Get Happy: Good News about Solar

There’s some pretty happy-making news out in today from the federal government. The price of solar is down while installations continue to soar. There are more jobs building solar systems and more solar systems out there cleaning up our air.

Today, from the U.S. Department of Energy and Lawrence Berkeley National Laboratory released Tracking the Sun VII—the seventh Tracking the Sun report since 2009. The report details trends in U.S. solar installations last year, based on data from more than 300,000 grid-tied solar systems installed since 1998. (That’s a full 80 percent of the grid-tied solar in the country, by the way, including home and commercial systems, as well as utility-scale projects.) Tracking documents how incredibly fast solar is growing here in the U.S. And it also reinforces just how important pro-solar policies are to that growth—creating a huge number of jobs, helping mitigate climate change, and giving our kids cleaner air to breathe.

[Note that LBNL also release two other cool reports that I haven't had a chance to dig into but look worth a read. One is on how much local regulations impact the price of solar and the looks at pricing trends for utility scale solar.]

Here’s the good news from the Tracking the Sun report in detail:

  • Prices Continue To Plummet: In 2013, solar prices continued their felicific nosedive, dropping 12 to 15 percent, depending on system size. That drop rounds out a staggering 50 percent price reduction since 2009. Just think about that for a minute: 50 percent. Know any other product categories that have cut their costs to consumers in half over the last five years? Here’s more good news: Based on initial data from this year, the price trend continues, with drops of an additional 5 to 12 percent in the first six months of 2014.
  • Solar Installations Soar:  Solar power accounted for 26 percent of all new electric capacity installed in the U.S. last year, making our country one of the world’s solar leaders. “With roughly 4,800 megawatts of grid-connected [photovoltaics] added in 2013”—that’s enough to power more than 750,000 homes—“the United States was the world’s third-largest PV market in that year,” the authors write. (Japan and China are second and first.)
  • Third-Party Ownership Is Increasingly Popular: The number of third-party-owned systems is going through the roof. (Please excuse the terrible pun.) Third-party-owned systems are solar power systems that are installed and owned by developers who sell the electricity they generate back at a discounted rate to the owners of the properties where these systems are sited. These systems accounted for a walloping two-thirds of all installations tracked last year.
  • Soft Costs Fall: Stubborn, so-called non-module costs, which have gotten a lot of policy attention of late, because they make up such a large portion of total solar costs, have finally begun to drop, falling 16 percent in 2013. The non-module (that is, non-solar panel) category includes everything from inverters and mounting hardware to permitting costs, fees, taxes and installer profits. Programs such as DOE’s SunShot Initiative and New York state’s NY-Sun Initiative have taken aim at them by, for example, funding pilot projects that created a streamlined and standardized model permitting process that every city and town in a state can use. (Currently, in most places across the U.S., permitting requirements are anything but streamlined and standardized.) The Tracking authors find, “the continued drop in installed prices during the first half of 2014—all while module prices have remained flat or rose—collectively suggest that recent [policy] efforts to target PV soft costs may have begun to bear fruit.”
  • Utility-Scale Price Declines: The cost of utility-scale solar projects has dropped by 38 percent since 2007-9. But current prices may be even lower, because LBNL's accounting methods track the price recorded when an installation goes to contract—often a year or more before actual construction—and don't account for post-contract cost-savings, like recent drops in panel prices.
  • Further To Fall: Despite their already eye-popping declines, US prices can likely drop even further, given how low current prices are in other industrialized countries. In fact, average German solar prices are less than half those in the U.S. Because panel prices are pretty much the same worldwide, “much of the pricing variation across countries can be attributed to differences in soft costs,” the authors report.
  • Local and State Policies Can Promote Continued Declines: How? By reducing certain soft costs, like permitting and interconnection fees, usually determined at the local level. In one recent study, onerous local permitting and interconnection fees and cost consumers an extra 64 to 93 cents per watt, meaning solar in those jurisdictions can cost thousands more than in more solar-friendly locales.

One thing that’s clear from Tracking the Sun VII: U.S., state and local policies devised to promote solar have worked just as designed. They’ve promoted incredible growth in the solar industry, creating economies of scale, clean power and job growth as they advance. Already, in some areas, solar is cost-competitive with conventional electricity. And that’s without factoring in the substantial health and environmental costs fossil-fuel power imposes on us all.

To make solar mainstream, we shouldn’t abandon this course but rather broaden it, making third-party ownership and net metering (in which solar owners sell excess electricity back to the grid at a fair price) available in more states and more utility districts. If we do, just imagine the price drops we’ll see in next year’s report and beyond.

About the Authors

Nathanael Greene

Director, Renewable Energy Policy, Energy & Transportation program

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