What do you think the top US solar power states are? Would you guess Massachusetts or a much sunnier state like Florida? If you picked the former, you would be correct. New York, New Jersey, and Connecticut are some of the other top solar performers that are also fairly northern in their locations. Solar power’s success at the state level has much to do with how well it is supported with government incentives for consumers and businesses. Fortunately, solar power continues to grow even though the current federal administration is not supportive. Ben Zientara, a Solar Power Rocks lead researcher and policy analyst, answered some questions about the state solar power rankings for CleanTechnica.
Image Credit: Solar Power Rocks
Massachusetts is doing quite well with solar power installations. Is that because of a supportive state government? Absolutely. Massachusetts simply has some of the best state-level policy packages out there, and especially does well with its SMART solar incentive and Mass Solar Loan programs. In some ways, that state support for homegrown solar power flows from necessity—electricity in Massachusetts is expensive because the state currently gets so much of its energy from outside its borders.
EIA data shows that the state imports 12 times as much energy as it produces, which means its utility companies are paying a premium for electricity generated out of state. Having more distributed solar in the state makes sense, because it reduces the need to buy electricity from other places. It’s the same reason the state is investing in offshore wind development.
At the state level, what can legislators do to support solar power better? 1. Net metering 2. Solar Rebates 3. A Renewable Portfolio Standard law with solar carve-out and SREC or performance payment program. 4. Everything else (tax credits, tax exemptions, and low-income/community solar programs). Net metering ensures everyone who owns solar gets full credit for the energy produced by their panels, whether they use it or send it to the grid. Studies of the value of distributed solar energy show net metering actually gives solar owners less than the value they provide to the grid in states with low solar penetration, but net metering has the advantage of being really simple for everyone to understand and calculate. With full net metering nationwide, solar would provide a positive net present value in almost every state in the union at current installation prices. Rebates we like because they help everyone who goes solar by reducing the up-front cost. This is in contrast to tax credits, which generally only help people who have large enough incomes to have significant tax liability that can be offset by the credits. RPS laws are great to have as a vision of the future and a plan to get there, but the actual nuts and bolts of RPS laws usually don’t have a direct effect on solar savings for homeowners. At Solar Power Rocks, we focus on what helps individual people go solar because we believe in a distributed energy future. One thing Massachusetts does right, as we mentioned above, is the SMART solar program, which is a performance payment program (meaning it pays a premium to solar owners for every kWh their panels make). A direct incentive like that or an SREC market is a great way for homeowners to directly benefit from owning solar.
In the body of the scorecard page, it says “…state laws and Public Service Commission rules…” are what is holding solar power back in some states. Can you provide some examples and what exactly are Public Service Commission rules?
The full quote from that page is “The industry is still hamstrung by a patchwork of state laws and Public Service Commission rules.” It’s important to mention the “patchwork” part, because it’s key to understanding why solar is still more expensive in the U.S. than it is in other countries. Every state gets to set its own rules for how solar panels can connect to the grid (i.e. interconnection standards, one of our criteria), how much solar owners can be compensated for the extra energy their panels (net metering or otherwise), and whether solar installations are supported by tax breaks and incentives.
In the absence of smart lawmaking from a state legislature, a lot of the above is left to Public Service Commissions (PSCs, also called Public Utilities Commissions or Corporation Commissions). PSCs are generally responsible for approving utility rate schedules and making rules that govern how utility companies in the state have to act. When it comes to solar power for homes, PSCs can allow (or disallow) the utility companies to levy fees on solar owners and pay basically wholesale rates for excess generation.
The problem we were pointing out in that section is the patchwork of rules force solar companies to face complications with how they do business and where/to whom they can offer services. The lack of strong solar-positive laws introduces risk into the business environment, and the way businesses mitigate risk and uncertainty is to factor it into end-user prices.
Non-standard paperwork requirements increase labor cost, net metering offered in one city but not another nearby city reduces customer base, new fees levied on solar owners makes solar less financially rewarding and removes potential customers, etc. For example, the Kansas Corporation Commission enacted a demand charge for all new solar owners that increased bills by so much that adding solar to a home became a losing proposition there.
On top of the patchwork problem, many of the commissioners on state PSCs are often former utility company executives, in many cases appointed by governors rather than elected by the people of the state. PSCs are supposed to act for the benefit of the state’s ratepayers, which means basically everyone, but in some cases, it’s pretty clear that’s not the case. In Arizona for example, commissioners on the Arizona Corporation Commission have allowed the state’s largest utility companies to enact wildly different rate structures for solar owners, in some cases resulting in favorable solar economics for one family while their neighbors across the street face additional fees and charges for owning solar. At least one commissioner was caught sending back-channel messages to utility lobbyists during a contentious battle over these rate cases. It’s a mess of epic proportions, and now some lawmakers in Arizona want to change ACC commissioners from elected to appointed officials, removing an important check that the people of the state have on the power of the ACC.
Is there anything voters can do to engage with their legislators to let them know how important solar power is to them?
For sure. Read about state solar policy on our website, find out what your state does well and what it doesn’t, and then look to the excellent solar advocacy groups out there like Vote Solar and Solar United Neighbors.
Are you expecting that energy storage products will be paired with home solar systems more often going forward?
This is a growing trend, for sure, but it’s been mostly adopted by more wealthy solar owners, because battery storage is still expensive. California, though, is doing things right, offering its Self-Generation Incentive Program to reduce costs. And people there are also more quickly adopting storage there to prevent against the negative effects of the state’s mandatory grid shut-downs that occurred through fire season in 2019 and look to be on deck for 2020, as well.
Battery storage prices have come down 85% in the last decade, and just a few more years of similar declines will put home storage within reach of many more homeowners. With ultra-low prices for batteries, we could see solar-plus-storage installations that are economically smart decisions in states without good net metering rules, because solar-plus-storage allows people to fully remove their usage from the grid and instead generate and use all their solar energy.
The approaching presidential election is obviously quite important for solar power because of Trump’s resistance to renewable energy. How much better would the election of a Democrat be for solar?
It’s hard to tell, because for now, we have to take the Democratic candidates at what they say they’ll do, which often gets changed and watered down when it comes to the doing. I wrote an article in late 2019 about the 2020 Presidential candidates’ plans for solar, and it shook out like this:
President Trump has been bad for the solar industry. His administration fought for and implemented the Section 201 tariffs on solar modules from China and other places, and he hasn’t done anything to rectify the “patchwork of state laws and PSC rules” we discussed above. On top of that, his administration didn’t push for an extension of the successful federal solar tax credit.
The top Democrats when I wrote the article were Biden, Buttigieg, Sanders, and Warren (Harris dropped out the day I published the piece and Bloomberg hadn’t yet started spending his billions). Within this group of 4:
Biden has said some good things about solar in the past, but no concrete plans to implement big changes to move the needle on solar.
Buttigieg is much the same; he’s made some pretty lukewarm statements of support for renewable energy and has a climate plan that calls for broad strokes, but without much of anything specific. He does advocate for a nationwide Green Bank to do financing and grants for solar power, which is a nice idea.
Sanders has a bold vision to remake the nation’s power system with Federal power administrations that generate and sell electricity from renewable sources. He also calls for trillions of dollars in investments to help people all over the country (especially low-income folks) invest in energy efficiency and clean energy like solar. Sanders would likely move away from tax credits for home solar to direct grants and rebates.
Warren’s plans signal that she’d be for a major expansion of net metering and continuation of tax credits like the federal solar investment tax credit that has helped the industry for the last decade or so. It’s kind of a steady-as-she-goes approach with increases in federal support that Senator Warren estimates will spur additional private investment.
Do you expect that the cost of home solar systems will continue to decrease?
Yes. I’d say the continued decrease in prices is inexorable. Basically we’ve hit the point where unsubsidized utility scale solar is cheaper than any new form of generation in most of the world, which is going to continue to push new growth in the industry. When the cost of unsubsidized home solar and storage is below the price of paying an American electric bill, especially if a loan with a reasonable term beats a power bill, solar will explode in popularity. I think we’re still at least a decade away from that for much of the country, which is why we still advocate for smart policy and incentives.
Already in Australia, people are paying something like $1.50 per watt for the same kinds of installations we pay $3.00/W for here. Some people say the Federal Solar Tax Credit plays a part in artificially supporting higher prices here. I’m not so sure about that, but it looks like we may get a practical test of whether that’s true because it’s scheduled to sunset at the end of 2021.
Do you think there is more awareness that it is now possible to generate electricity with a home solar system that can also be used to charge and EV, so EV drivers don’t have to pay for electricity and can run their cars almost for nothing?
A little bit. A few years ago we made an infographic about charging an electric vehicle with solar power. Doing so was already cheaper than the grid then, and much cheaper and more environmentally responsible than paying for gas. In the next 5 years, we’re going to see EVs that act like “batteries on wheels,” charging from the sun during the day or overnight when electricity is the cheapest, and discharging during evening peak times after their owners return home. With a robust public charging infrastructure, that’s going to be a huge boon for solar, EVs, and electric bill savings.
At the state level, what conditions help support solar power the most?
The answer to this is similar to #2 above, with one big difference: electricity prices matter a ton in whether solar is financially viable today, far more than whether a place is cloudy or sunny. In southern states like Georgia, Alabama, and Mississippi, there’s tons of sun, but electricity prices are low because their systems run on lots of cheap, abundant fossil fuel. But in a less-sunny place like New Hampshire, which has high prices in part because they have to import a lot of electricity from other states, solar is hugely profitable, even without big state incentives.
Add net metering and straightforward interconnection rules to a state with higher-than-average energy prices, and that means good solar economics for homeowners. Anything else is icing on the cake and helps support people making the decision to go solar, which helps everyone in the state breathe easier and live in a cleaner, forward-thinking place.