Here Are 7 Ways the US Solar Market Will Change in 2015

solar and utilitiesFrom 2009 through 2014, U.S. solar PV installations grew at a compound annual growth rate of over 60 percent. This resulted in a 2014 market that was 12 times larger than it had been five years earlier, and 108 times larger than a decade prior.

This year will be an exciting one for the U.S. solar market, and our team at GTM Research is already discovering new insights. But before we get too far into the year, here is one final set of 2015 predictions.

In order to stay true to my inner analyst, I’ve tried to construct predictions that are both objectively measurable and not blindingly obvious. No room for me to weasel my way into half-credit here. As a result, I could easily go zero for seven. Here we go anyway

 

equity of solar power

Let’s Talk About Solar Power and Equity

equity of solar powerWe need to have “the talk” about solar power and equity, because ignoring uncomfortable questions will invite misinformation and bad decisions. We need an informed dialogue about how local solar power can impact low-income communities and communities of color in the U.S. We need to talk about “all the good things, and the bad things, that may be.”

First things first: the price of solar panels has fallen by 80 percent since 2008. This significant decrease in cost, coupled with incentives such as net metering which allow customers to send the energy they produce from their solar systems back to the grid and receive a credit on their bill, and the emergence of new financing models like solar “leasing” programs, has led to an explosion of local solar in the U.S.

We now boast an estimated 20 gigawatts of solar energy nationwide (enough to power more than four million U.S. homes), and the United States added more solar capacity in the past two years than in the previous 30 years combined. In fact, as President Obama highlighted in his State of the Union address, “every three weeks, we bring online as much solar power as we did in all of 2008.”

So, who is benefiting from this solar boom? In regard to rooftop solar, it is mostly middle-income and working class homeowners, according to analysis from the Center for American Progress:

“Rooftop solar is not just being adopted by the wealthy; it is, in fact, mostly being deployed in neighborhoods where median income ranges from $30,000 to $90,000.”

The growth of the solar industry is also creating good jobs, and plenty of them. The solar industry added jobs nearly 20 times faster than the national average in 2014, and solar employment has increased 86 percent in the past five years.  Solar installers make an average of $20 to $24 per hour, and solar salespeople can make $30 to $60 per hour. And, as I have written before, solar and other clean energy jobs are generally more accessible to people of color and folks without advanced degrees.

Not to be overlooked are the environmental benefits of solar: the deployment of this clean energy resource helped avoid an estimated 20 million metric tons of harmful carbon dioxide emissions in 2014, the equivalent of taking four million cars off U.S. highways. The fact that solar averts dirty, fossil fuel pollution has a critical equity aspect, as approximately 68 percent of African Americans (and a similar percentage of Latinos) live within 30 miles of a coal-fired power plant, and a recent study claims that nearly 40 percent of communities of color breathe polluted air.

While all of this news is encouraging, there are still important questions about local solar access and affordability for low-income people, renters, and communities of color – constituencies that greatly overlap.

There is no easy answer, but fortunately this issue has been a priority for many lawmakers and advocates – including Environmental Defense Fund – who are working to find solutions. A community solar pilot project in Los Angeles, for example, will empower residents to own a share of a local solar garden without installing panels on their own roofs. This has the potential to reach 51 percent of the population in L.A. who rent, and large swaths of residents who can’t afford their own solar system. These and other policies can create access and affordability for people who otherwise could not join the clean energy revolution – and we need to get these policies right.

But, in the meantime, we also need to counteract misinformation and bad ideas.

Enter the “solar hurts low income people” argument, which claims that low-income people are paying higher bills to subsidize solar power they can’t afford, and thus advocates and lawmakers should oppose it. This argument is misguided, ignores critical information, and often emanates from industry groups trying to turn low-income communities against clean energy.

To be clear, asking important questions regarding clean energy and equity is productive; so is pushing lawmakers to find solutions that work for all communities and don’t place unfair, burdensome costs on low-income people. What’s unproductive is misinformation and conjecture. To forge fair, lasting solutions, we need real, unbiased data and analysis on the costs of solar to customers and the grid, some of which already exists:

  • Fact: a study commissioned by the California Public Utilities Commission found that solar customers on average cover their full costs to the electric grid;
  • Fact: a study by the Nevada Public Utilities Commission and a study from the Mississippi Public Service Commission found that solar customers provide a net benefit to all ratepayers;
  • Fact: an analysis from Deutsche Bank finds that rooftop solar will be as cheap as traditional power by 2016 in all 50 states (this is already happening in 11 states); and
  • Fact: an analysis from the Lawrence Berkeley National Laboratory (LBNL) found that even the most aggressive net-metering solar programs would have minimal (0.1-2.7 percent) impact on electricity rates.

So, why would some industry groups want to slow the growth of local solar? (Spoiler alert: it’s about THE MONEY!) The LBNL study found that local solar will have significant impacts on utility shareholder profits – up to a 40 percent loss for some. It seems clear that the efforts to attack local solar may have more to do with threats to utility profits than negative impacts on low-income people.

And, thus, we arrive back where we started: let’s not decoy, avoid, or make void this topic. We need to ask complex and sometimes uncomfortable questions when it comes to local solar power and equity. It’s ok that we don’t have all the answers figured out ahead of time, as long as we learn together and arrive at solutions based on real information. But it’s not ok to allow misinformation and bad ideas to lead us to making the wrong decisions.

 

solar tax credit

US industry ready for ‘bare knuckle brawl’ to save solar tax credit

solar tax creditThe US Solar Energy Industries Association (SEIA) has responded angrily to an attack on solar by a conservative think tank saying it is ready for a “bare knuckle brawl” if necessary.

The Taxpayers Protection Alliance (TPA) published a report last week entitled ‘Filling the Solar Sinkhole: Billions of Bucks Have Delivered Too Little Bang‘, which cited the danger of expanding the investment tax credit (ITC) for solar and warned of an intense lobbying effort off the back of its inclusion in President Obama’s budget proposal. The ITC is set to fall from 30% to 10% at the end of 2016 but a reprive has been floated by the President.

The report also claims that the industry received an average of US$39 billion in subsidies every year for the past five years. Ken Johnson vice president of communications at the SEIA was unequivocal in his response to the report and particulary the claimed level of subsidies.

 

gansu solar

A New Solar Renaissance

gansu solarHow Harnessing the Sun Got Cheap and Practical

Solar power has been declared a winner before, only to flounder. It’s easy to remain skeptical today, given that solar power accounts for less than one percent of the global energy supply. But it is also expanding faster than any other power source, with an average growth rate of 50 percent a year for the past six years. Annual installations of photovoltaic panels increased from a capacity of less than 0.3 gigawatts in 2000 to 45 gigawatts in 2014—enough to power more than 7.4 million American homes. This time really is different: solar power is ready to compete on its own terms.

The momentum behind solar power is a result of innovations in regulation, industry, technology, and financing. In a number of markets, it no longer needs public subsidies to compete on price with conventional power sources, such as coal, natural gas, and nuclear power. The International Energy Agency, which has historically taken a conservative approach to evaluating solar power’s prospects, has projected that by 2050, in the best-case scenario, solar energy could be the single biggest source of power, generating as much as 27 percent of electricity worldwide.

 

SolarCity Solyndra

SolarCity fills former Solyndra manufacturing facility in Fremont

SolarCity Solyndra
The sign has been gone for a while — but now a new tenant will take over the old Solyndra building at 47700 Kato Road.

If you need any proof that the region’s solar industry is well past the Solyndra failure, head 2 miles south of the Tesla Motors Inc. plant in Fremont on I-880.

Ever since the world’s most famous solar-panel startup went bust in 2011, the two prominent buildings at 47700 Kato Road — the ones with the cheerful blue angles and dark glass walls — have stood vacant.

Well, not for long.

The new tenant? San Mateo-based SolarCity Corp., which has quietly leased the roughly 200,000 square feet, two-building facility.

hawaii solar

Will New Obstacles Dim Hawaii’s Solar Power Surge?

hawaii solar
Solar photovoltaic panels on the roof of a home overlooking downtown Honolulu.

Honolulu’s roofscape is being repainted in blue-black. From the flattop warehouses of Sand Island to the city’s residential neighborhoods, shiny rectangles spreading across roofing tiles are collecting the tropical sun and powering houses. It would seem like a no-brainer for sunny Hawaii, but it’s just since 2007 that a combination of government and utility incentives and the right economics have ushered in a real solar boom, with capacity roughly doubling each year.

Today, Hawaii leads the nation in rooftop solar per capita: About 10 percent of residential customers, more than 50,000 households, have panels on their roofs, according to the Solar Electric Power Association. That compares with about 0.5 percent nationally.

But in 2013, the boom nearly went bust. Because rooftop solar penetration has moved so rapidly, Hawaii’s utilities are now grappling with both technical and economic challenges that mainland utilities have yet to fully face. How Hawaii surmounts these hurdles could help other utilities sidestep barriers as they ramp up capacity.

 

why tech loves solar

Why Tech Loves Solar Power

why tech loves solarThe love of AppleGoogle, and other data center companies for solar power from companies like First Solar has less to do with idealism and more to do with business practicality.

It’s the oldest trick in the financial book, a hedge you can write a bond on.

Electricity is an input cost to a data center operator, or to anyone with a lot of electronics. If you’re going to plan ahead, and these companies now think in terms of decades ahead, you’re going to want to predict that cost.

Solar power makes the cost predictable. You buy X number of panels delivering Y amount of megawatts, with a life expectancy of Z. You put that capital cost into a sinking fund, a lease, or a mortgage, and you let time do the rest. Now you know what your costs for electricity are going to be next year, and the year after that, and 10 years down the road.

Whatever the other claimed benefits of fossil fuels, they can’t deliver that certainty. This is especially true for California utilities, whose costs (and rates) can vary considerably from place-to-place. A lot depends on the cost of fuel. That may be low today, but it may be higher tomorrow. Whatever the cost, it’s not fixed.

 

What Apple Just Did in Solar Is a Really Big Deal

apple-solarIt was a year ago this week that Apple Chief Executive Officer Tim Cook responded to a climate-change heckler at the company’s annual shareholder meeting with an impassioned rebuttal in which he famously told investors who care only about profits to “get out of the stock.”

Now Cook is putting his prodigious sums of money where his mouth is, proclaiming the “biggest, boldest and most ambitious project ever,” an $850 million agreement to buy solar power from First Solar, the biggest U.S. developer of solar farms. The deal will supply enough electricity to power all of Apple’s California stores, offices, headquarters and a data center, Cook said Tuesday at the Goldman Sachs technology conference in San Francisco.

It’s the biggest-ever solar procurement deal for a company that isn’t a utility, and it nearly triples Apple’s stake in solar, according to an analysis by Bloomberg New Energy Finance (BNEF). “The investment amount is enormous,” said Michel Di Capua, head of North American research at BNEF. “This is a really big deal.”

Apple's solar buy draws controversy

Why are Green Groups Unhappy with Apple’s Big Solar Buy?

Apple's solar buy draws controversy
Endangered San Joaquin kit fox.

Is that massive Apple solar play that made news on Tuesday burnishing the tech titan’s green cred? It might be, but environmentalists aren’t thrilled about the whole thing.

Not that they’ve got anything against Apple – or solar power, they say.

Kim Delfino is California director of the group Defenders of Wildlife, an organization that has backed California’s aggressive policies to reduce greenhouse gas emissions. But in an interview, Delfino said the 2,900-acre, 280-megawatt California Flats project that First Solar is pursuing in Monterey County – and which Apple is helping make happen with an $848 million, 130-megawatt, 25-year power purchase agreement – raises serious concerns.

“We’re urging developers to do projects on degraded and disturbed land,” Delfino said, “and unfortunately, this project is on beautiful, open, largely intact land.”

 

renewable energy

Renewable Energy Case Studies: Burlington Vermont and Argentina

renewable energyThe massive growth of renewable energies is hard to refute. Strong growth forecasts come from the combination of current day models of clean energy use and extraordinary opportunities that remain to be exploited.

Here are two renewable energy case studies from the municipal level (Burlington Vermont) to the national level (Argentina). The first illustrates a current example of functioning renewable energy systems and the second points to the potential for growth.

Countries like Germany and Norway are not the only ones transitioning to renewable energy. Scotland is destined to be a net exporter of renewable energies. In the US, the city of Burlington, Vermont is entirely powered by renewables. Through a combination of biomass, hydroelectric, solar and wind, Burlington is the first US city to get all of their energy from renewables. This switch to renewables will also save the city $20 million over the next decade. Cities like Burlington demonstrate what has already been shown in Germany, renewable energy contribute to a strong economy.

Burlington’s sustainability leadership also involves an aggressive energy efficiency program that enables the city to use less electricity in 2015 than it did in 1989. The city also has nine electric charging stations, which is admirable for a city with less than 50,000 people.

 

oil and renewables

Energy Economics: Cheap Oil Will Not Stop Renewables

oil and renewablesThere is a powerful economic argument that can be made to suggest that renewable energy will not be sidelined by oil’s price declines. While it is true that renewable energy stock has decreased in value due to falling oil prices, this is a temporary phenomenon.

The cost of oil is roughly half of what it was seven months ago and according to traditional market principles this will mean a surge in oil demand and a decline in demand for the more expensive alternatives. However, when we metaphorically drill down a bit further we realize that electricity accounts for much of the increased energy demand. Although electricity demand is increasing along with the cost this will not increase the demand for oil. Even at less than $50 per barrel oil is still too expensive to be the primary source of electricity generation. This is why electricity is primarily generated by natural gas, hydro, and nuclear power.

In a Guardian interview Amory Lovins said, “The unsubsidized cost of electricity from the most cost-effective new onshore wind projects beats all other forms of generation. Solar PV modules have dropped in price by about 80% since 2008, while LED lights are 85% cheaper than five years ago. The integration of various clean technologies, like electric cars, batteries and solar panels, are mutually reinforcing the drive towards competitiveness.”

Gas may still drive most of our cars but wind and solar energy will increasingly power our electrical grid as the price of renewables continues to decline. Solar will soon be less expensive than oil and eventually it will be cheaper than even the least expensive fossil fuels. Although solar is currently less than 1 percent of the electricity market, the increasing price of electricity and the declining price of solar is expected to make the sun the world’s biggest supplier of energy by 2050 according to the International Energy Agency (IEA).

This new reality is prompting people like Bloomberg’s lead solar analyst to say, “You couldn’t kill solar now if you wanted to.”

Like solar power, wind energy is also an unstoppable force. According to Ecotech Institute Wind Energy Technology Instructor Walter Christmas, “Short-term savings on petroleum are drastically reducing the overall cost to invest in wind energy. This is dramatically improving the profit margins and attracting investment at a faster rate than usual. This lowered cost allows wind energy to compete directly with coal and natural gas as a source of electrical generation. As the cost per kilowatt-hour of wind energy continues to decline, we have seen contracts signed between utilities and wind energy power producers that are cheaper than coal and natural gas. Remember… once a wind farm is built, the fuel is free!”

Oil prices will inevitably rebound, but that should not be taken to suggest that the era of fossil fuels is not coming to an end. Whether we are talking about the high price of oil or rapid declines oil’s volatility is bad for business. While the price of oil is volatile the price of renewables is predictable and steadily declining.

Fueling an economy with renewable energy is no longer Pollyanna science fiction, clean energy is being used to power major portions of some very significant economies. Germany is a renewable energy leader that is already getting around one quarter of its electricity from renewables and Denmark recently broke its own record by getting almost 40 percent of its energy from the wind. These two nations, along with many others, prove that it is possible to rely on renewable energy. Other nations like Scotland are leading the way with ambitious plans to export renewable energy (wind power) as a lucrative source of revenue.

People increasingly understand the need to manage climate change and that is driving a growing political momentum. In the near future we will see a regulatory environment that will drive up the cost of fossil fuels while favoring renewables. With the price of oil so low now is a perfect time to introduce a regulatory regime that includes some form of carbon pricing.

With a recent Economist headline reading “Seize the day” and an accompanying editorial saying that this is a “once-in-a-generation opportunity” the issue of reassessing our relationship to fossil fuels has never been more prescient.

If we are to manage climate change we simply have no other option than to wean ourselves off of fossil fuels and embrace renewable energy in earnest.

This overwhelming logic is borne out in the data and the bean counters are taking notice alongside everyone else. According to data compiled by BNEF, global investment in clean energy increased by $310 billion last year, this represents a 16 percent increase over the year before. Investors still have confidence in renewables and so should we, regardless of the price of oil.

As explained by CNBC’s Leslie Shaffer, “Suddenly cheap oil prices may spur economic re-calculations across the board, but many analysts are sticking with a still-sunny outlook for renewable energy take up.”

 

IHS solar

IHS: Quarterly module revenues reach $5.9 billion

IHS solar

Signs of the resurgence of the global PV market are appearing, with the latest being the continuing modest rebound in module revenues. The latest figures come from IHS, which observes that the top 20 suppliers shipped 8.8 GW of modules in Q4 2014, for total revenues of $5.9 billion.

Due to falling module prices, the revenue total still falls short of the record set in Q3 2011, when revenues were in excess of $6 billion. Average module selling prices (ASPs) for the top suppliers fell below $0.60/W for the first time. IHS published the findings in its latest Module Tracker Quarterly report. The revenue figure excludes processing service revenues.

The $5.9 billion in revenues represents growth of 12% from Q4 2014 (YoY). IHS notes that consolidation continues to be evident in the module supply market, with the top 20 leading suppliers accounting for 68% of global demand in 2014, up from 60% in 2011.

 

Solar home value

Solar Panels Could Add $15,000 of Value to Your Home

Solar home valueSolar panels, which over the next decade will save millions of homeowners money each month on their electricity bill, could also add thousands to the value of your home itself. A recent report from the U.S. Department of Energy’s Lawrence Berkeley Laboratory found that host-owned solar panels could add $15,000 to a home’s value. That’s big news and could change how many people look at solar energy.

The Value of Solar Now Realized

In a study of home sales in eight states between 1999 and 2013, the Berkeley Lab found that a solar power system was worth about $15,000 to home buyers, or about $4 per watt. That’s a significant addition in value, especially when you consider that SolarCity (SCTY), Vivint Solar (VSLR) and SunPower (SPWR) are currently selling solar power systems based on the immediate cost savings they deliver customers each month.

 

solar cost

The cost of wind and solar power keeps dropping all over the world

Wind turbines erected on the site of a former open-pit coal mine and operated by Ostwind spin at night as lights from the Jaenschwalde coal-fired power plant glow behind
Wind turbines erected on the site of a former open-pit coal mine and operated by Ostwind spin at night as lights from the Jaenschwalde coal-fired power plant glow behind

Many people have probably heard that it’s getting cheaper to install rooftop solar panels in the US. But that’s just part of an even bigger trend. Since 2010, the cost of renewable energy has been plummeting all over the world.

David Roberts highlights a new study from the International Renewable Energy Agency laying it out in detail. Large wind farms got cheaper between 2010 and 2014. Large-scale solar got a lot cheaper. And at least some renewable plants are even becoming competitive with new fossil-fuel plants: