As we are marching into the fourth quarter of 2019, it is a good time to look back at the solar power market and assess where we have been, and where we may go. Much has been communicated about the downside of the solar tariffs. People opposed to clean energy continue to devalue it, including solar energy. However, renewable energy markets continue to boom.
Plenty of Good Solar News
Tariffs. There has been a lot of talk about how destructive the 30% tariffs imposed on imported solar panels would be. Panels are the most expensive part of home and small business solar installations. Other tariffs on raw materials and components were a concern, as well.
The industry adapted. Most solar panel manufacturers and assemblers adjusted supply channels and rode the global wave of solar energy growth. Minor pricing pressure was felt on solar panels and solar power inverters. But to the consumer, total system costs were essentially the same. That’s because the financial competitiveness of solar power is strong and always improving, making cost a driving factor. In short, solar executives were able to dodge most of the negative impacts of the tariffs.
According to one CEO, Tom Werner of California-based SunPower,
The tariffs have been overwhelmed by the scale and costs coming down.
Adds Eric Luo, Chairman and CEO of China-based GCL System Integration Technology,
The fact is the trade war hasn’t slowed down the global demand.
Over the past few years, many people and groups opposed to renewable energy were predicting a resurgence of fossil fuel sources, especially coal. A quick review of the data shows the coal industry continues to decline. In fact, demand has reached a 42-year low. While for solar energy, there are plenty of great, positive indicators. Here are just a few:
A summary of more good news:
- In the first quarter of 2019, it is estimated 2.7 GW of solar power capacity was installed in the U.S. For the second quarter, 2.1 GW are estimated. Both are comparable to the previous year, although a few percentage points less. However, analysts caution that the numbers were likely influenced by the “wait and see” response to tariffs. They suggest the final two quarters could see a significant increase.
- According to the SEIA (Solar Energy Industries Association), residential solar continues to be very robust. Installations are growing 3% quarter-over-quarter and 8% year-over-year.
- Homes with solar energy installed are increasing in value. In fact, because of homeowners’ and home buyers’ greater recognition of the value of solar powering the home, a quick study by Zillow shows solar adds 4.1% to the price of an average home across the U.S.
The Future of Solar Energy in Pennsylvania and New Jersey
Governors in both Pennsylvania and New Jersey have moved to create environments that they expect will accelerate adoption of renewable energy throughout their respective states. Legislation and the resulting utility and energy regulations that follow are slowly progressing. They are more opportunities in the future for even bigger improvements. Here is a snapshot of where the solar energy industry stands in each state.
Past state energy policy has not sufficiently targeted renewable energy, making every move forward vital for progress. Here are key highlights:
- Because of previous policy changes that increased SREC values in Pennsylvania, we discussed earlier how a new Pennsylvania SREC peak value had been reached in 2019.
- It is also likely these positive SREC changes led to the Zillow study as reported by CNBC finding a 4.9% solar home value increase. This equals approximately $8,589 for the median-valued home.
- As we noted, Senate Bill 600 will require renewable energy to make up 30% of all power sold in the state by 2030, with a 10% solar carve-out. That’s a big improvement on the current law setting a target of 8% by 2021.
- The authors of Senate Bill 600 are not resting. They are currently proposing The Climate Change Mitigation and Energy Transition Act, written to slash carbon emissions from the electric power sector at least 90 percent by 2040.
Even though it is the most mature market in the east, solar continues to grow in New Jersey. However, like other states, a milestone has been reached where leaders are required to review and revise some of the most successful policies in the nation to date. Currently New Jerseyans enjoy generous SREC values, for example. Here are key highlights:
- By the original Clean Energy Act law for the state, regulators must stop accepting SREC applications when solar power production reaches 5.1% of the total electricity production. Initial NJBPU next-phase proposals are being met with strong resistance by solar industry business owners and solar advocates alike.
- After the most recent quarterly report, the New Jersey Board of Public Utilities (NJBPU) is estimating this point will be reached by approximately the early summer of 2020.
- According to the same Zillow study as reported by CNBC, New Jersey homeowners enjoy a 9.9% solar home value increase due to existing and strong SREC value and high median home price. This equals approximately $32,281 for the median-valued home.
- In the fall of 2019, the state revised building and electrical codes to follow national standards. The portion affecting solar power, Section R324, generally reduces the amount of roof space that can be covered by solar panels in order to provide human access. Homes receiving solar permits before March 1, 2020 are excluded, as are all homes with low pitch structures (less than 17% slope).
Make a Difference in Solar Energy Policy
Good solar energy policy requires the voice of the people to influence lawmakers and governors. We highly recommend you communicate your position with your local elected officials.
You can find your local Pennsylvania lawmaker here.
You can find your local New Jersey lawmaker here.