In one hour, the sun delivers more energy to the earth than humans consume in an entire year. Indeed, one group of researchers once discovered that over a 90-minute period in 2006, the sun's output easily outpaced total worldwide consumption for 2001. With such a surplus of power available, capturing at least a portion of it via solar panels has always been a smart, cost-effective energy strategy, and in recent years improved panel technology has helped make the drive toward renewable power increasingly viable.
According to the U.S. Energy Information Administration, the nation's consumption of solar energy is estimated to have more than doubled from 2013 to 2016, from 0.3 quadrillion BTUs to 0.62 quadrillion BTUs. Costs have also plummeted over that time span. For example, in September 2016, NV Energy filed a bid for a 100-megawatt project in Boulder City, Nevada, that would offer electricity at only $0.04 per kilowatt-hour. Assessing similar projects from China to the United Arab Emirates, Dom Galeon of Futurism recently asserted that costs had dropped by one-quarter in some cases.
Less expensive projects have helped fuel a boom in installations throughout the 2010s, fortunately at a time when demand for solar has also been on the rise. The GTM Global Demand Model for Q1 2016 found that close to 60 gigawatts of solar capacity were installed in 2015, the bulk of it for utilities. By 2020, the total could climb to 100 gigawatts annually, while system costs continue to decline the entire way.
Why residential and commercial end users are increasingly drawn to solar
The ongoing growth of the solar power industry is gradually remaking the energy grid in countries like the U.S. A Pew Research Center survey conducted from May to June 2016 revealed that respondents supported expansion of solar in greater numbers (89 percent for; only 9 percent against) than they did for any other energy source. That squares pretty well with what the EIA has projected for new capacity: It foresees 9.5 new gigawatts from solar this year, compared to 8 gigawatts for natural gas and 6.5 gigawatts for wind turbines.
In this context, residential and commercial buyers stand to gain numerous benefits from their investments in solar power infrastructures, including:
- Savings on utility bills: Electricity rates increased faster than inflation in general in the U.S. between 2000 and 2006 according to the Edison Electric Institute, meaning that many consumer and businesses have looked to slow their exposure to rising prices. Ninety percent of homeowners cited utility bills as a reason to adopt solar technology. In states such as California and Hawaii, solar is particularly attractive as a way to offset the high costs of living.
- Obtainment of investment tax credits: Power-related ITCs from the U.S. government, which have been extended into the 2020s from the original cutoff point in 2015, are another potential source of savings. Six in 10 homeowners surveyed by Pew reported that they took up solar in order to obtain ITCs, which can help recoup 30 percent of the project expenses.
- Improving family health and the environment: After utility-related savings, these two reasons were the most frequently cited rationales for taking up solar energy among the Pew respondents, at 87 percent and 62 percent of homeowners, respectively. Solar panels can help achieve these two goals by providing alternatives to fossil fuel-producing forms of electricity generation, such as burning coal.
- Keeping up with their neighbors: One of the most common reasons that homeowners install panels on their homes is to mirror what their neighbors are doing. In fact, a study from Connecticut's Clean Energy Finance and Investment Authority discovered that the installation of a single photovoltaic panel within the last half year in the state increased the average number of projects within a six-mile radius by almost half.
General enthusiasm about solar power is widespread in the U.S., with many financial and social incentives for investment. Plus, there is still plenty of runway for growth, as solar sources accounted for only 1 percent of all electricity generation in the U.S. between August 2015 and July 2016, as per Pew's numbers. There is a strong combination here, of growing demand alongside enormous opportunity for increasing market share. But there are still some challenges to wider adoption that must be addressed.
How solar projects have evolved in Hawaii and Florida
Let's look at two states with an abundance of sunshine, Hawaii and Florida, to see how consumers and their local utilities have responded to challenges in the transition to solar. Hawaii has been at the forefront of solar energy investment, with nearly 12 percent of its homes sporting solar panels as of 2015. Solar has been a powerful tool for homeowners wary of the state's high electric rates, which are significantly more expensive than in any other state.
At the same time, the amount of electricity being fed back into the grid has pushed utilities to upgrade their circuits and meters to better handle the flow of solar power through their systems. While they have looked to reduce their payments to end users and remove certain incentives so as to curb further installations, the current penetration of solar projects across Hawaii has still overhauled the Aloha State's relatively small and isolated electric grid in a very short time.
Meanwhile, in Florida, state law still prohibits third-party leasing of rooftop panels, which is often an important part of the net metering arrangements under which solar power is sold back into the grid. The Sunshine State is considering a November 2016 ballot amendment that would finally lift this restriction but also implement utility charges that would force solar users to subsidize the electrical infrastructure. Whether the tradeoff is worth it will be up to the state's voters.
In both states, the rise of solar has prompted important questions about how to invest in electrical infrastructure, incentivize solar panel projects and regulate electricity sales. These considerations will continue to be at the forefront in the years ahead as consumers, businesses and utilities all look to harness solar power to the furthest possible extent.
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