What is the impact of Obama’s re-election on residential solar?


Now that President Obama has been elected to a second term in office, what does that do to your prospects for going solar at your residence?

Unfortunately, like with most things, the U.S. President does not have as much of a direct influence on our ability to power our homes with solar as we would like to think.

In 2008 when Obama stepped into office, renewable energy was one of his top priorities. Unfortunately, the healthcare debate took front and center for most of his first two years in office. While there was some movement on the renewable energy front, hopes of any major legislation to promote it nationwide were dashed after major Republican victories in the 2010 mid-term elections.

However, what many people don’t realize is that energy policy is ultimately handled at the state level. This makes sense because energy resources and their respective costs vary greatly from one state to the next. For starters, 29 states, DC and 2 territories (PDF map) already have some form of renewable portfolio standard (RPS) enacted at the state level. Furthermore, 16 states plus DC (PDF map) have “solar or distributed generation (DG) carve-outs” that specify that a portion of that requirement comes from solar or DG.

While Obama and Congress could potentially institute a national RPS, they would be met with a lot of resistance if they were to try to mandate specific types of energy for every state. For example, the aesthetics of requiring both New Jersey and Arizona to utilize the same amount of solar energy instead of letting them choose their own energy mix would seem very inefficient.

In reality, solar is just as viable in both places. In fact, New Jersey has more solar capacity installed than Arizona – though to be fair, it is mostly due to a successful SREC inventive program! Despite the obvious sunshine disadvantages, solar works just as well in New Jersey because densely populated areas have plenty of roof area, distributed, peak-hour solar generation in dense areas help reduce the costly need to power up auxiliary power plants and, most importantly, retail electricity rates that are being displaced are over 50% higher in New Jersey than in Arizona, effectively canceling out the production advantage of solar in the southwestern desert over solar in the northeastern marshes!

As for solar at the federal level, the U.S. Government has invested in technologies that will hopefully reduce cost of the solar equipment. The most infamous example is Solyndra, but it was a small fraction of a successful program run by the Department of Energy. That program was also responsible for the world’s largest wind farm and several of the largest solar projects on earth. Many of the other investments by the DOE have supported software firms looking for ways to reduce the red tape involved in installing a project and to solar installation firms who can prove that they can bring down install costs. These are important programs, because, as we noted in an earlier post, while the technology costs are coming down here and abroad, the U.S. still has a long way to go before the actual installation costs are competitive with solar-friendly countries like Germany.

These Federal programs are each making incremental improvements to the economics of solar, that, in aggregate and in the long-run, will make the U.S. among the most competitive in the world when it comes to installing solar. That said, what really moves the needle for individuals who want to put panels on their roof today or sometime in the near future are local programs.

That is where state energy policy comes into play. From 2005 to 2010, 8 states commenced programs pushing forward solar energy carve-outs. Unfortunately, this momentum was cut short when solar energy advocacy became a casualty of the Tea Party wave that brought many anti-spending lawmakers into office. Since then, other than incremental improvements to existing programs, little has been done to push solar forward at the state RPS level outside of these 8 states. These are the types of policies that affect you, the home owner, and are a major reason why solar is popping in residential neighborhoods in states like New Jersey, Massachusetts and Maryland, while opportunities in other states like Florida, Georgia and Oklahoma are relatively non-existent.

Second, many of the “soft costs” involved with installing solar come from local permitting, interconnection and net metering laws. The permits required to install solar on your own roof, the rules around connecting to the electricity grid and the policies governing your ability to be sell unused power back to your utility all vary from state to state and can add significantly to the costs associated with installing a solar system. FreeingTheGrid.org provides an excellent summary of the challenges that prevent the nationwide proliferation of residential solar.

While it is great to have the support of a President who views solar as a serious part of our energy future, the most important thing we can do as citizens is pay attention to the people we elect to our state legislatures. The benefits of solar cater, in one way or another, to nearly every type of person across the political spectrum. Whether you’re a libertarian who wants to be freed from the grid, an environmentalist who wants to reduce our carbon footprint, or a conservative who wants to reduce our dependence on foreign energy, solar is a very tangible and accessible way to accomplish our collective goals. Voters clearly support solar but we need to see that convert to action in state legislatures.

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