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The Prodigious Growth of On-Site Solar Energy

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Led by home solar energy, there is a revolution in on-site renewable electricity generation underway in the U.S.  The process of generating electricity from small energy sources is called by a number of names, including distributed generation, dispersed generation, embedded generation, decentralized generation, decentralized energy, distributed energy or district energy. These energy systems commonly employ small-scale power generation technologies, typically in the range of 1 kW to 10,000 kW.

The benefits of small scale local generation over large centralized energy production are numerous and include minimized environmental impacts. Locally produced energy does not need to travel long distances which reduces the amount of energy lost in transmission and eliminates the need for extensive power lines. On-site smaller scale energy generation affords greater supply security, lower maintenance requirements, lower pollution and higher efficiencies.

The growth of on-site solar energy is rapidGrowth of rooftop solar

While solar power has been growing fast in the U.S. the growth of rooftop solar has been spectacular. In addition to providing a clean source of energy, solar pours $15 billion a year into the U.S. economy and provides thousands of jobs.

According to GTM Research and the Solar Energy Industry Association’s (SEIA) “Q1 2014 U.S. Solar Market Insight Report, for the first time in the history, residential solar installations surpassed commercial installations in the first quarter of this year. During this time a total of 232 MW of residential PV were installed, compared to 225 MW of commercial solar. What makes this even more remarkable is the fact that this occurred in the first three months of the year, a period which is historically the weakest in terms of solar installations. A third of this power came online without any state incentive,

GTM has predicted that the residential market will continue its upward trend and outpace the non-residential market on an annual basis as soon as 2016. GTM forecasted  6.6 GW of installed photovoltaics (PV) in 2014, which represents an increase of  39 percent over 2013 and nearly double the market size in 2012.

According to a report from Pike research, the distributed solar energy generation market will increase from about $66 billion in 2010 to more than $154 billion annually by 2015. This represents an annual growth rate of 18 percent. During that period, the total installed capacity of distributed PV will rise from 9.5 GW to more than 15 GW.

One of the chief drivers of this growth is declining costs. The price of solar is now becoming cost-competitive with traditional energy sources. From the first quarter of 2013 to April 2014, the price of a residential system declined 7 percent from $4.91 per watt to $4.56 per watt.

There are also a number of solar-friendly policies including incentives which are helping people to generate on-site solar power. As revealed by the Center for American Progress, middle class families are the ones who are adopting solar power in record numbers in the U.S.

In addition to declining prices and government policy support, Pike attributes the growth in homeowner investment in PV to leasing programs and purchase power agreements. Leasing programs have the advantage of very little or no up front costs while purchase power agreements allow developers to lease commercial rooftop spaces and install solar PV systems.

DOE – Rooftop Solar Challaenge

Through the Department of Energy (DOE), the U.S. government is actively involved in spurring innovation and reducing costs with the aim of expanding on-site solar energy. In 2012, the DOE launched the Rooftop Solar Challenge which aims to “reduce the cost of rooftop solar energy systems through improved permitting, financing, zoning, net metering, and interconnection processes for residential and small commercial photovoltaic (PV) installations.”

As part of the Rooftop Solar Challenge, the DOE awards grants to companies, universities and nonprofits to make it easier for Americans to go solar.

“Today, solar modules cost about one percent of what they did 35 years ago, and permitting and interconnection are an increasingly large portion of overall solar system costs,” DOE secretary Ernest Moniz said. “Through the Rooftop Solar Challenge, the Energy Department is helping to make the deployment of solar power in communities across the country faster, easier and cheaper–saving money and time for local governments, homeowners and businesses.”

State Support

States are also increasing their support for on-site solar.  For example, in July 2013, New York Gov. Andrew Cuomo awarded $54 million for on-site solar projects in the second round of his NY-Sun initiative. These projects will be located in businesses, factories, municipal buildings and colleges. Together they will add 64 MW to the state’s solar capacity.

On-site solar projects are a great way for States to meet air quality standards and forthcoming EPA rules on power plant emissions.

Energy Storage

Energy storage in the form of large banks of lead-acid batteries are a traditional obstacle to on-site energy, particularly for home based generation. There are now more compact, cost effective and efficient lithium ion battery storage systems. Home storage systems also employ advanced electronics and software control systems to further reduce costs and increase functionality.

Alternatives to rooftop solar

According to the NREL, nearly 80 percent of homeowners do not have a suitable roof for solar panels. For these people as well as those who are concerned about up front costs, or who simply do not want the added responsibility, there are other ways they can still support the growth of solar. There are several alternatives to rooftop solar that are ideal for homeowners with unsuitable roofs, renters, schools and businesses.

In Vermont, Massachusetts and nine other states, people and organizations can go solar through utility bill credits. These states may soon be followed by New York, where State Energy Committee Chair Amy Paulin has introduced the Shared Clean Energy Bill (A.9931). The bill would let New York residents subscribe to a local renewable energy project elsewhere in their community and receive credits on their utility bills in return.

Another rapidly growing alternative is called community solar. This enables people to buy or rent panels in a centralized solar array.

Consultant and NABCEP board member Carl Siegrist envisions “a day in the not-too-distant future, where every new building is designed and built with solar installed…I think the dominant piece will be solar on the buildings where people are living and working, but there will continue to be a role for community solar—because not everyone can put solar on their property.”

Utilities are concerned that rooftop solar is undermining their business models and this is sparking fights over net metering in states across the country. Despite this fact, home powered renewable energy continues to grow at a prodigious rate.

The combination of technological advancements, increasing public awareness, decreasing cost, rising demand, government policies, better energy storage, flexible financing, and ongoing innovation, will continue to drive the growth of on-site solar.

Distributed solar energy is an ever expanding part of a clean energy future and it could completely change the energy paradigm when it achieves grid parity.
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Richard Matthews is a consultant, eco-entrepreneur, green investor and author of numerous articles on sustainable positioning, eco-economics and enviro-politics. He is the owner of The Green Market Oracle, a leading sustainable business site and one of the Web’s most comprehensive resources on the business of the environment. Find The Green Market on Facebook and follow The Green Market’s twitter feed.

Image credit: ATIS547, courtesy filckr

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