Solar Trends of 2016

Published October 10, 2016

Solar Trends of 2016

DATE PUBLISHED: October 10, 2016
Category: Blog Article

Solar power is continuing to mature at an impressive rate across the United States. We are beginning to see some notable tendencies develop on the legislative, technological, and market fronts. Here’s a look back at some of the trends we’ve seen develop in 2016.

Utilities Developing Solar

When it comes to establishing a standard in an industry, you would expect its biggest entities to be the ones who take command. To the contrary, U.S. utilities that should have been the biggest proponents and developers of solar in the country were surprisingly reserved. Utilities have provided us with power for hundreds of years, yet they were barely eclipsing the output of the commercial and residential owners who had decided to take their energy needs into their own hands. Thankfully, this year we’re projected to finally see them buck this trend, with 75% of newly installed arrays to be established by utility companies. Despite the utilities being credited with 75% of new installations, residential and commercial installations are both expected to continue their growth and post record years of their own. In fact, with almost 15 GW planned for solar installations this year, we’re set to double last year’s totals and are on track to hit 20 GW annually by 2020.

Community Solar Catching On

Much of the growth in the utility and commercial-scale markets can be attributed to the maturation of community solar projects, where municipalities or other local groups come together to build shared solar projects. These solar projects (sometimes referred to as solar farms) are excellent ways for those who can’t afford or are unable to accommodate rooftop solar to get involved in renewable energy. Community solar projects not only allow for bigger, more efficient total output, but they also eliminate many of the barriers of entry. Often times expensive down-payments or high credit requirements inhibit many from buying into solar. In states like Minnesota, we are seeing the joining of utilities and community solar. For example, Xcel Energy has developed the Solar Gardens Program with over 1,000 participant applications for approval, yielding 900 MW of electricity.

Solar Policy Conflict at the State Level Continues

While some states like Minnesota are seeing their utilities, communities, and legislation come together to make a bigger commitment to renewable energy, many states remain challenged by how solar power is regulated. Nevada, for example, should be a solar powerhouse due to its geography and landscape. However, residential solar development has all but stopped following a ruling where NV Energy was granted approval to triple fixed rates for solar owners, while paying them wholesale prices for their net metering rate. This represented a 75% plunge in income versus the retail rates they had been receiving and applied retroactively to arrays that had already been built. In one fell swoop, current owners were crushed, and new ones were essentially barred from entry.

The debate over how utilities should compensate customers who send energy back into the grid continues to rage across the country. Thankfully, stories like Nevada’s are few and far between, with the majority of rulings falling squarely in the middle of the spectrum. Several states including Arizona and Colorado have seen these debates give way to logical policies that are actually structured around the “why, when, and how” of energy production and not simply punishing customers who have installed arrays. Policies that have produced “time-of-use charges” in Colorado, net metering alternatives in Arizona, and the reduced solar-only fees in New Mexico are all encouraging signs that the value of solar is beginning to be recognized. However, we’re far from finished, and the recent veto of a solar incentive in Maine – coming just 2 votes shy of the 2/3 majority needed to override the veto is a perfect example of how we’re teetering on the edge of true change.

Extended ITC Will Continue To Drive New Installations Through 2021

Despite the lack of consistency across geographies, caused by varying state approaches, the five-year extension of the Federal Government’s Solar Investment Tax Credit (ITC) incentive program, has helped to spur solar investments nationwide. Before the ITC renewal at the beginning of this year, the 2016 deadline had helped to push countless projects into production. Granted while the program will see its payouts decline slightly in the final two years of the term, the extension is expected to generate an additional $40 billion in solar investment . Over the period of the ITC extension, solar is also expected to create an additional 220,000 jobs while pumping an annual $30 million into the economy.

The ITC has played a huge role in driving solar power to where it is in the States today. However, there’s one glaring omission that continues to stand out in contrast to our counterparts overseas. China, Germany, and even tiny Japan all closed out 2015 with more solar capacity than we have in the states. Why? The absence of a Federal Renewable Portfolio Standard (RPS). Approximately 25 states have implemented a mandatory Renewable Portfolio Standard requirement, with another handful establishing voluntary goals, while 8 states remain completely devoid of policy. The worst part? The majority of these 8 states are in the Southeastern U.S., where the weather and terrain create tremendous potential for solar generation. We acknowledge that a Federal RPS would be difficult to pass and that a Federal RPS wouldn't even need to come in the form of mandatory requirements. However, if we are going to be the world leader in renewable energy, our efforts need to exist at the national level. We need clear, stable, federal policies to create a true national solar industry.

If 2016 is any indication of the year ahead, we expect a bright future for solar in 2017. However, we’re all too accustomed to riding the “solar coaster,” and undoubtedly, the upcoming year for solar will have its challenges. The positive solar trends of 2016 have paved a path for expansion of solar growth, and we look forward to seeing what sort of trends develop in 2017 as new technologies emerge and storage moves closer to becoming an economic reality.