Things are looking pretty darn good for the solar industry these days. First, let me clarify that I’m talking about small solar installations – not the industrial-sized solar farms that require enormous investment dollars, acres of land, lengthy government approval and years of construction. Nope, I’m talking about small systems installed on the rooftops of homes, small businesses, and schools. Some people call it the “microgrid” while others call it “distributed generation.”
Whatever you call it, it’s gaining serious momentum. According to the Interstate Renewable Energy Council, consumers added 522 megawatts of solar generation capability to the grid between 2006-2008. In contrast, utility companies added just 96 megawatts. In the next ten years, GE and IBM project that up to half of American homes will be generating their own renewable energy.
Over the course of the next several days, we’ll explore three reasons why solar energy is about to reach the tipping point and three things that need to happen to ensure that it does.
Reason One: It’s getting more affordable.
Industry insiders are predicting the market for small solar installations will at least triple next year as prices continue to fall. One estimate says that prices have already dropped 20%-30% this year alone.
They’re getting a head start in Gainesville, Florida. Gainesville Regional Utilities set a goal of installing 4 megawatts of power each year for the next 10 years. GRU will buy the electricity generated by participants’ solar PV systems at a fixed rate of $0.32/kWh for the next 20 years. Currently, GRU sells energy for between $0.026/kWh and $0.098 kWh – so PV system owners could see their investment more than pay for itself in that time span. Consumer response was so enthusiastic that the city reached its cap for the first year in less than three weeks, and hit its second year goal a few days later.
The financing barrier seems to be falling as well. Solar installers are offering low down payments, leasing options and affordable monthly payments so consumers no longer have to face the daunting prospect of handing over $30k-$40k in upfront costs for a rooftop PV system.
Reason Two: Consumers aren’t seeing the bill reductions they want from energy efficient behaviors and renovations.
In our upcoming Energy Pulse report, we asked consumers how much they would expect their bills to shrink if they invested $4,000 in energy efficient home improvements. They said their bill should be cut in half. Fact is, there is no combination of energy efficient home improvements that can reach that number for $4,000 – but if they installed solar, consumers could potentially save more than 50% on their energy costs. In several states, consumers can now install a small solar system for about $5,000.
We also hear increasing consumer frustration that their conservation efforts aren’t yielding results. Consumers are saying, “Look, I’ve adjusted my thermostat, I’m cutting out lights, I’ve turned down the water heater. I’m inconvenienced, uncomfortable and my bill’s still the same so why should I keep doing it?”
Americans will start looking for other ways to save money as well as reduce their environmental impact. And the answer might be right over their heads.
We also asked a very specific, fact-filled, question regarding propensity for purchase of a solar PV generation system, “How likely would you be to buy a solar electricity system for your home, knowing that a mid-size system that would provide around 63% of the average household’s electricity, costs thirty-five to forty-thousand dollars that could be offset by a $2,000 federal tax incentive along with additional rebates in many states.”
- 28% said they would be likely or very likely (13%) to buy such a system.
Next post: The third reason why the microgrid is on the cusp, and we start to discuss what needs to happen to bring solar into the mainstream.