GTM Research Report Shows Significant Solar Gain
GTM Research has released its latest solar report, which found that 20 US states are at grid parity today, with 42 expected to reach that milestone by 2020.
“As installation costs continue to decline and retail electricity rates climb, residential solar economics have become increasingly attractive across the United States,” states the report.
The report is titled, “U.S. Residential Solar Economic Outlook: Grid Parity, Rate Design and Net Metering Risk.” About the report, senior analyst Cory Honeyman writes grid parity is calculated as follows:
“Residential solar reaches grid parity when the levelized cost of solar energy falls below gross electricity bill savings in the first year of a solar PV system’s life. While traditional grid parity analyses rely on average retail electricity rates to calculate customer savings, GTM Research used utility and state-specific rate design, system production and installation costs to more accurately gauge solar’s attractiveness.”
The impact of net metering rules
Honeyman adds that the realities of rate design and net energy metering will determine tomorrow’s solar economics
Foe example, when accounting for current net metering rules, rate design, and incentives, California, Massachusetts, and Hawaii lead the nation in residential solar attractiveness, meaning in each state solar can reduce an average customer’s electricity bill by 20 to 40% during the first year of system life. Conversely, GTM Research found North Dakota, Oklahoma, and Washington are the least attractive states for solar today.
While 20 states are currently at grid parity, the report also explores how rate design and reforms to net metering complicate the residential solar economic outlook in ways that can both strengthen and weaken rooftop solar savings.
“To date, the residential solar market’s growth has primarily come from a handful of states where favorable rate structures and net metering rules have set high, predictable ceilings on savings due to solar,” said Honeyman.
“But with more and more utilities reevaluating net metering rules and rate design, the residential solar economic outlook can no longer depend on a static policy landscape that fueled the nearly 1 million homeowners now with rooftop solar. Looking ahead, it is no longer a question of if, but rather, when and to what extent rate structures and net metering rules are revised.”
In this report, GTM Research details what might happen under several net metering reform scenarios. For instance, the report finds that if each state’s largest utility were to add a $50 monthly fixed charge for rooftop solar customers, just two states would remain at grid parity in 2016.
At the close of 2015 numerous states were considering changes to existing net metering policies. GTM reported regulators or legislators in 27 states were either studying or changing their net-metering policies in the 2015 third quarter.
Rationale for reviewing net metering pertained to the success of rooftop solar. Utilities in several states hit previously established net-metering caps, which called for a review of the policy.
The Nevada Public Utility Commission was more draconian in voting for radically modifying the state’s net metering policy.
According to Utility DIVE, “Several provisions have sparked anger from the state’s solar sector, including the controversial “grandfather” provision that incorporated 17,000 existing distributed solar users into the new rates and fees, along with the new users. Leading solar developers SolarCity and Sunrun ceased operations in the state shortly after the ruling, terminating more than 600 jobs. A group of rooftop solar customers also filed a class action lawsuit against NV Energy.
Graphic via GTM Research