Enough sunlight falls on the Earth’s surface every hour to meet the entire world’s energy needs for one year. While this abundant source of energy seems like a solution to our energy woes, it all comes down to the ability to convert solar energy into electricity.
Far gone are the days when the solar technology meant concentrating the suns rays to make fire or burn ants. This year, an airplane powered only by sunlight made it across the Atlantic, more and more Americans are powering their homes with solar, and businesses are capitalizing on its rapid rate of return. The technology to utilize the sun’s rays for lighting, heating, cooling, and charging has arrived.
Still, solar has to be able to compete with other energy sources on the market. While solar power may not be able to rival the price of natural gas, it is well on it’s way to becoming a strong contributor to the United States energy make-up.
Making the Case: Why the use of solar will grow in the U.S.
It’s a Good Investment
The cost of solar panels dropped 46% since 2010. Massive investments in manufacturing capacities in China created an overwhelming supply of solar panels outpacing demand by 200%. As a result, prices areplummeting.
Steven Chu ,the U.S. Energy Secretary (2009-2013) predicted that thegrid parity will be achieved by the end of the decade. The gird parity is the point at which renewable means of gathering electricity is equal in cost, or cheaper than grid power. At grid parity, we can expect a wholesale shift to renewable power sources.
Third-party owned systems
Third-party owned systems (TPO) remove the upfront costs making solar dramatically more affordable. Under TPO, installers offer simple leases with a fixed payment every month. Before, the upfront cost of a solar system kept away many businesses and homeowners. TPOs are a key driver for the explosive growth of solar in the residential market.
In 2012, TPO’s accounted for the majority of new solar system installations, and are projected to grow an average of 39% every year from now to 2016. Third- party solar is more than 50% of the California home solar market as of 2011.
The fact that companies like Google and Bank of America are making huge investments in residential solar power, shows that it has become a good investment opportunity.
(Read more about solar financing on The solar financing frontier).
Local, State, and Federal Incentives
There is a number of government, utility, and non-profit financial incentives that promote renewables in the United States (see the Map of financial incentives for renewable energy).
In his speech on America’s first climate change strategy, President Obama pledged that by 2025, more than 13GW of electricity made in the US will come from renewable sources. The federal government will increase the percentage of its electricity from renewable sources from 7.5% to 20%. The clean energy technology funding would rise 30% to $7.9 billion across all government departments.
Already 30 states and the District of Columbia have Renewable Energy Standards (RES) legislations, which mandate installation of renewable sources of electricity. Another 7 states have nonbinding goals for adoption of renewable energy sources.
At the federal level, Congress has extended the 30% federal investment tax credit (ITC) to both residential and commercial solar installations until December 31, 2016. Under the American Reinvestment and Recovery Act (ARRA), the U.S. Treasury Department had implemented a program to issue cash grants in lieu of investment tax credit for renewable energy projects.
These policies have public support – a month before 2012 presidential elections, a poll of likely U.S. voters showed that 92% of Americans support developing more solar, and a majority wanted the government to support solar with tax credits and other financial incentives.
A study from NYU/Yale confirmed what has been an anecdotal evidence: in residential communities, solar is contagious, once someone installed solar panels, it is much more likely that neighbors will also install them.
As the solar market grows, so grow jobs. “I see electricians going into the solar market, structural steel companies going into constructing solar mounting systems,” said Avi Yashchin, CEO of CleanEdison, Inc., the New York-based provider of clean-energy training programs, in an interview with Bloomberg.