Why you should get excited about solar in 2014!

In his recent State of the Union speech, President Obama highlighted several reasons to get excited about the role of solar in the country’s expanding renewable energy portfolio.

“Now, it’s not just oil and natural gas production that’s booming; we’re becoming a global leader in solar too. Every four minutes another American home or business goes solar, every panel pounded into place by a worker whose job can’t be outsourced. Let’s continue that progress with a smarter tax policy that stops giving $4 billion a year to fossil fuel industries that don’t need it so we can invest more in fuels of the future that do.”

For fact-checkers carefully combing the President’s remarks for exaggeration and hyperbole, Obama’s solar assertions fall solidly in the accurate column. The U.S. is quickly becoming a global leader in solar production. According to a recent report from GTM research, for the first time in 15 years, the U.S. surpassed current world-leader Germany in solar capacity added to the grid. In the third quarter of 2013, more Americans added solar panels to their homes than in any other quarter in history. And considering this installation activity, it’s no surprise that the Solar Foundation’s latest Solar Jobs Census reveals that solar industry job creation outpaced the national average by tenfold, growing by a whopping 20 percent.

While Federal tax breaks and subsidies awarded to fossil fuel, nuclear, and biofuel energy sources dwarf those investments in renewable energy, including but not limited to solar, it’s clear that the return on investments in solar are generating significant shockwaves throughout the energy and power industry.

 Historical Average of Annual Energy Subsidies

Credit: Greentech Media

2014 could prove to be an important tipping point for solar development in the U.S. The Federal Investment Tax Credit (ITC), which is set to expire in 2016. If Congress doesn’t extend it, it could spur continued historic development as new projects race to beat the deadline. This increasing momentum in solar development means that communities, local and state governments, and utilities are grappling with strategies to incorporate and accommodate increased demand.

The policy landscape for solar is also changing. Recent regulatory developments in several states including Hawaii, California, Arizona, New York, and even Georgia could influence the direction of the solar market nationwide, and provide valuable case studies for state and local governments across the country.

In Arizona, California and Hawaii – three of the country’s most technologically advanced and financially mature solar markets – public utilities are pushing for regulatory revisions that could change the demand for residential solar. According to a January 2013 report from Edison Electric Institute, the growth of distributed energy resources – small-scale, power-generating devices, primarily solar, that operate “behind the meter” or “off the grid” – mean that utilities will have fewer customers among which to spread the costs of operating the grid. Therefore, the rates each remaining customer pays increase, which makes alternative energy options potentially more attractive. This cycle could be a game-changer for an industry whose infrastructure and business model has been relatively consistent for nearly a century.

Nationally, solar energy generates only 0.2 percent of the electricity supply, but in the country’s market leaders, utilities are already feeling the pinch of growing solar saturation. In Arizona, for example, last November, the agency that regulates utilities in the state agreed that Arizona Public Service Co. may impose a monthly fee on customers sending “excess” solar energy into its system. While the fee is small – roughly $5 a month for qualifying customers, and only a tenth of what the utility wanted to charge – opponents contend that utilities in other states will be watching the outcomes closely and that any fee could reduce demand for installations. California lawmakers also approved legislation late last year that would allow regulators to authorize a $10 fee for customers with solar systems, but that also removes the cap on the state’s net metering program and authorizes regulators to require utilities obtain up to a third of their power from renewable sources.

Many eyes are eagerly watching Hawaii as well. Last August, a rule went into effect requiring homeowners to receive permission from the utility prior to installing solar. Hawaii could be a bellwether for markets across the country as utilities increasingly see solar as a threat. The new rule on the islands has significantly tampered solar growth in the country’s most prime solar spot. In the months after the regulations took effect, installers saw a staggering 50 percent drop in new business.

Other areas around the country provide a different outlook for solar expansion. In early January, New York State Governor Andrew Cuomo announced sweeping support for solar including a $1 billion investment to install 3,000MW across the state and add 13,000 jobs in the industry. The initiative includes significant investments in solar at a municipal level. Charging 5,000 of the state’s schools to serve as “demonstration hubs”, will launch solar deployment in communities across the state.

Support for solar energy is also growing in previously politically unlikely places including Georgia. Recently, conservative and tea-party leaders in the state declared support for solar energy, citing that hindering adoption counters free-market principals and property rights. Georgia lawmakers are advocating that customers should have access to cost-effective solar energy deployment without interference from utilities and regulators.

There is little question that solar has arrived. What recent activities, policy changes and investments in states across the country foretell, is that solar is a viable, legitimate option that must be addressed. What remains to be seen is how these strategies evolve and ultimately how stakeholders are forced to adapt.