By Jim Kennerly and Autumn Proudlove
As a result of solar PV cost declines, rising utility rates, and supportive public policies and incentives, residential rooftop solar PV has become an affordable option for millions of customers, especially in America’s 50 largest cities. This is especially true if customers have the ability to access low-cost financing options like longer-term loans, leases, and third-party power purchase agreements (PPAs) that eliminate the upfront cost. Thus, the availability of solar PV (and other ways to more efficiently use energy) has caused many customers to seek their own degree of personal “energy independence” by focusing on ways they can diversify their energy choices and exert greater control over their utility bills.
However, most of the customers who want a greater degree of personal energy independence (and the community leaders who wish to help them get there) often do not understand (or are simply unaware) of how solar PV technology can help them save money and reap the rewards of a largely risk-free long-term investment. Often, the lack of familiarity most customers have with solar PV has the effect of increasing the costs (often called “customer acquisition costs”) that solar PV installers must incur to educate consumers and make a sale. When one considers that selling more PV systems is how solar installers can reduce their other costs and make their businesses leaner, more competitive, and cost-effective without incentives, educating customers and community leaders about the “dollars and cents” value of solar PV truly is paramount.
The NC Clean Energy Technology Center at NC State University, a partner in the U.S. Department of Energy’s SunShot Solar Outreach Partnership (SolarOPs), has developed a series of tools to help do just that. This month, we released our “Going Solar in America” series – two reports that highlight, for residential homeowners (Going Solar in America – A Customer Guide) and community leaders (Going Solar in America – Ranking Solar’s Value to Customers) in America’s 50 largest cities, that the combination of rising utility rates, declining costs of solar, and the existence of supportive public policies and incentives make investing in solar PV a prudent and conservative long-term investment for people of all walks of life. We also crunched the numbers and ranked the best places within America’s 50 largest cities for customers to invest in solar PV.
These reports show that, for a typically-sized (5 kilowatt (kW)) solar PV system,
- According to data shared with us by the online energy marketplace EnergySage, total installed solar PV system prices have declined from $10/W in the late 1990s by 60% to less than $4/W nationwide on average in the 3rd Quarter of 2014.
- Residential utility rates and bills are likely to increase by up to 83% over the life of a 5 kW solar PV system (about 25 years)
- A customer does not have to live in a sun-drenched city to benefit greatly from solar PV – often, people in cities like Chicago and Boston can offset more of their energy use with solar PV, and benefit from it.
|Selected Examples of Solar PV’s Monthly Energy Usage (kWh) Offset Potential by City|
|City||Avg. Solar Production||Avg. Usage||% “Offset” by Solar|
|Source: Calculations Using a 5 kW System on a “base” electricity usage home in each area using the NREL System Advisor Model|
- Customers with a typically-sized 5 kW system can realize savings over $100/month, depending on how efficiently they use energy, and how much of their energy use from their utility they can offset with solar PV.
- When customers choose a low-cost financing option like a loan (or a lease), solar PV can be a better investment than the S&P 500 in 46 of 50 of America’s largest cities, and in 20 of those 50 if customers purchase it upfront.
Nevertheless, the non-hardware soft costs of solar PV still constitute 64% of the price of a solar PV system, and must be reduced in order for solar PV to offer customers significant savings and investment value without supportive public policies and incentives. Over the next two years, while solar PV may face some policy and market uncertainty with the scheduled expiration of the Federal Residential Renewable Energy Investment Tax Credit at the end of 2016, local governments can help lower the costs of solar PV by taking targeted actions to reduce soft costs, and allow an even greater portion of the American public to choose solar energy if they so desire.
Jim Kennerly is a Senior Policy Analyst, and Autumn Proudlove is a Policy Analyst at the NC Clean Energy Technology Center. Their special thanks goes to all of their colleagues working on the Database of State Incentives for Renewables and Efficiency (DSIRE) project, whose knowledge of policies and incentives in their states made this project greatly benefitted this project.
For more information on how your city can expand its local solar market and save consumers money on their utility bills, please feel free to contact Autumn Proudlove (firstname.lastname@example.org).