Financial Innovations and Falling Prices Lead to Solar Growth

2012 was a very productive year for solar and 2013 is looking just as promising. Between a wide variety of financing options and falling costs, solar is becoming even more readily available to anyone who wants it.

An increase in third party solar leasing programs gives potential solar customers more options to go solar, especially if they’re not in the financial position to go with a purchase. Solar leasing allows customers to–at zero or low upfront cost–have solar installed on their homes. The monthly lease payment and utility bill with solar are less expensive than your utility bill without solar.  Since utility rates are only projected to go up, this means substantial savings over time.

Solar Savings

Customers also have the choice of a Power Purchase Agreement (PPA) in which case the customer pays for their energy at a set rate (per kilowatt hour). In either case, with third party financing, the risk for the customer decreases as they don’t have to shoulder the responsibilities that come with ownership (maintenance, monitoring, insurance, and production guarantees).

These financial innovations are part of the reason why total installed solar capacity reached 1,992 MW in 2012 with 684 MW occurring in the third quarter alone–118 MW of which being residential installations.

The growth of the solar industry can also be attributed to costs dropping almost 40% in the past two years. Though this has been beneficial to consumers, the price drop comes in part from an increase in global oversupply which has created problems for the US solar manufacturers who’ve had trouble competing with unfairly low prices.

But despite quarrels over the oversupply, solar in the US is still growing and responsible for adding 13,872 jobs in 2012 according to the National Solar Jobs Census report. Currently, there are more than 119,000 workers employed in the solar industry, a 13.2% increase since 2011.

Between financial innovations and falling costs, solar is becoming even more accessible to families, businesses, and a wide range of other applications including utility scale projects and military installations.

Military’s Mobile Solar Systems

The U.S. military has been instrumental in developing new technology, helping it develop so that it can be adopted by the private and consumer markets. The military has geared up another project that allows for large scale mobile solar energy systems.

As traditional energy costs and the military’s need for energy continue to rise solar technology for remote locations has become an interesting prospect brought on by SunDial Capital Partners.

Founded in 2009, SunDial created a mobile solar energy unit specific for on the move military operations and operations in remote locations. These units come in 20-foot long containers that are packed with 120 photovoltaic panels that can be set up into a fully functional solar field within 2 hours. Once unpacked, the container itself can then be used as a field operations facility.

A single unit can produce 28.8 kW of power and charge 64 storage batteries stored in the container’s floor so that the power can be used in the container at night. If the battery power begins to dwindle, a diesel generator kicks in to provide power until the sun comes up and the panels begin producing power causing the generator to shut off.

Though the military recognizes climate change as a potential threat to national security, right now, the military is imploring these renewable energy projects as a tactical move. With the ability to pick up and go within a few hours, remote areas that were previously unsuitable because of the diesel fuel needed to be transported can now be accessed. Relying almost completely on renewable energy decreases the need for costly and dangerous convoys for fuel. Self-sufficiency improves reliability, mobility, and most importantly, safety for our troops.

The idea of a mobile solar unit can apply to more contexts than just military. Anyone hoping to operate off the grid could benefit from this solar/battery/diesel hybrid system–from disaster relief efforts and rural electrification to powering outdoor concert events. With the military known for taking technologies out of their testing phases and proving viability, any private sector skeptics will be able to see applications of these hybrid systems and apply them to their specific needs.

Net Metering: Doubling California’s Solar Energy Goal

The California net metering battle has come to an end–til 2015 at least–and will raise California’s maximum roof-top solar capacity from the current 2,400 megawatts to about 5,200 megawatts.

The state Public Utilities Commission (PUC) voted on Thursday to make a technical tweak in the way it calculates how many electricity rate payers can participate in the net metering program. This tweak includes residential, commercial, and government buildings whose excess solar power gets sent back to the grid, giving the solar user a lower bill.

In the simplest terms, net metering enables solar users to get credit for the electricity generated by their solar system when their overall usage is low (i.e. when you’re not home during the day). This credit can then be used towards their bill when they’re using electricity but their solar is not generating (at night, when the sun’s not shining).

The daytime solar generation – nighttime usage = a lower bill.

Net metering gives solar owners an element of predictability. Based on the credits received for the solar contributed to the grid, a homeowner can project the savings they’ll incur over the life of their solar system (25+ years).

The net metering issue has been under scrutiny recently as the PUC was gearing up to vote on how to calculate a cap on net metering eligibility. Consumers and utilities opposed to net metering argued expanding the program would create unfair subsidies for wealthy people who can afford to install solar in the first place and shifting costs to non-solar customers who either can’t afford solar or don’t want it.

A 3-year-old PUC study estimated the amount paid by non-solar customers to be $140 million annually to cover the net metering program for their solar owning neighbors. But a more recent study done by Berkeley energy consultant, R. Thomas Beach, concludes that the benefits of using solar (decreasing fossil fuel dependence, decreased carbon dioxide emissions) outweigh the subsidy costs.

Net metering is a very important driver of residential solar adoption. As it is, California’s solar industry employs more then 25,000 workers and provides a clean, renewable source of energy to homes and businesses.

After the extension of the net metering program, PUC  President Michael Peevy announced, “Today’s decision ensures that the solar industry will continue to thrive for years to come, and we are fully committed to developing a long-term solution that secures the industry in California.”

Solar Moving Forward Despite Low Subsidies

Despite relatively low subsidies, especially in comparison to the subsidies awarded to other energy sources, solar has been making it’s way as a valuable source of energy .

Incentives Graph

Graph Used From Baker Report and Think Progress .

The federal government provides incentives for every major energy production market and they exist to bridge the “chasm” between early adopters (about 16%) of a certain market and the majority adopters (about 84%). Crossing the chasm doesn’t necessarily mean all companies in the industry succeed, but that the industry itself succeeds. To get from initial adoption to full scale implementation, federal incentives support new energy resources on average for 30 years, including market control for oil, pipeline availability for natural gas, and dams for hydropower. Incentives provide economies of scale in a long term scenario that offer stability during the adoption process with gradual reductions in incentives as the industry matures.

Solar is at the chasm where continued government incentives are critical in assisting the jump between adoption phases. As it is, incentives for solar have been small compared to fossil fuels, according to a report by the Baker Center, “federal investment in solar technologies has been modest in a long-term histroical context relative to other energy technologies”. But, the incentives solar has received have really aided the industry. The growth of solar over the past two years has come with the federal investment tax credit and state renewable energy standards set in place. In addition to the decreasing PV prices, there’s been a 77% growth in the last 5 years.

This growth is spurring innovation, which in itself stimulates growth. Growth means more opportunity for jobs–the Baker Report estimating between 200,000 and 430,000 direct, indirect, and induced jobs coming from the solar industry by 2020. There are already 100,000 Americans working in the solar industry. To top it off, solar provides more jobs per megawatt hour than any other energy industry.

Solar has huge potential in the U.S. Rooftop solar alone could provide 20% of America’s energy needs, which would help decrease impacts of price and supply vulnerabilities from fossil fuel supplies. Solar could be an important addition to the American energy portfolio, but continuing incentives will be a crucial factor in perpetuating this.

Incentives are used to move an industry up the adoption curve. Solar has come this far despite relatively low subsidies; imagine what it could accomplish if the federal government channeled incentives usually given to the fossil fuel industry into solar.

Through the Looking Glass: Our Renewable Energy Future

2011 was a boom year for renewable energy in the United States. According to the SEIA, the solar industry alone installed a record 1,855 megawatts of PV in 2011; double the previous year’s record of 887 megawatts. Wind’s success must also be noted growing 31% with 6.8 gigawatts connected to the grid from new turbines.

These installation numbers aren’t necessarily indicative of the future of renewable energy, however. In reality, there aren’t enough new renewable projects being contracted to keep pace with the installation progress we’re seeing now. In fact, the construction we’re seeing today is a result of power purchase agreements (PPAs) signed several years ago (as it takes between two and five years to complete them). Now the flow of new PPAs being signed has slowed dramatically, and new renewable projects will inevitably crawl to a halt in the next half of the decade.

There are a few reasons this is happening, one notable one being this is an election year and no one wants to appear too extreme (though the thought of Newt Gingrich getting extreme on renewable energy makes me laugh out loud). But the huge obstacle renewable energy is facing right now is natural gas and the unnaturally low prices fracking has been able to achieve. Even though the cost of solar and wind has dropped (and is the lowest it’s ever been), historically low natural gas prices make it appear as though the gap between fossil fuels and renewables is much larger than it actually is.

Policy makers don’t want to choose anything other than gas that could increase costs to rate payers, putting renewable energy advocates in a bit of a predicament–vehemently opposing natural gas in favor of renewables makes it seem like they support increased costs for the rate payers.

An article in Forbes suggests proponents for renewables should embrace natural gas because of its affordability and its clean(ish) nature (its less polluting than coal) instead of trying to argue against it. Though I think this is the route energy will ultimately take, I don’t think it’s the best course of action.

Natural gas costs aren’t sustainable, and they will inevitably rise. Relying on natural gas only perpetuates our society’s fossil fuel driven mind set and won’t help to drive down the costs of renewable energy to something rate payers across the board find attractive.

We need to achieve a clean source of energy that’s sustainable in terms of both supply and cost. Renewable energy contracts and power purchase agreements need to pick up speed lest our clean energy future gets muddled by natural gas.

Renewable Energy Fact Sheet

It’s fairly easy to make renewable energy look like a pipe dream, and misguided attacks on clean energy is doing just that: making renewables look too costly, too sporadic; not merited because it’s not competitive with fossil fuels, or that it won’t create jobs.

These petty strikes against the renewable energy industry don’t even remotely mesh with what we know is true about clean energy, and Think Progress recently published an article pointing out what you really need to know about the value of renewable energy.

1. Clean energy is competitive with other types of energy: Renewable energy is affordable now. Not tomorrow, not next year. Now. Even with the price of natural gas being inordinately low, these cheap prices are unsustainable, like any nonrenewable resource,  supplies will dwindle, and prices will rise. But renewable is staying competitive: with the help of bigger turbines, and increased reliability, some wind developers are signing power-purchase agreements in the 3 cents a kilowatt-hour range, which is far cheaper than any other new power source. The same industry maturity is occurring in solar with California solar developers signing contracts for power costing less than that of a natural gas plant.

2. Clean energy creates more jobs than fossil fuels: Renewable energy job creation outstrips fossil fuels 3 to 1. Not only does the renewable energy sector create more jobs, they create better jobs: twice as many medium to high credentialed jobs are being created in the clean energy economy with wages being about 13% higher, and almost half of these jobs employ workers with less than a four year college degree. Aside from these facts, the clean energy industry is actually growing by a rate of 8.3% which is more than can be said about the overall economy.

3. Clean energy improves grid reliability: Yes, it’s true that if the wind isn’t blowing or the sun isn’t shining then power isn’t going to be generated. But, that doesn’t mean that renewable energy isn’t a viable option for large scale power production. For instance, predictability of wind power would be easier to manage if there was more of it and energy could be delivered without interruption to the grid. Any additional costs for backup generation would be small (less than 10%) and would have little to no effect on consumer power costs.

4. Fossil Fuels have gotten 75 times more subsidies than clean energy: From 1994-2009 the fossil fuel industry received $446.96 billion in subsidies where as in that same time frame renewable energy received $5.93 billion. A study showed that in the early years of the fossil fuel industry, oil and gas producers received federal subsidies making up one half of a percent of the budget. This amount may seem small, but compare that with the one tenth of a percent of federal spending that’s used for renewables. If more subsidies were dedicated to renewable energy instead of the fossil fuel industry, clean energy would become even more cost effective than it is now.

Renewable energy could be an engine for economic growth and a pathway into a sustainable future, but false information that undervalues its potential could really set up road blocks. It’s important to realize the merit behind renewable energy, not only is it affordable and cost effective, but we can make it reliable on a large scale while creating jobs and with more investments from the federal government, we can more forward into a clean energy future.

And How Should We Proceed? The Future of Solar in California

California has been pushing its solar industry. It’s not a secret. In pushing the solar industry came a flurry of jobs. Based on the “Solar Industry & Occupations: Distributed and Utility Scale Generation” report, California is currently home to 3,500 solar firms employing 25,000 people. Based on these trends, the state could add as many as 18,000 jobs in the solar industry by 2015.

This increase in jobs is of course, welcomed, however at present there may not be enough qualified people to fill them. Although California’s community colleges have done a good job of not only training, but fulfilling the market demand for solar installers, the future of solar in California will require different skill sets, many of which are not being taught in college programs.

The solar curriculum in California’s community colleges needs to be expanded to cover the basics of energy production, power plant management, and solar technologies the report recommends. This will be especially prudent in certain areas of California where the  solar industry is becoming more popular, but the market for installers is saturated. Class options need to be diversified in order to address other skills needed in the solar industry. By incorporating skill sets relevant to other aspects of solar aside from installation (manufacturing and distribution for instance), colleges might be able to better prepare graduates for their impending job searches.

There are 15,000 students enrolled in 300 different green job training programs. There will come a point in the near future where policy makers will need to catch up to educational institutes that are driving green jobs. If California’s community colleges succeed in diversifying classes in green jobs, will California’s green economy evolved enough for these graduates to find work in their fields? California won’t be able to realize the full economic potential of green jobs if this doesn’t equalize. If we train people in green jobs but there is no market for them it will all be for naught.