For more than a decade, solar-powered energy has made a quiet but remarkable transformation. What was once a slow payback niche technology is now a high payback broad solution. At Soligent, we see this daily when supporting the thousands of solar installers across the country. Here are six surprising facts about solar.
Less Than a Six-Year-Payback Period
When solar first came to market, most businesses and home owners balked at the cost. However, in a stunning economic reversal, the price of turnkey solar has decreased almost 80 percent over the past decade and is expected to continue to fall. Today, most commercial solar investments are paid back within six years—and some are paid back as quickly as one year. (Most residential systems payback in eight years, though certain markets payback much faster.) To put this six-year period into perspective, you would get 19 years of free power on a system with a 25-year lifespan. For a business, this can easily be millions of dollars of savings. For a household, this is often upwards of $20,000 of savings. Beyond that, the cost of a large utility scale solar system is substantially lower than coal, oil, nuclear, or gas in many markets. Two utility-scale projects sold as power-purchaseagreements from a developer to the utility (one in Nevada and one in California) had respective energy prices of $0.035 per kilowatt hour for power and storage and $0.02for power alone. Lazard’s analysis of the levelized cost of energy for other fuel sources at scale are substantially higher and roughly $0.057 for coal, $0.109 for nuclear, $0.035 for gas combined cycle, and $0.142 for gas peaking large-scale plants. These are market transforming prices.
The Economics Continue To Dramatically Improve
Solar prices are expected to drop 71 percent by 2050driving a further wedge between solar and traditional electricity sources, while electricity prices are expected to increase approximately 2.5 percent per year, with many local markets seeing much steeper climbs in pricing.
Though the 30 percent federal tax credit for solar is decreasing by the end of 2021 to 10 percent for utility and commercial solar and 0 percent for purchased residential solar systems, almost all major research publications forecast that solar will continue its growth—even with the impact of tariffs on solar equipment. After all, technology cost reductions, huge efficiency gains, and soft cost reductions (permitting, installation, etc.) are driving the solar economy far more than offsetting tariffs.
Solar Is Emerging as the World’s Dominant Electricity Source
Last year, 45 percent of newly installed electricity production around the world was renewable, and 30 percent of those were solar. Moreover, Bloomberg New Energy Finance expects the electricity market to be 55 percent renewable by 2050.
Facilities that provide solar and storage allow for localized power production that can cover the base load needs day and night. Solar facilities are often closer to the point of need, faster to construct, and highly cost-effective, avoiding some of the expensive substation and line upgrades associated with construction of remote power plants that drive power over long distances. Just as cell phones circumvented the need to construct landline infrastructure, so the future of solar will leapfrog present energy delivery and storage systems.
Consumer and Business Trends Point Toward Solar’s Sustainability
Consumer and business sentiment are trending toward sustainable, renewable forms of energy. According to a recent survey by Edison Electric Institute, 70 percent agreed that we should produce 100 percent of our electricity from renewable energy sources such as solar and wind. More than 80 cities and 150 private companies—including Google, Ikea, Apple, Facebook, Microsoft, Coca-Cola, Nike, and GM—have committed to 100 percent renewables.
Beyond that, the EPA estimates that more than one pound of carbon dioxide is produced for every kilowatt hour of power produced by a power plant. For every home that goes solar, 10,000 pounds of carbon dioxide are saved per year per home. Less carbon dioxide equals less heat trapped in our atmosphere.
"Just as cell phones circumvented the need to construct landline infrastructure, so too the future of solar will leapfrog present energy delivery and storage systems. The future of power management is controlled by a home-app"
Energy Is Becoming Much Easier to Store
Thanks to skyrocketing consumer demand for electric cars, the automotive industry has focused its attention on research and development in battery chemistries, making the reliability and storage power of batteries much more favorable than a decade ago.
Consequentially, storage costs have fallen by 80 percent since 2010and are expected to continue to decrease. This has driven favorable economics for stationary storage, which allows organizations to have backup power or be completely off-the-electrical-grid and self-managed. With low cost storage, not only does solar electricity become 24 hours base load power, but the manner in which the electrical grid buys, sells, and balances power dramatically changes.
Storage installations are expected to more than double between 2019 and 2020and continue on a substantial growthtrend as prices decrease, efficiencies increase, and additional states realize the economic sense of deployment.
The Future of Power Management Is Controlled By A Phone-App
Though a few will still exist, large centralized coal power plants with backup gas peaking plants, all linked by thousands of miles of power lines and million-dollar substations, are disappearing.
Driven by the steep decline in the prices of storage and power, as well as the proliferation of electric vehicles, the future of power is this: Many smaller homes and businesses will power the grid and balance the local power markets.
In fact, a large industry is emerging in virtual power plants. Case in point: Sonnen recently won deployment of a virtual power plant in Utah of 12.6 megawatts. This shift represents an exciting move from economies of scale in the form of big power plants to economies of density in the form of technology-enabled local networks, which solve a variety of existing inefficiencies. Unlike their large-scale power plant counterparts, virtual power plants provide localized reactive and voltage support, frequency regulation stabilization and restoration, and dispatch flexibility.
Moreover, aged infrastructure must be replaced, which is costly. As a result, this technology-enabled segment is expected to grow at 29 percent through 2023.
In other words, the future of power looks much more like an app that controls your Nest than your monthly power bill.