What Solar Power Needs for a Brighter Future

Solar power has been on a roll in recent years, as plummeting prices for solar panels and generous government incentives have helped to make it much more affordable.

Advocates are convinced the boom times have only just begun. They predict solar power will become even more attractive to consumers over the next two decades as prices decline further and new technologies lead to expanded uses.

"People won't think solar is novel 20 years from now," said Minh Le, director of the U.S. Department of Energy's SunShot Initiative, which funds solar technology research and development. "It will be so cheap that it will be on your house, your car, the back of your iPhone."

Perhaps, but we aren't there yet, and plenty of skeptics would argue otherwise. Solar power isn't economically competitive without government incentives, they say, and the variable nature of sunshine is a problem.

Even with solar power's rapid growth in recent years—the U.S. Energy Information Administration says solar generation capacity should reach 14 gigawatts by the end of this year, a more than fivefold increase from 2010—it remains a tiny part of the U.S.'s overall energy mix at less than 1%. That should rise to 4% by 2040, based on EIA projections.

Still, advocates say solar has a very bright future. Here is a look at some of the developments they say could help the rooftop solar market take off in the next two decades.

Prices continue to fall.

Why it matters: Polls have shown that consumers like the idea of using cleaner sources of electricity and producing their own power. But many are reluctant to pay the high cost of installing a solar system, so prices will have to come down further for solar to become a more common sight.

Installation prices for residential and commercial rooftop solar systems plunged 40% between 2008 and 2012, largely because of a supply glut, according to Lawrence Berkeley National Laboratory. Price declines are expected to continue, with the average installation price for a residential rooftop system set to drop to $2.88 a watt by 2017 from $4.45 a watt in 2012, according to GTM Research. At that price, solar may become attractive even for those who don't rack up high electricity bills each month, supporters say.

The solar industry also is expected to increase its use of long-term lease deals to entice those who may want to go solar but can't afford the upfront cost. The residential leasing market is forecast to grow to $5.7 billion by 2016 from $1.3 billion in 2012, says GTM.

The obstacles: The time it takes to recoup a rooftop solar investment depends not only on installation costs, but also on utility rates. Rapidly rising utility rates typically shorten the payback period, increasing solar's appeal. Stagnant or falling rates might change the equation.

The leasing market, meanwhile, will grow quickly only if banks and other investors are willing to increase their investments to finance the leases. Raising those funds remains a big challenge for solar companies because they need to show they can deliver the promised returns over time.

Continued solar-friendly policies and subsidies.

 

Why it matters: The recent boom in solar owes a great deal to state rebates and the federal investment tax credit that covers 30% of the cost of installing solar equipment. A policy called net metering also has been instrumental in helping the spread of solar-topped roofs. Net metering requires utilities to give homes and businesses credits on their utility bills, sometimes at retail rates, for whatever excess solar electricity they generate. While 43 states have net-metering policies, most have limits on the amount of power that can be sent to the grid.

Advances are needed for solar-heavy neighborhoods 
like this, in Richmond, Calif., to become more common.

 Corbis

Advocates say cutting government subsidies or mandates too much or too soon will squelch growth in the solar market. Germany became the world's largest solar market with help from a policy that requires utilities to pay for solar electricity at premium prices. Now those government-set prices are being reduced, and Germany's solar-energy installations are forecast to plummet by about half this year from 2012.

The obstacles: The 30% federal tax credit is set to fall to 10% in 2016, and its renewal is far from assured. Utilities, meanwhile, are fighting to scale back net metering. They say the policy benefits mostly affluent households and that customers whose electricity bills are greatly reduced each month are underpaying for grid maintenance.

 The development of ultrathin, high-efficiency solar cells.

Why it matters: The solar cells used to power satellites today are lightweight and more efficient at converting sunlight into electricity than rooftop panels. These ultrathin cells, made with such materials as gallium arsenide instead of silicon, convert more than 30% of the sunlight they absorb into electricity, versus 24% for the most efficient silicon cells. Packing more powerful cells into a limited rooftop space would boost the amount of power a building can produce.

The obstacles: Ultrathin solar cells cost a lot more—about $200 a watt wholesale, compared with less than $1 a watt for the silicon solar cells that populate most rooftop panels today. Until manufacturers find a way to make these thin, highly efficient cells more cheaply, they won't be brought to the terrestrial market.

Better energy-management technologies.

 

Why it matters: Solar electricity that isn't consumed on site usually flows into the grid, which must maintain a balance of supply and demand to avoid blackouts and other problems. Sudden infusions or drop-offs of power can destabilize the whole system.

There isn't enough rooftop solar today to cause trouble. But if solar generation reaches projected levels, the inverters that regulate the voltage and frequency of the electrical current flowing from solar panels to the grid—and the grid's communication network—will need to be improved. New inverters will have to respond quickly to signals from utilities and be able to tap energy stored in on-site batteries.

The obstacles: Building this kind of sophisticated communication network will require billions of dollars and coordination by government and private groups to upgrade the existing grid.

Finding profits in solar for utilities.

Why it matters: For most utilities, there is little reason to promote rooftop solar because every kilowatt of energy a homeowner or business produces is one the utility can't sell to them. If utilities can find ways to profit from solar, however, their size and reach could mean a dramatic increase in the production of sun power.

Utilities could, for example, use their long relationship with customers to sell solar-installation services. Or they could offer solar leases or power sales contracts, in which their customers essentially rent out their rooftops in exchange for a discount on their electricity bills. Some utilities have already begun to dabble in rooftop solar, and others have said they are exploring their options.

The obstacles: Utilities often need approval from regulators if they want to change the way they make money, a process that can be contentious and lengthy. If they decide to install their own solar-energy equipment on customers' properties, they will face competition from solar companies that have attracted consumers by convincing them not to rely only on their utilities for power.

Ms. Wang is a writer in Oakland, Calif. Email: reports@wsj.com.

Source:  http://online.wsj.com/news/articles/SB10001424052702304520704579129211308141046