Looking back at 2019
2019 was another exciting year in solar, with some surprising victories despite a stagnant national policy picture for the industry.
Millions of Increasing Solar Installs
The biggest news of the year may be that the U.S. hit 2 million solar installations as of May 2019, and is now well on its way to 3 million. California all by itself has more than a million installations, and its new home solar mandate will continue the trend of the state being a leader in solar.
2019 saw wins for net metering in such strange places as Georgia, Maine, Washington, Idaho, and Montana. Those are states where net metering was either preserved or reinstated. This is despite the best efforts of utility companies who submitted rate cases that included demand charges and reduced compensation for net excess generation.
Solar also suffered some losses in 2019, in Louisiana and Kentucky, which finally killed net metering for good, and Arkansas, which opened the door to the end. We’ll have to see if regulators will walk through, perhaps led by fossil fuel executives riding on their backs and dangling carrots in their faces.
Batteries, batteries, batteries
The majority of homeowners are now interested in adding batteries with their solar installation. It’s just that the marketplace hasn’t quite caught up with them yet. As of the beginning of 2020, adding batteries to a solar installation is not yet an economically smart choice. However, that doesn’t mean it’s not a smart choice in general.
The biggest catalyst of interest in batteries this year was how California utility company Pacific Gas and Electric (PG&E) began arbitrarily shutting the power off to thousands of people at a time. The shut-offs were necessary to mitigate fire risk, but that doesn’t mean they were well-received. PGE&E’s customers were understandably angry about having their power shut off while also facing the prospects of wild fires in their area.
Almost every major solar installer and manufacturer is now offering energy storage as part of their suite of home solar options. Expect that trend to continue into 2020.
This innovation will surely bring with it lower prices and increased options, with a possible side of technological breakthroughs. Hopefully the recently-announced Energy Storage Grand Challenge will spur some of that innovation.
Looking ahead to 2020 and beyond
When it comes to looking at where the solar power industry is heading, it can be exciting and frustrating to be living in these times. It’s exciting because after the growing pains of the 2000s and early 2010s, the solar industry has now arrived on the national and international stage as a major force.
It’s frustrating because the solar industry could be growing much more quickly—and prices can be much lower. The industry is still restricted by state laws and Public Service Commission rules, many of which are written by former employees of utility and fossil fuel companies. These are the same employees that stand to lose revenue if homeowners choose to replace the outdated central business model of burning fossil fuels in one location and sending the electricity produced out across the land.
Here’s a look at some of the fights and opportunities we see in the coming year:
Net Metering battles in 2020
Back in 2017, California introduced a net metering successor program now referred to as “Net Metering 2.0.” The state of New York will be the next place to watch for such a successor program, as it seeks to transition folks from vanilla net metering to something called the “Value of Distributed Energy Resources Value Stack,” or just VDER for short.
The New York Public Utilities Commission has spent years studying net metering, and is designing the VDER program to recognize the “cost-shift” that solar customers cause to be foisted upon non-solar customers.
The current VDER picture looks like New York thinks solar owners are getting between 3.5 and 8.1 cents too much for every kilowatt-hour their panels produce but they don’t use. The state asserts the shortfall should be recouped to the tune of $227-$524 in extra fees or reduced compensation for solar owners.
Additionally, Michigan may be the next place to reinstate net metering after it was lost, with bills introduced into the state legislature last year. That may get full hearings this year. We’d be happy to see Michigan’s government re-join other Net Metering states.
Solar tariffs in 2020
Donald Trump’s solar tariffs will step down to 20% on February 7, 2020, and are up for interim review at that time. The International Trade Commission is preparing its report on the effects of the tariffs, which is also due to be delivered to the President on February 7th.
The step down trajectory of the tariffs will likely not be affected by the ITC’s report, and they will again decrease in 2021, to 15%, before disappearing for good on February 7th, 2022.
It’s important to note that while the tariffs increase the average cost to install solar, the effect it has on residential installed prices is roughly 5% over what the non-tariff price would be.
Unfortunately, the tariffs are still around while the federal solar tax credit steps down.
The Federal Solar Tax Credit Step-Down
Well, it happened, even though we hoped against hope that it wouldn’t. As of January 1st, 2020, the federal solar tax credit will cover 26% of the cost to install solar, down from 30% during the decade before.
Unless congress acts to preserve or reinstate the federal tax credit at its current of former level, it will step down again, to 22% for installations placed into service after 12/31/2020.
In 2019, we wrote that 4% of the solar tax credit was responsible for about $1,000 in savings, and the next step down will be responsible for another $1,000. Based on our current calculations, the change in the solar tax credit will cost Americans who go solar in 2020 an average of $1,200 and result in a drop of 0.8% in the internal rate of return on their solar investment.
It’s very much an exciting time for Solar power and we’re anxious to see where it goes for 2020 and beyond. Where do you see solar heading in the future?