As I’ve watched the residential solar energy market for the past year I’ve often wondered where it is heading.
Who will emerge as the dominant players?
Will the panel manufacturers ultimately control the industry or will those on the leasing and finance side?
How will rebates look in years to come?
Will the federal and local governments continue to support residential solar energy?
I’m not enough of a clairvoyant to be able to predict who will dominate the market, but I will say that there is some pretty amazing progress being made. Here are my favorite advances which I believe will continue to shape the future of the residential solar energy market by reducing the overall price and friction of going solar, and therefore increasing the adoption rate.
1. Micro-inverters and other parallel panel technology that allows each panel to perform at it’s best rather than bringing all the panels down to the level of the worst performing panel, as is the case with traditional inverters. Currently panels are usually hooked up in series and if one panel is only performing at 90% due to shading or something else, the whole system will be brought down to 90%. Whereas with parallel panel technology each panel performs at it’s optimal range and is not impacted by the panels around it. So if only panel was dirty and performing at 90%, the others could still produce at 100%. This can improve overall system performance by 5-30%. Or more accurately, it can avoid losses of efficiency that often run 5% -30%. Companies to look at in this space:
eIQ Energy – Parallel Solar
Enphase Energy – Microinverters
2. Packaged installation kits. I don’t mean DIY kits for homeowners to try to install themselves. I mean kits like Akeena Solar’s Westinghouse Solar kit (formerly Andalay Solar) and other similar kits. believe these will help drive down installation time and cost because they are delivered to the installer with all of the necessary parts, which means the installers won’t have to make one-off runs to the hardware store because they forgot this fastener or that bolt. That should help drive down costs by decreasing the installation time. The bulk purchasing of parts may also help drive down costs.
3. Solar Leases. Companies like SunRun, Sungevity, and SolarCity are all now offering solar leases of one sort or another. While the details differ between each of the leases (lease length, down payment amount, monthly payment, etc.) the idea is the same. instead of paying one lump sum upfront to buy and install panels, a homeowner pays a monthly fee to lease the system. The home owner won’t own the system, but they will get all of the power it produces, which in turn lowers their utility bill. The net effect is a reduced energy bill and a monthly payment for the use of the solar panels, which, when added together cost less than the homeowners pre-solar energy bill. Because the leasing company, rather than the home owner, owns the solar panels, the leasing company handles all maintenance and repairs of the system. The homeowner can have the system installed, then never have to lift a finger for the next 10-20 years.
One of the other benefits of a solar lease is that the solar leasing companies can purchase panels in bulk and or can negotiate better rates with installers because they do so many installations, and therefore can pass some of that savings on to the homeowner.
Lastly, lease payments do increase year over year, but they tend to do so at 2.5% a year, not the 6%+ a year that traditional utility rates are increasing so homeowners who select a lease are insulated from rising energy prices.
4. New excitement around clean, renewable energy. I wish it did not have to come to things as extreme as a coal mine collapse and the Gulf Coast oil spill to motivate people to take real steps towards renewable energy, but often it does take a catastrophe to get change to happen. If global warming and climate change are not concrete enough for some, I suggest they take a look at the Louisiana coast line.
5. Lastly, rebates and incentives. While New Jersey did cut one of their rebate programs as a way to make up a state budget short-fall, on the whole there are more and more rebate programs being put in place and that’s a trend that I believe will continue. For example, Oregon just put in a $0.65 per kWh feed-in tariff. That’s about as good as it gets! President Bush extended the 30% federal tax credit through 2016, and given how much President Obama has been talking about the importance of renewable energy now, I think President Obama will be likely to extend it further given the opportunity. While you’re at President Obama, how about putting a solar array on the Whitehouse?
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