Two things help accelerate the adoption of technology – its value for the consumer when in use and the growing ability over time for people to acquire it. Perhaps a prime example is the smartphone. In a reasonably short period of time, devices have become much more powerful and much more affordable for billions across the globe.
Solar power is the new smartphone. While the fundamental technology is decades old, solar has quickly become the most versatile clean energy source and a better solution both due to cost and the positive environmental impact compared to traditional generation.
Whether coal or natural gas, traditional fuel burning plants continue to be expensive to build, operate, and maintain for long periods of time. The economics work only as they grow in size. In contrast, solar energy systems can provide inexpensive power to each home individually as well as at the utility scale for thousands of homes.
Looking at real world data, it is easy to see why solar energy and wind are the future. Here are our highlights that we think tell the essential story.
Renewable Energy Competes with Fossil Fuels
For the past few years, renewable energy capacity growth is outpacing traditional forms of fossil fuel energy production. The investment and lifetime costs for clean energy, and especially solar energy, make large and utility scale projects more justifiable than ever before. Some see this as the transition where fossil fuels have become the energy of the past. As one author put it, in Green Energy Is Now As Cheap As Fossil Fuels:
Green energy isn’t just the non-suicidal choice for our grandchildren, it’s the economic choice right now.
A popular method to compare lifetime costs uses the Levelized Cost of Energy (LCOE). LCOE measures the total cost of building and operating a facility over its lifetime. Some versions also calculate indirect things like environmental costs, often referred to collectively as externalities. According to financial and asset management powerhouse Lazard , clean energy beats coal generation and is now calculated to be equal to natural gas generation. Wind and solar energy LCOE are lower in a growing number of circumstances. Lazard adds that even without subsidies this cost gap will continue to widen for decades to come.
The results of this analysis are even more significant because Lazard chose to ignore certain externalities such as costs related to storage of nuclear fuels, impact of fossil fuel pollutants, etc. Even without those added costs which favor solar and wind, clean energy still has the economic advantage in many cases today.
That is why the U.S. forecast for 2020 is bright. The Energy Information Administration (EIA), a part of the U.S. Department of Energy, annually makes conservative predictions for the following year expansion based primarily on known commitments. EIA reports through its Annual Energy Outlook:
- Combined, wind and solar energy will make up nearly 75% of all capacity additions to the grid this year.
- Solar capacity expansion rate in 2020 will greatly outpace that of 2019, going from around 8% year-over-year to 13.5%.
What Makes Solar Power Competitive
Speed.
Solar power projects can be brought online to provide electricity faster than other means, quickly generating income and offsetting investment costs. While at scale wind energy requires more time to begin producing power, like solar power, the overall economics win out over fossil fuels.
Increasing Efficiency.
One of the most effective advancements in solar panel technology has driven increased electricity production per panel while maintaining pricing and even lowering unit costs over time.
Hardly 5 years ago, the majority of affordable but quality solar panels were rated at 250W perhaps up to 280W each. State of the art products at a premium price were perhaps approaching 325W per panel.
Today, the most economical panels are 330W to perhaps 360W, and the newest products are exceeding 400W per panel. Why is this a big deal? Because now every homeowner can produce more electricity in the same amount of roof space, or less.
Increasing efficiency means more power from the same roof area. Add in the fact that solar panel costs per watt have plateaued and dropped in some cases, and today a solar energy system will produce more from the same available rooftop area at a lower purchase price.
Versatility.
Utilities invest in solar power either by owning large solar electric projects outright or by signing long term power purchase agreements. However, unlike every other energy source, solar works at nearly every scale.
- Businesses and homeowners are adding gigawatts of solar power and saving over time compared to buying 100% from the utility.
- Solar energy isn’t confined to homes and businesses either. Just look around. Boats and RVs use solar technology. You have garden and security lights on solar power, and cookers, fountains, PDAs and a big range of devices that may operate on solar energy. That’s why Summertime is Solar Time, too. With such broad uses across every scale, it is destined to be ubiquitous with increasingly lower costs as more is manufactured and installed.
What It Means
For Pennsylvania and New Jersey businesses and homeowners, policies are in transition.
For New Jersey. the next generation of SRECs, relabeled TRECs, are now real but their value is not yet defined. You can learn more in our piece New Jersey Sets Interim SREC Plan.
For Pennsylvania, policy progress is slowly moving in the right direction. You can learn more in our piece Quick Look at the State of Solar in 2019
These policy transitions are in response to the improving cost advantages of solar power. State and local lawmakers want to continue to facilitate renewable energy growth, but only to an extent as needed. With highly competitive economics and growing overall public acceptance of clean energy, leaders are seeking to find the best balance for incentives. Locally in Pennsylvania and New Jersey, the net result is that currently for each business and residence a solar investment pays out better than ever.