Solar’s Middle Way Ready for Boom
March 25, 2016
As the US Congress in Washington continues to fumble in science and technology denial, for now, in the US, the renewable energy action is at the state and local level.
States are finding out that they can compete better economically and create more jobs if they open up opportunities for renewables – solar energy in particular right now.
One bone of contention for states to deal with is that the large and still influential electric utilities are loath to give up their control of electric generation, and have doubts about a wild west solar economy with each householder as his own electric utility.
Turns out there’s a middle way that is getting attention.
Chris Mooney in Washington Post:
Right now, there’s an odd thing about solar in the United States (and elsewhere). It’s either really big — at the scale of massive solar farms with the capacity to generate tens or hundreds of millions of watts of electricity — or pretty small: on your rooftop, with maybe as little as 5 kilowatts, or thousand watts, of capacity.
Solar has been growing extremely fast in these existing markets. But more and more, analysts say, there’s a middle-range market whose large potential is just becoming clear. It’s bigger than individual rooftop installations but smaller than vast solar farms. And it’s for a much broader and diverse range of people than fairly wealthy, suburban homeowners.
It’s called community or “shared” solar, meaning that multiple people get electricity from a mid-sized solar array on the top of, say, a condo building, or in a lot centered in a community, or perhaps an array or resource designated by their power company. This means people living in more densely populated cities, who may not own the roofs over their heads or who may not have the best credit, could also participate in the solar wave — without having to purchase or finance panels themselves.
s of 2015, only a tiny sliver of all solar capacity in the United States fit into this category. But according to a new report from the energy think tank the Rocky Mountain Institute, the potential for community solar to expand is vast. The group said that as much as 30 gigawatts (or billion watts) of solar capacity, at the extreme upper end, could be added in this space by the year 2020, which would more than double all currently installed solar capacity in the United States.
Granted, that also requires a redefinition of what community solar is — the group calls it “community-scale” solar to denote mid-sized arrays, whether owned by a group of individuals or by a power company.
By this definition, “community-scale solar reaches millions of U.S. customers that so far rooftop solar has not or cannot,” notes the report. It found that almost half of all U.S. homes and businesses cannot have solar even if residents want it “because they rent their home, live in dwellings such as a multi-unit apartment building or high-rise condo, or have a roof unsuitable for solar.”A nation that combines innovation with responsive care and sound policy succeeds, and thrives.
Hence the size of this market: The Rocky Mountain Institute says it is larger than prior estimates for three main reasons. One, solar tax credits have again been extended; second, the price of the technology keeps falling; and third, the institute defines the market more broadly, to include offerings by different types of power companies, including rural electric cooperatives and municipal utilities.
“Community-scale solar is at a sweet spot between utility-scale and behind-the-meter solar,” says the document. “It is neither too big nor too small; it is just the right size to capture community and distributed energy benefits on the one hand and utility-scale solar’s economies of scale on the other.”
This follows on research published last year, which suggested that utility companies are getting quite interested in these types of programs — in part because they could allow them to give their customers a taste of solar without the risk of losing some of their business because they start generating their own rooftop electricity.
I am on record predicting that solar photovoltaic (PV) cells are eventually going to take over the world. That is to say, they will eventually become the world’s predominant source of power. I’m not crazy enough to try to predict exactly when — 2060? 2080? — but I think it will happen within the century. (For more on why, see this post.)
One of those reasons is simple: Solar PV is incredibly scalable.
Because individual solar cells are so small, it’s possible to scale a PV installation to almost any size or shape. If coal and nuclear plants are giant boulders, PV is like sand, sifting in to fill any crack, available building, structure, or piece of land. It’s possible to put a solar cell in a piece of glass the size of a coaster. It’s also possible to build a 2,400-acre, 290 MW power plant with PV panels (with larger plants to come soon).
Most notably, it’s possible to build at any size in between.
If you wanted to build a coal or nuclear plant, you’d be limited by capital to fund a plant, land on which to site it, and the patience and expertise to get through the years-long process of building it. A limited number of entities fit the bill.
By contrast, there isn’t one market for PV, there are dozens of them. At every scale, there are different customers, different incentives, different financing structures, and different value propositions.
The market for solar windows and building materials is different from the market for rooftop solar or commercial-building solar, which is different from the market for community-scale (0.5 to 5 MW) solar, the market for midsize (5 to 20 MW) solar, and the market for utility-scale (20 MW and up) solar.
This fluidity of solar PV isn’t fully appreciated in the US because the market has been somewhat crudely divided between (fairly small) residential and commercial rooftops and (fairly large) utility-scale solar plants — tiny or huge.
It’s only now that PV is starting to filter into those in-between markets in earnest, as legacy regulatory, legal, and financial structures are jury-rigged to accommodate it, in fits and starts.
How many shared solar projects are there? From a new report by Deloitte:
In 2010, only two shared solar projects existed [in the US]. Today 77 utilities administer 111 projects across 26 states, accounting for a combined capacity of about 106 megawatts (MW).
That’s a tiny base — less than 1 percent of installed solar PV capacity, according to GTM — but growth is accelerating.
According to RMI, if you include both types, community-scale solar could grow to 30 GW capacity by 2020.
Typically, customers “subscribe” to a shared solar project. Some subscribe to a certain amount of capacity (say, the output of one panel), measured in kW. Some subscribe to a certain amount of power, measured in kWh. The credit for the power appears on a customer’s utility bill.
Who runs these things? “Shared solar arrays,” writes NREL, “can be hosted and administered by a variety of entities, including utilities, solar developers, residential or commercial landlords, community and nonprofit organizations, or a combination thereof.”
Exactly who can build and run a shared solar project depends on whether it is located in a regulated or deregulated energy market (more on that in a second) and what type of utility service area it’s in.
Shared solar is overwhelmingly driven, at least at the moment, by customer demand. So it makes sense that the utilities most responsive to their customers — co-ops, where customers are also owners — are leading the way on shared solar projects.
There’s more. Recommend you read both articles if interested – and the Rocky Mountain Institute report is here.