Solar Incentives Support US Energy Goals
Every year and every election cycle, energy is a top priority for voters on both sides of the political aisle. This focuses on abundant, reliable, and increasing cleaner forms of energy production, including oil and natural gas as well as alternative energy, such as solar.
Consumer Energy Alliance (CEA) has long been a champion of solar power. We have advocated for years for pro-solar, pro-grid, and pro-consumer polices, to ensure continued growth within this vibrant industry, while updating and maintaining our electric grid, to keep energy prices affordable for families, small businesses, and those struggling to make ends meet. We can expand energy options for households and at the same time lower emissions in smart, cost-effective ways.
Solar photovoltaic (PV) has become one of America’s fastest-growing energy types. According to data from the U.S. Department of Energy (DOE), solar generation grew over 40 percent between 2016 and 2017. In fact, solar power became the largest source of new power generation to come online in the first quarter of 2018, representing 55 percent of all capacity added, per a recent report from GTM Research and the Solar Energy Industries Association. Prices for solar installation have also drastically declined, down some 70 percent since 2011 alone. A recent report by DOE’s National Renewable Energy Laboratory found that prices for utility-scale PV systems fell 30 percent in early-2017 from the previous year.
Federal, state, and local incentives, combined with policies such as net energy metering, have been a significant factor in the increased use of solar generation by reducing the homeowner’s out-of-pocket installation and maintenance costs for residential systems. In fact, in many instances, total incentives are now greater than the system’s total costs, according to CEA’s latest findings.
Many state lawmakers and utility commissions nationwide are reexamining their current regulatory frameworks accordingly. CEA has a new analysis that quantifies incentives in 25 states to help policymakers make informed decisions about what works best. We concluded that while incentive structures vary significantly across the country, owners in all but five of the states studied received at least 75 percent of their solar system costs back from financial incentives under a standard rate structure. On average, residential solar PV systems received between 104 percent and 140 percent of the system costs back in incentives. By comparison, utility-scale solar installations only received about 45 percent of total system costs in incentives.
With the country expected to add 130 million more people by 2050, states will need a modern and flexible electricity mix to ensure they can meet growing demand in safe, reliable, and environmentally-friendly ways. They will also need to make sure that incentive policies keep pace with ever-changing market conditions. To that end, states can leverage solar not just on the residential side but also the utility side, creating much-needed market competition — which is ultimately a win for all Americans.
So when it comes to solar, what is the right pro-grid and pro-consumer move to make? Given the rapid transformations in both the economics of solar PV systems and the policy debates over solar incentives, that really depends on each state and its unique position in the market. Our hope is that this new analysis will help inform officials and their communities make these decisions regarding solar incentive policies to the benefit of everyone.
Brydon Ross is Vice President of State Affairs for Consumer Energy Alliance.