Recently, there was much hand wringing in the news over the bankruptcies of three United States solar manufacturers, Solyndra, Evergreen Solar and Spectrawatt. What many casual observers don’t realize, however, is that the demise of those companies does not mean that the solar industry is crashing. To the contrary, the solar industry is booming, both domestically and internationally, driven in large part by the rapid entrance of Chinese solar manufacturing and the decrease in the cost of solar modules. In short, there has never been a better time to install a solar system on a home or business. In 2010, the number of solar installations more than doubled from 2009, enough to power more than 200,000 homes. Projections indicate that installations will again double in 2011 over 2010. The top 10 states for PV installation in 2010 were: California, New Jersey, Nevada, Arizona, Colorado, Pennsylvania, New Mexico, Florida, North Carolina and Texas. Although most solar installations were placed on existing homes and businesses, there is an upswing as well in the number of commercial and residential developments that are building solar into the project.
While the cost of solar modules has decreased by close to 50% over the past decade, there still is significant capital cost in installing a system. Currently the average cost for solar modules is less than $3 per watt, with some thin film modules under $2 per watt. That translates into a range of $25,000 to $35,000 for a 4kW system (including labor and other costs) before incentives.
GOVERNMENT AND UTILITY INCENTIVES ARE CRUCIAL
To assist homeowners and developers, the federal government and many states have stepped in with incentives and programs. The main federal incentive has been the Section 1603 Cash Grant Program (Cash Grant), which provides a cash payment on 30% of the eligible costs of the installed system. Unfortunately, the Cash Grant is scheduled to sunset at the end of the year, so there is limited time to take advantage of that subsidy. If congress allows the program to expire, a homeowner still will be able to utilize the Business Energy Investment Tax Credit (ITC), which provides a tax credit for 30% of the eligible costs of the installed system. Many states provide additional incentives through tax credits or rebates. Oregon, for instance, provides up to $6,000 in tax credits for a residential system and has an alternative pilot feed-in tariff program requiring electric utilities to pay homeowners and businesses for the solar energy generated over 15 years. New Jersey, which has the most rapidly growing solar market in the U.S., requires its electric utilities to offer 10- to 15-year contracts to purchase the solar renewable energy credits from solar system owners. Many utilities and non-profit entities that receive and allocate utility customer money to further renewable energy also offer rebates to buy down the cost of installing a solar system.
ROLE OF AGGREGATE PURCHASING
There are companies that play the role of wholesaler, making bulk purchases of solar modules at reduced prices and selling them to homeowners and businesses. Similarly, there are programs that homeowners purchase as a group for reduced costs.
ENTRANCE OF LEASE OPTIONS
Several companies with access to large amounts of capital now provide a lease product, which they will install, own and operate a solar system on commercial and residential property. The property owner has no upfront costs, but makes monthly payments for the service and receives the benefit of clean electricity and a reduced electricity bill. The fact that Solar City offers its lease program through Home Depot and Sungevity through Lowes, and that SunRun recently secured $200 million from U.S. Bank in a tax equity deal for its lease program, indicates how scaleable and mainstream this aspect of the solar market has become.
NEW BUILDING PRODUCTS AND NET-ZERO ENERGY HOMES
Many companies now offer pre-fabricated housing construction with integrated solar systems. Other housing products keep emerging as well to integrate solar panels into windows, awnings and other structural features. Ultimately, these renewable energy innovations and energy efficiency technologies will help achieve government long-term goal for homes to be at least 80% more energy efficient and to strive for net-zero energy homes through a combination of energy efficiency and on-site generation.