Yesterday (Feb. 10) GTM Research introduced U.S. Residential Solar Economic Outlook its latest report on rooftop solar power in the U.S. The newest report found that rooftop solar is at this point at pretty with other electric sources in 20 states—from California to Missouri. By the end of the decade that number is expected to more than double to 42 states, the report found.
The expectations are based on “business-as-usual conditions,” wrote report author Cory Honeyman.
"Through 2020, incremental cost reductions to rooftop solar, alongside incremental retail rate hikes in most utility service territories, will serve as sufficient tailwinds to expand the number of states that reach grid parity from 20 to 42 states,” the report said.
“Residential solar reaches grid parity when the levelized cost of solar energy falls below gross electricity bill savings in the first year of a solar PV system’s life,” Honeyman said. “While traditional grid parity analyses rely on average retail electricity rates to calculate customer savings, we used utility and state-specific rate design, system production and installation costs to more accurately gauge solar’s attractiveness.”
The report looked at how rate design and net metering impact the residential solar market in states and how it impacts the costs of rooftop solar panels and power. This is an increasingly important way of looking at residential solar as utilities and energy commissions revisit their net-metering and rate designs now and in coming years. Most recently the draconian changes the Nevada utilities commission made are a clear sign of this.
Honeyman and GTM Research Vice President Shayle Kann discussed their findings during a dial-in with UBS yesterday as well. Kann observed that the solar industry was not paying enough attention to how net-metering and rate design are impacting parity in states.
For instance, the imposition of a fixed monthly charge of $50 for a rooftop solar system would mean only two of the 20 states currently considered at parity would remain at parity. Other costs, like on-demand charges, could also reduce the savings solar users experience.
”Most utilities are talking fixed charges and rolling back the value of solar exported to the grid,” Kann said. He added that thus far utilities haven’t had much success with raising fixed charges. In Nevada, for instance, the utility that led the charge to impose fees and reduce net-metering, NV Energy, already is backpedaling on the changes the commission made.
"With more utilities re-evaluating net metering rules and rate design, the residential solar economic outlook can no longer depend on a static policy landscape like the one that helped encourage the nearly 1 million homeowners who now have rooftop solar,” Honeyman said. “Looking ahead, it is no longer a question of if, but rather when and to what extent, rate structures and net metering rules will be revised.”
"In the long run, when solar becomes a mainstream power source beyond 2020, regulators and utilities are more likely to align compensation for solar exports more closely to wholesale market pricing, underscoring the need for continued installed cost reductions to counter a policy environment in which rooftop solar compensation is significantly undercut,” the report stated.Tweet