A recent example of this convergence: a program that will make solar panels more affordable and create jobs for installers, technicians and other workers.
At the same time economists are wary of too much government assistance, and say it is difficult to predict the economic impact of clean tech because it isn’t an industry that produces a steady stream of new products like biotech or high tech. Many green innovations, for example, involve changes in behavior, not new inventions.
Sanders spokeswoman Rachel Laing said the city administration is still “building goals and expectations” for green industry. “And when we do set them in place, it won’t be what are our one- and two-year goals, it will be what are our 10- and 20-year goals.”
There is no doubt that San Diego is well positioned to take advantage of the worldwide movement toward clean technology. The region has one of the best science research universities in the world, tech and biotech sectors that attract top talent and a growing number of companies that focus on sun, wind and biofuels. Examples include Envision Solar, a leader in solar applications for parking structures, and Sapphire Energy, which is developing transportation fuel from algae.
And Sanders’ move last month to make San Diego the state’s first large city to establish a program for homeowners and small businesses to more easily purchase rooftop solar systems has been widely considered an important step in the right direction.
The program, made possible by California Assembly Bill 811, allows city homeowners to finance the entire cost of installing solar panels on their homes, and allows for the up to 20-year loan to transfer along with the property when the home is sold. It makes the financing palatable to banks by allowing them to put primary liens on the homes when they loan the money for the solar panels. It will begin in the city on a test basis in September.
Such a program eliminates the two biggest hurdles facing homeowners who want their electricity provided by the sun. The first is the sizable down payment needed to purchase the systems — which can cost between $25,000 and $60,000. The second is the prospect of selling your home, but still owing on the solar panel system.
So, with available state and federal rebates totaling about $12,500, a city homeowner could purchase a $30,000 system and end up with a $17,500 loan, Laing said. Assuming a 7 percent interest rate, the monthly payment would be $135.68.
And with a solar panel system, the typical homeowner would cut his or her monthly electricity bill of $82 to about $10, Laing said. So, the homeowner would end up with a solar panel system for about $62 a month more than today’s electricity bill. In the end the homeowner would have a smaller carbon footprint and a presumably more valuable house because it included a rooftop solar system.
Jim Waring, the city’s former land-use chief, and now chairman of CleanTECH San Diego’s board, said that an economic engine could be created even if the program attracts just 10,000 of the city’s 450,000 households.
It would start with all the work for installers, electricians and plumbers that would be generated by the demand for the solar panel systems. Then, with a successful program in place, Waring reasons that there would be a strong argument for solar companies to base their operations here. And following that could be manufacturing centers opening up in Mexico.
Waring said the region has a chance to be one of the world’s leading clean tech clusters. “Can’t say whether that means 2,000, 10,000 or 20,000 jobs,” he said.
Duane Roth, chief executive officer of Connect, a trade organization for San Diego’s high tech and life sciences industries, said that just because we don’t have a clear picture of a robust green industry, doesn’t mean it isn’t taking shape. He points to the evolution of the biotech sector. “I don’t think anyone in the early 1990s knew what was happening in biotech,” he said. “It takes awhile.”
Yet, economists — and even some in the industry — say it is too early to declare green tech the new biotech. Solar companies, which have been burned in the past by pronouncements that home solar panels will become the norm, are taking a cautious view, said Lee Burdick, a lawyer who represents clean tech companies.
“There is so much uncertainty,” Burdick said. “No one is making any moves or predictions as far as how many dollars or jobs this will mean for the industry.”
Marney Cox, chief economist for San Diego Association of Governments, said clean tech is not so much an industry as it is a new way of doing things. This makes it difficult to predict what kind of job growth it will deliver. “New clean tech jobs could mean that you don’t have to add jobs to old industries,” he said. “With more solar there may be less maintenance needed for electrical lines.”
Cox is also concerned that the state and federal subsidies are masking the true cost of installing solar panels, and hiding the true cost of ownership of anything ultimately leads to problems.
“Pretty soon it has to fly on its own — if it doesn’t, we run the risk of creating another bubble,” he said. “We’ve had a high tech bubble and a housing bubble; we don’t want a green bubble.”
Richard Carson, an environmental economist at the University of California, San Diego, said the solar program, along with all large-scale green initiatives, is on shaky ground without increased taxes on energy consumption. He points to the drop in oil and natural gas prices in the second half of last year, which are meaningful because almost all of California’s electricity is generated by gas-powered plants. Until green initiatives can compete pricewise with traditional technologies, they will be at a disadvantage.
“Solar deals that looked really good bets six months, or a year ago, don’t look nearly as attractive now,” Carson said. “This is the basic problem with lots of things that are clean, energy efficient technology. The very best thing in the long run is for energy prices to be higher.”