The U.S. solar industry just achieved another major milestone, and did so three years ahead of schedule. According to recent data released by the Department of Energy’s (DOE) National Renewable Energy Laboratory (NREL), installed costs of solar photovoltaic (PV) systems fell to new lows in the first quarter of 2017, with utility-scale solar seeing the biggest decline. The average installation costs of utility-scale solar have dropped nearly 30 percent to around $1 per watt, and have reached the ambitious cost target set for 2020 by DOE’s Sunshot Initiative.
Since it was launched in 2010, the Sunshot Initiative has been working to make solar energy more affordable and cost-competitive with other energy sources, even before accounting for state and federal policy support such as the federal Investment Tax Credit (ITC). The Sunshot program sets cost targets for utility-, commercial-, and residential-scale solar energy, and then facilitates collaboration across the solar industry and funds research and development efforts to help the industry meet the goals of the program.
According to NREL, the large drop in installed costs of solar power can be attributed to several factors, including declining PV module and inverter prices, greater efficiency of PV modules, and lower labor costs. And as solar becomes increasingly affordable, the DOE recently announced plans to expand the scope of its work by focusing on two additional areas of research: Concentrating Solar Power (CSP) technologies (which would enable on-demand solar energy) and Power Electronics technologies (which will support and enhance the connection of solar arrays to the electric grid).
Although Sunshot’s initial set of goals seemed out of reach when first introduced, it is clear that with critical support from the federal government coupled with the ingenuity of researchers and entrepreneurs, the solar industry is capable of rapid progress and innovation. Now, the public-private collaborative Sunshot has enabled must redouble its efforts, and its investments, to focus on reaching the 2020 cost targets for commercial and residential solar, while working towards Sunshot’s next, increasingly ambitious goal for utility-scale solar: cutting average costs of generation by half, from 6 cents per kWh today (before accounting for policy support) to 3 cents per kWh by 2030. To do this, the Trump administration must rethink its proposed cuts of 66 percent to the Solar Program at the Department of Energy, whose primary project is Sunshot. The Sunshot Initiative has been highly successful to-date, and it will need sufficient funding to build on its achievements in order to help further accelerate the deployment of solar energy.
Many power companies are eager to take advantage of cost-effective solar power, and thanks in part to the Sunshot initiative, solar has emerged as the cheapest form of new power in many regions of the country. With the 30 percent federal ITC in place for the next several years, most new solar projects are being priced at or below 5 cents per kWh, with some power purchase agreements (PPAs) dropping to an incredibly low 3 cents per kWh, according to new data released today from DOE’s Lawrence Berkeley National Laboratory. The combination of solar and storage is also becoming increasingly attractive: most notably, Arizona-based Tucson Electric Power recently signed a PPA for a combined solar-plus-storage system for a remarkable price of less than 4.5 cents per kWh.
The significant decline in solar costs detailed in the NREL and LBNL reports is just one measure of the solar industry’s success over the past several years. Job opportunities in the solar industry have increased at least 20% per year for the past four years throughout the U.S., with solar jobs available in all 50 states, and the industry now employs over 260,000 workers. And solar capacity in the U.S. is rapidly increasing: according to NREL, about 13.7 gigawatts (GW) of PV solar were installed in 2016, with the majority of that amount coming from utilities (10.2 GW). After a record-breaking second quarter this year, the U.S. now has about 47 GW of total installed solar capacity, making up about 1% of the country’s electricity generation, and most analysts expect that the industry will continue its rapid growth.
While the solar industry appears poised for continued success – due to its impressive cost declines and state and federal policy support – it may face a dangerous and unexpected hurdle from the Trump Administration later this fall. Earlier this year, two solar manufacturing companies, Suniva and SolarWorld, filed a trade complaint under an obscure provision in U.S. trade law. In a hearing before the International Trade Commission in August, the two companies argued for a tariff on imported solar cells. The rest of the solar industry was nearly unanimous in fighting back against the tariffs, declaring that it would hurt the competitiveness of solar energy compared to other energy sources and would ultimately result in significant job losses throughout the industry. The commission is expected to make a decision on or before this Friday, September 22, and if the commission determines that tariffs are justified, it would head to President Trump’s desk for a decision on whether and how to implement a remedy.
Imposing tariffs on imported solar cells would risk reversing years of progress in reducing the costs of solar energy, achieved in part by the highly successful Sunshot Initiative. The higher cost of imports would reduce the build-out of new solar projects, which would lead to a loss of jobs and an increase in carbon emissions. At a time when we cannot afford to slow down on climate action, there is a significant risk that the Trump Administration puts an unnecessary major roadblock in front an industry that is hitting its stride.
The Sunshot Initiative has been an incredible achievement that demonstrates the value of government and industry collaboration – a clean energy success story that even the Trump Administration thinks is worthy of praise. It’s now imperative that the Trump Administration not do anything to impede the remarkable progress of the solar industry that it was so recently highlighting.
Elisheva Mittelman contributed to the writing of this post.