This is a special year for the solar energy industry. Consistent and considerable reductions in costs combined with government support for clean energy has resulted in the first year when more solar-based electricity generation capacity is planned than any other type.
The Energy Information Administration estimates that new generator projects in the US planned for 2016 are mostly utility-scale solar (9.5 GW), wind (6.8 GW), and natural gas (8.0GW) power plants. These numbers, as always, underestimate solar additions by excluding residential solar which, in 2015, saw the installation of 7.3 GW of new capacity according to the Solar Energy Industries Association. If these additions go through as planned, then the trend of increased market share for the three resources at the expense of coal will continue as illustrated below in another graph provided by the EIA.
The rise of solar – rooftop solar in particular – is troubling power generators in the US. A Bloomberg article by Jonathan Crawford details how the decreased demand from houses is cutting into revenues of East coast power companies adding to strains from lower demand, environmental regulation, and depressed prices. Increased energy efficiency and clean power proponent in the White House were already putting pressure on conventional generators, but the oil and gas glut was especially devastating for revenues as wholesale power prices are heavily influenced by the cost of natural gas. On top of those issues, residential solar installation seems ready for exponential growth.
“It’s certainly possible to see rooftop solar growing to a level where it becomes a serious issue for regulated utilities and merchant generators,” said Swami Venkataraman, vice president and senior credit officer for infrastructure finance at Moody’s Investors Service Inc. “It compounds all the other issues if solar is also going to cause demand to go down.”
The political side of the solar energy spectrum just as interesting as the business side.
In Oregon, Governor Kate Brown signed into law a bill making Oregon the first state of the nation requiring a phase out of coal from the power supply. The bill is the first to use legislative power to call for the elimination of carbon-intensive generation; it also requires utilities to provide half of their customers’ power from renewable sources by 2040.
“Working together, they found a path to best equip our state with the energy resource mix of the future,” Brown said. “Now, Oregon will be less reliant on fossil fuels and shift our focus to clean energy. I’m proud to sign a bill that moves Oregon forward, together with the shared values of current and future generations.”
Oregon has long been a “green power” state but the use of legislation to determine the energy mix for a state sets a precedent likely to come up in the future, boding well for the solar industry.
Across the Atlantic, an interesting development in Parliament has prevented the increase of sales tax on solar panels as Prime Minister Cameron faces opposition from within his own party. At least 16 Conservative lawmakers backed a Labour Party amendment sparing solar panels and insulation from an increase in sales tax to 20% from 5%. Many of the Tories opposing the tax hike are Euro-skeptics at least partially supporting the Brexit campaign. They made their argument on the grounds that the European Court of Justice ruling that Britain’s reduced rate of VAT on energy-saving products was in breach of European Union laws was unnecessary and detrimental interference from the Continent.
Here are some recent developments in solar projects: