SOLAR ENERGY So, when are they going to start making photovoltaic panels look nicer? Once they do, Im all in… How about some nice frames and some spacers and so forth? TEXT: Rooftop solar costs might keep falling, but not by much If going solar was a novel idea a decade ago, its now a serious topic of conversation for many homeowners and businesses. There are nearly 600,000 solar installations producing electricity in the United States, according to the Solar Energy Industries Association, of which about 250,000 are in California — the vast majority serving homes and businesses. By comparison, just 30,000 homes had solar panels in 2006, according to the Union of Concerned Scientists. That growth has been fueled largely by the plummeting costs of solar technology, leading some energy consumers to wonder whether they should wait a few more years before installing solar panels. If prices will continue to fall, the thinking goes, why not hold out for a better deal? Prices might keep dropping, but solar experts and ratepayer advocates say consumers thinking about going solar should do it sooner rather than later. Costs have been coming down, and they will continue to go down, of course said Nicole Litvak, a solar analyst at the consulting firm GTM Research. But the cost reduction was a lot more drastic over the last few years than it will be going forward. There are several reasons experts say to move sooner than later on solar purchases, including the upcoming expiration of a massive federal tax credit, a slowdown in manufacturing and newly announced tariffs on Chinese solar cells. Those forces could counteract expected cost reductions from better technology and more efficient installation techniques. But even if rooftop solar prices do keep moving downward, experts say consumers wont save much money by waiting. Disappearing incentives For some energy consumers, rooftop solar isnt an option, even if it would save them money in the long run. Buying a solar system still involves significant up-front costs, and most leasing and loan programs require a good credit score. Its also difficult for people renting or living in apartments to go solar. But for consumers who have the money to buy or lease a solar system, the biggest reason not to wait might be the upcoming expiration of a key tax credit. That federal investment tax credit for renewable energy will drop from 30 percent to 10 percent in 2017, driving up costs for consumers who go solar later than Dec. 31, 2016. The tax credit is huge, said Matthew Freedman, a staff attorney at The Utility Reform Network, a San Francisco-based ratepayer advocacy group. A 20 percent difference in that tax credit has a big impact on the savings that customers are going to realize. Homeowners and businesses looking to take advantage of the 30 percent tax credit probably shouldnt wait until the last minute, Freedman added. Sometimes when theres a looming tax-credit expiration, in the period right prior to the expiration of that credit, theres a surge of demand, he said. That could actually drive prices up. In California, a solar incentive program known as net energy metering also could end soon, or at least be replaced by a less lucrative incentive. Under the current net energy metering program, rooftop solar customers who generate more energy than they consume can sell that excess energy back to their utility at full retail value. But regulators have capped the amount of solar generation that each utility can compensate under the program, and experts expect those caps to be reached by the summer of 2016. Regulators are currently developing net energy metering 2.0, a new mechanism to pay homes and businesses for rooftop solar generation. But that mechanism probably wont be as generous as the current one, because utilities — and some ratepayer advocacy groups — have argued that the existing program too heavily subsidizes rooftop solar customers at the expense of everyone else. The current system involves significant amounts of subsidies to net-metered customers, Freedman said. Its not sustainable to scale up the program in that way. Consumers who sign up for net energy metering before the caps are reached will be grandfathered into the existing system. That means theyll still be paid full retail value for their solar generation, even after the system takes effect. Bernadette del Chiaro — executive director of the California Solar Energy Industries Association, an industry trade group — believes that as utilities get closer to hitting their net energy metering caps, consumers could rush to sign up, leading the program to close as soon as mid-2015. I just had my parents go solar because I didnt want them to wait any longer, and not take advantage of these early-adopter incentives, del Chiaro said. Falling costs Going solar has become substantially cheaper over the last decade, thanks in large part to technological improvements. The average cost of installing a residential solar system dropped from about $8.50 per watt in 2007 to just over $4.00 per watt in 2013, according to GTM Research. Litvak said that decline was driven largely by cheaper photovoltaic panels. But panels are now so inexpensive that they make up just a small part of the overall cost of installing a residential solar system. We are, right now, not really seeing massive, massive breakthroughs in the evolution of the (photovoltaic) cell, del Chiaro said. That doesnt mean that theres a ceiling on the evolution of the technology, but its working pretty well. GTM projects that system prices will keep falling over the next few years, but not nearly as much as they did over the last few years. Future price decreases also will be driven not by better technology, but by lower soft costs, including more efficient installation techniques and streamlined permitting procedures, Litvak said. Even if soft costs decrease, global market conditions could push installation costs upward over the next few years. In addition to better technology, one of the reasons prices have dropped so dramatically over the last few years is an oversupply of solar panels. Steven Kelly — director of policy for the Independent Energy Producers Association, a Sacramento-based trade group — attributed that oversupply to a glut of Chinese manufacturing and a slowdown in rooftop solar installation in Germany. This could be a really opportune time to buy, because of the flood of modules, Kelly said. That oversupply, experts say, probably wont last. A flood of Chinese solar cells has helped push down prices in the United States, but it has also forced some American manufacturers to go out of business. For several years, the company SolarWorld Americas has petitioned the federal government to levy tariffs on Chinese cells, stirring a debate that has created sharp divisions within the U.S. solar industry. That debate came to a head on Tuesday, when the Department of Commerce announced it would impose heavy tariffs on solar cells imports from China and Taiwan. Officials made the decision after ruling that Chinese companies were receiving unfair government subsidies. That could actually increase the price of Chinese panels, Litvak said. Reasons for caution Despite those factors — expiring incentives, a manufacturing slowdown and tariffs on Chinese solar cells — there are some reasons consumers interested in solar might hesitate. In California, the states three major utilities have proposed an electricity rate restructuring that would reduce the number of price tiers from two to four. If those utilities — Southern California Edison, Pacific Gas & Electric and San Diego Gas & Electric — get what they want, low-end energy users will pay much more for electricity than they do now, while high-end users will see their costs fall substantially. That means high-end electricity who go solar under the current rate structure might not end up saving as much money as they think they will. Thats especially true because the rate restructuring would impact consumers already signed up for net energy metering, who would be compensated at the new electricity rates. Its not clear how the California Public Utilities Commission will rule on the proposed restructuring, which has faced opposition from the solar industry and ratepayer advocates. Still, Freedman said consumers should be wary of the savings estimates they get from solar companies, which are generally based on current rates. Customers would be ill-advised to rely on those kinds of estimates of savings, he said. Any customer that signs up today under a net metering tariff is going to live with the rates that are adopted next year. Its also possible that unexpected technological changes will drive solar prices down over the next few years. Technology improvement, Kelly noted, isnt usually linear — it tends to jump forward after new breakthroughs. But for Freedman, the expiration of tax credits planned exploration is a strong incentive to invest in solar now. Congress could renew the tax credit in the next two years, but it would need broad support from Republicans, who now control both houses of Congress. Theres no guarantees about whats going to happen, Freedman said. But I think it is generally a safe bet for customers who want to go solar, to think about doing it in the next year and a half, before the tax credit expires, and before the frenzy around the tax credit expiring kicks into full gear.
Posted on: Wed, 24 Dec 2014 13:20:02 +0000
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