Solar makes sense. It’s cost efficient, it’s eco-friendly and has no
carbon footprint, electricity is generated in the same grid where it is
consumed, and the price of installing panels on residential rooftops is a
fraction of what it cost just ten years ago, even after Donald Trump’s
prohibitive tariffs slapped on imported solar panels earlier this year. So
why hasn’t it taken off?
According to opinion polls the majority of homeowners in the United States
like the idea of rooftop solar and love the idea of seeing their electricity
bills drop. And indeed, in 2017 overall rooftop solar gigawatts of capacity
were almost ten times higher in 2017 than they were in 2010, with more than 2
million US homes now sporting solar panels. However, despite these
considerable gains, residential rooftop solar panels still account for less
than 1 percent of the United States’ total electricity, and growth has slowed
considerably in recent years, with volumes actually dropping by 15 percent in
2017.
While volatility is nothing new for the solar industry, the peaks and
valleys of recent years are particularly marked thanks for unpredictable
regulation and the inconsistent if not erratic business models of solar
energy firms. In some cases regulation has been extremely friendly to solar.
Just this month the California Building Standards Commission gave final
approval to a mandate requiring new homes to include rooftop solar panels
starting in 2020, which will provide a big uptick in demand. This is on top
of sizable subsidies, just one of which is a 30 percent federal tax credit.
These generous subsidies, however, are a big part of what makes demand for
solar panels so variable. This year the solar industry was confronted with
the unpredictable specter of tax reform and considerable uncertainty of how
it would impact the solar sector on the whole. This is compounded by the fact
that solar regulations vary greatly state by state, not to mention that the
fact that sunlight itself is not a constant.
Solar panels may be cleaner, greener, and cheaper than almost all of the
alternatives, but not everyone is happy with that. As homeowners are able to
create their own energy and even their excess, the very same diminishing
electricity bills they are celebrating are being lamented by the power
companies that used to provide that energy for them.
Big power companies are losing out on profits thanks to rooftop solar
panels, but still bearing the costly burden of maintaining the power grids.
However, if these power companies then raise their rates in an effort to make
up for the money lost to solar, they will be punishing those without solar
panels, therefore pushing more of their customer base away from traditional
power and toward installing solar panels themselves, a classic catch-22. Related:
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In addition to rankling traditional power companies, rooftop solar
incentives and mandates like California’s are not universally popular among
energy economists either. To be clear, everyone is in agreement that this
will help California make good on its extremely lofty goal of dropping their
carbon footprint for energy usage to zero by 2045. Homes built under the new
mandate will use approximately 53 percent less energy than homes built under
the 2016 standard and could cut the state’s greenhouse gas emissions by as
much as 700,000 metric tons over the next three years, according to projections
made by the CEC.
This is all good news, but it will not be cheap, and it’s still not
enough. 700,000 metric tons is less than 1 percent of the Golden State’s
annual emissions. Furthermore, other green ventures like building more solar
and wind farms would be more cost efficient--up to three times cheaper if
done correctly and developed in ideal locations--and just as effective.
By Haley Zaremba for Oilprice.com
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