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Based on the Rooftop Revolution report by John Farrell who directs the Energy Self-Reliant States and Communities program at the Institute for Local Self-Reliance and he focuses on energy policy developments that best expand the benefits of local ownership and dispersed generation of renewable energy. Reach John on Twitter @johnffarrell or by email at email@example.com
Rooftop Revolution: Changing Everything with Cost-Effective Local Solar
With the cost of solar power plunging and retail electric prices rising, 100 million Americans in the nation’s largest cities will be able to “go solar” for a lower price than grid electricity in the next ten years. Seizing this opportunity requires rethinking electricity policy and planning even while solar produces less than 1% of the nation’s electricity. Investments in new centralized power plants and transmission could divert billions of ratepayers dollars from a democratization of the electricity system.
At the same time, energy subsidies — for fossil fuels and solar energy — must be gradually transformed into barrier-breaking incentives that maintain the pace of growth and push solar into all corners of the country.
One Third of Americans Reach Solar Grid Parity by 2021
Nearly 100 million Americans could install over 60,000 megawatts of solar at less than grid prices — without subsidies — by 2021.
The solar opportunity is driven by converging economics: the installed cost of solar has fallen 10% per year since 2006 and grid electricity prices have averaged a 2% annual increase in the last decade.
If the trends continue, there may be an outbreak of economical solar. The following chart illustrates the number of Americans (from the top 40 metropolitan areas) that would be at solar grid parity and the potential amount of solar capacity that could be added to the grid at less than retail electricity prices in the next decade. Nearly 100 million Americans could install over 60,000 megawatts of solar at less than grid prices — without subsidies — by 2021.
The potential for solar grid parity may be much larger than the chart suggests because it is limited to residential rooftops in the top 40 metropolitan areas of the United States.
Expanding the analysis to the entire country, and to non-residential rooftops, could more than triple the solar potential and drive down costs.
Furthermore, innovative time-of-use electricity pricing could help advance the year of the solar crossover.
Democratizing the System
The opportunity of solar grid parity goes beyond the benefits of solar power for the masses. It suggests a future that transforms Americans from energy consumers into producers and gives them a stake in electricity production and energy policy. Each house with a solar rooftop has (on average) two voters who will strongly support smart solar policies. And when half of Americans can install solar for less than the cost of grid electricity, it makes a majority that favors local ownership of localized energy production long before solar power becomes a significant portion of total electric generation.
Policy Can Overcome Technical and Regulatory Barriers
A major technical roadblock to realizing the full potential of solar grid parity is the so-called 15% rule, a common state regulation that limits the amount of solar on a utility’s distribution grid to 15% of the peak demand. However, recent research shows that the 15% rule is too conservative, and that there are minimal impacts when distributed solar supplies 25% or more of the power to the local electricity grid.
The best transition policy may be a feed-in tariff, as is used in solar-leading countries like Germany.