Solar continues to be one of the fastest-growing sources of electricity generation in the U.S, according to the EIA. In just the last five years, solar has evolved to become even more accessible to businesses that are looking to reduce their overhead costs as well as their carbon footprint. Here are some factors that have driven this evolution.
According to SEIA, the price of installing solar photovoltaics (PV) has plummeted 45% over the past five years, with the average system price falling to just $1.25 per watt in 2020. These favorable economics have opened up more corporations to the idea of solar energy as a means to offset their utility costs as well as deliver on sustainability goals. More than 10,000 businesses in the U.S. have chosen to go solar, many of which are Fortune 500 companies. PowerFlex is proud to have helped some of the nation’s top-10 solar energy adopters, including Amazon, Target, and Facebook, hedge against the volatile price of carbon-derived electricity by installing solar energy systems at their facilities. Spurred by the continued affordability of installation, solar’s impressive growth shows no signs of slowing. Despite a slight dip in commercial installations last year due to the COVID-19 pandemic, the U.S. solar industry is projected to quadruple in the next 10 years.
The solar energy industry is constantly improving in terms of capabilities and cost effectiveness. One example is bifacial solar panels. While most solar panels in operation are monofacial — that is, they only absorb sunlight on the side that’s facing the sky — bifacial solar panels are also able to harness the indirect sunlight that’s reflected off the ground. Originally developed in the 1960s, bifacial technology has become more efficient over the years, and can increase the overall output of a PV system by as much as 10% under optimal conditions. Bifacial panels tend to be more expensive than monofacial panels, but the price discrepancy between the two has shrunk considerably since 2016.
Energy storage solutions have also become more effective and more affordable. The average price of lithium-ion batteries dropped by nearly 90% over the last decade (from $1,100 per kilowatt-hour to $137), and is expected to land at around $100 per kilowatt-hour by 2023. A driver of this change is the ascension of lithium iron phosphate, a specific type of lithium-ion battery chemistry that has significantly-improved thermal qualities and is made from raw materials that are more widely available. As a result, batteries are now being utilized more and more within solar-plus-storage systems, where solar energy from the PV array can be banked for later use, as well as in microgrid configurations that provide energy resiliency.
Incentives at the federal, state, and local levels have greatly encouraged the adoption of solar energy in recent years. The solar Investment Tax Credit (ITC) grants tax savings to eligible system owners, and currently stands at 26% of the total system cost. Enacted in 2006, the ITC has been extended numerous times throughout the years and has led to a 10,000% growth in the solar industry.
State-based Solar Renewable Energy Credit (SREC) programs have also been a big driver of solar growth. System owners are granted a SREC for every 1 MW of solar power they generate. These credits can be sold on state exchanges to other entities who wish to claim the use of renewable energy, making solar not only an energy cost-saving tool but also a source of revenue. Also at the state level, per-watt rebates may be available as part of “block programs” that parcel out incentives across a number of regions within a given state.
Net metering has played a significant role in the expansion of solar as well. This is a policy at the state- and local-utility level that provides solar energy producers with credits on their utility bills for any excess electricity they export to the grid after satisfying their onsite power needs. Solar policies are ever-changing, so be sure to check out PowerFlex’s roundup of major policy changes in key states for 2021.
As solar energy continues to improve and expand, finding a knowledgeable developer to help you navigate the changes is key. That’s why so many commercial and industrial clients have put their trust in PowerFlex, a company with more than a decade of experience in solar design, installation, finance, and maintenance. If you’re considering going solar at your business, reach out to us now to schedule a free consultation.