More solar developments are hitting the news each year. As the industry continues to grow in size and importance, solar is attracting more attention from nations looking to reduce emissions and entrenched interests looking to prevent the disruptive rise of another power source.
In the US, new solar installations are coming online at higher rates than any fossil fuels providing large increases in total capacity and solar sector jobs. Obligations to reduce emissions required under the Clean Power Plan as a means of meeting Paris Climate Change Agreement targets positions the zero-emission energy source for significant growth. Threats still exist, of course, for the industry as some states revisit their feed-in tariff and infrastructure usage fee legislation. As seen in the case of Nevada, solar is vulnerable to sudden changes in policy.
Aggressive legislative battles at the state level are becoming a defining feature of US solar. Financing solar energy for public institutions is one of the more interesting challenges facing a proponents as schools and churches – both large scale architecture that are well-suited to solar installation – are not tax-paying entities and as such do not receive federal tax breaks like businesses and residents. The most common financing option for public institutions is third-party financing but some states still have barriers to financing solar projects like North Carolina’s prohibition of such financing. Pushes to allow third-party energy sales, upgrade net metering policy, and make utilities invest more heavily in solar-friendly infrastructure improvements will become much more visible as the US states are driven to meet emission reductions obligations set by the Clean Power Plan.
In Japan, the post-Fukushima energy industry has seen a steadily growing solar market thanks to strong incentives for non-nuclear clean energy. Japan’s solar installations are expected to peak this year with the addition of 13-14 GW of panels, moving closer to 10-12 GW of installations next year. Japan is expected to cut its feed-in tariff for solar power producers by 11% while leaving rates for wind, biomass, geothermal, and hydro unchanged.
Technology, policy, and finance will decide solar’s future.
Falling costs via sustained technological progress have been a major boon to the solar industry. The IEA said in its Projected Costs of Generating Electricity report that “The costs of renewable technologies — in particular solar photo-voltaic — have declined significantly over the past five years.” Energy.gov provides the chart below which shows the monumental decrease in hard costs for solar panels over just the 2010-2013 period showing a major shift in share of total costs to soft costs.
Though the policy battle for solar’s future is still raging, technological breakthroughs put more pressure on the financing and labor costs. Customer acquisition, installation labor, and supply chain costs make up over 30% of total costs nearly matching the cost of the actual panels. There are plenty of ways to cut costs in these areas but so far implementation has not keep up with the pace of hard cost reductions. Third-party financing would reduce up front costs and give more people the opportunity to install solar and learning-by-doing will also naturally reduce labor training costs over time. Much more exciting for customer acquisition departments will be the increased number of people and companies looking to solar as a means of cutting emissions.