The pace of change quickens
Solar power continues to be a relatively small portion of the energy supply of the United States with just under 3% of the country’s power coming from the sun. Now, before the naysayers dismiss the industry as insignificant, let’s point out the fact that solar was under 1% just a few short years ago. The direction and speed of change are undeniable. In fact, solar power is expected to account for half of all new utility power generation in the next year. I refuse to say “the future of solar is bright” because that’s hokey, but well… it’s kind of true.
Solar is now cheaper than coal
First and foremost, the technology of renewable energy continues to improve, and that improvement means lower costs. In addition to refinement of the technology itself, the economies of scale made possible by wider adoption further bring down the costs of renewable energy.
According to Bloomberg, in most countries today it is cheaper to build a new solar or wind farm than a new fossil fuel power plant. Bloomberg also estimates that by 2025 building new renewable energy power sources will be less expensive than even just maintaining old fossil fuel plants. What’s more, “solar is on track to become the cheapest form of power ever”!
Truly a watershed moment, especially for those who are less concerned about the environmental impacts of power production than the economics of it.
One of the most significant and impactful trends is just society’s level of familiarity with solar technology. As more governments at the city, state, and national levels incentivize the installation of solar power cells, the sight of buildings – both residential and commercial – covered in black panels becomes more familiar. The more normal is seems to people, the more reasonable it will seem to invest in it.
Word of mouth, as well, has a snowballing effect as people share their experiences of saving money by installing their own systems. In a 2019 survey, 6% of residences in the U.S. at that time had home solar systems, but another 46% “have given serious thought to adding solar panels at their home in the past year.”
This is both a strong indicator that incentives work and that even more people will be taking the plunge soon.
The political future of solar power
Some of what the future holds for solar power depends upon the actions of our political leaders. With U.S. leadership at the federal level swinging so wildly between the poles of environmental advocacy, it’s often been left to state and local governments to decide how solar power is governed and incentivized. As noted, it is clear that government incentives work.
Of course, there are some things that can only be done at the federal level, like the signing of international treaties that coordinate renewable energy efforts and then following through on those commitments in a meaningful way. The Biden administration has signaled a prioritization of climate action, though their performance on that front has been mixed. Executive actions that lie within the purview of the president have been helpful, but the most impactful legislation dealing with renewable energy generally and solar specifically (namely the Build Back Better bill) have failed to make it through Congress.
The federal incentives that have helped with the growth of residential solar for years now have always had an expiration date built in. Fortunately, this is one area that Congress has been able to take action by extending the incentives, though at a progressively lower level. Before 2019, homeowners enjoyed a 30% tax credit for their solar installations. For the period 2020-22 the federal credit sits at 26% and in 2023 it will drop to 22%. Theoretically, the credit will disappear in 2024 unless Congress extends it again. They’ve done it before, so fingers crossed they do it again.
Should the tax incentives expire in the next couple of years, sales strategies for residential installers will need to shift. There are still plenty of good reasons for people to utilize solar systems – the lack of incentives may just make the pitch a little bit harder.
Home battery storage
An important trend within the residential market is the use of home batteries to store some of the power produced by a home’s solar panels. A home battery allows a homeowner to hold onto some of the power they’re producing for a rainy day, both figuratively and literally.
In places like California where rolling blackouts are likely the new normal, batteries give people the ability to take control of their power usage.
And with many markets now seeing spikes in energy prices at peak times during the day, batteries allow consumers to significantly reduce their power bills by strategically choosing when they draw from the power company.
For these reasons and more, the U.S. Energy Information Administration expects battery storage to increase by an impressive 84% in 2022.
Not every residential utility customer has the ability to add solar to their roof. Community solar allows people to pool resources and use a portion of a nearby solar farm. Consumers are able to offset some of their power usage and receive credits toward their power bill.
Currently, 41 states and D.C. have community solar programs representing just less than 5 gigawatts. That capacity is expected to nearly double within the next five years.
Agrivoltaics refers to systems in which land is used for both solar power generation and agriculture at the same time. Often this means scattering solar panels among crops or even on stilts above crops.
The model is still mostly in the study phase of development, with some arguing that it isn’t an efficient use of agricultural land. Others argue that some crops and/or livestock are not strongly impacted by having some extra shade.
The World Economic Forum says agrivoltaics may be an especially attractive solution for some parts of the developing world, particularly Africa. Kenya has been taking the lead, mounting some panels above crops. In this context, the added shade is actually a benefit as it reduces “heat stress and water loss.”
Perhaps the most sci-fi of the ideas I’ll present here, solar roads aren’t just theoretical. Pilot programs are being tested here in the U.S. and some are already being built in China. The idea is to convert the eye-sore pavement that covers so much of our land into something even more practical: a network of power production. (The key, of course, is creating solar panels that can withstand the wear and tear that roads experience.)
And it should go nicely with your solar-powered car, which is also coming to a garage near you.
A tipping point toward the future of solar
Due to the changes in efficiency and cost, we are currently living through the tipping point in which the movement toward solar power picks up speed. It’s important to remember, though, that the transition will take time. We’re speaking about decades here, not years.
Regardless, there is much cause for optimism for the future of the solar industry.