STATE OF THE SOLAR INDUSTRY
Every year at about this time, the President of the United States gives a “State of the Union” address, so it seems like a good time to go over the State of the Solar Industry. Unlike a typical solar system, the solar industry has a lot of moving parts, and the only constant in the industry is change. What was true three years ago, is not necessarily true today. Therefore, it is important to keep up to date on what is going on in the industry.
The first issue that is on a lot of people’s minds is the solar tariffs that have been announced by the Trump administration. The industry has been watching this trade case for quite some time, so the announcement didn’t really catch anybody off guard. There is currently an appeal underway to try to stop the tariffs, but even if they go through, they won’t have too much effect until the latter part of the year when current module supplies run out and companies have to bring in more modules. Even then, costs for residential projects will only increase minimally. The real impact will likely be felt in large commercial and utility-scale projects. These projects, which can require thousands of panels, are more sensitive to even the smallest increase in the cost of materials since it is multiplied over such a large scale. Because of this, many large-scale projects have been put on hold. The tariff situation has caused uncertainty, and business doesn’t like uncertainty. On a positive note, one Chinese company has already announced plans to build a manufacturing plant in Florida, and other companies have stated that they would review whether or not it would make sense for them to move at least a portion of their manufacturing operations to the United States. So even though manufacturing is a small component of solar jobs in the United States, it is nice to see new jobs being created.
It is important to note that we are down to the last two years of the 30% Federal Solar Tax Credit. The tax credit, which was initially established in 2005, has had a huge role in the growth of the solar industry. Homeowners have taken advantage of the tax credit to make solar more affordable and reduce the time it takes to break even. Investors have made money by financing leased solar systems and then pocketing the tax credit. The tax credit has also made solar more competitive with natural gas for utility-scale solutions. It will be interesting to see how the industry adjusts once the tax credit is reduced, but at least we know it is coming and can plan accordingly.
Homeowners who have wanted solar, but have been dragging their feet, will want to get the process started. Two years may seem like a long time, but it will go by pretty fast. In order for a homeowner or company to be eligible for the tax credit, their system must be in service, meaning installed and turned on, by 11:59 pm on December 31, 2019. If you have any questions, ask your tax professional.
Changes in what the utilities are doing have always had a huge effect on the solar industry. Until battery technology improves, homeowners who install solar must do it under the terms set by their electricity provider. 2017 saw the end of net metering for the three main, investor-owned utilities in California. Net Metering 2.0 is now the norm, and while there have been some extra costs added to those that go solar, it still makes financial sense. The major change coming this year is that the major utilities in California will begin transitioning customers to time-of-use rates, meaning homeowners will pay more for their power at certain times of the day. The utilities are offering different plans designed to fit different needs, but homeowners will need to do their due diligence to make sure that they end up with the plan that is right for them. Southern California Edison will allow customers to switch back from time-of-use to an alternate plan, but once they do, they must remain in that plan for at least eight months. If you are a homeowner going solar under Net Metering 2.0, you will have to be on a time-of-use rate plan.
There are definitely some exciting technological developments in renewable energy set to be released this year. Most notable is FreeVolt USA’s PV Graph™ technology that is coming to their solar modules. This will replace the busbar technology that most companies are currently using. While FreeVolt has already started integrating PV Graph™ into their modules, full PV Graph™ modules will be available sometime in the second quarter. PV Graph™ will revolutionize the solar industry in several ways. First, the panels will be much more efficient. Today’s top panels have about 22- 24% efficiency. PV Graph™ panels will reach 30-35% efficiency. The output of the panels will also be higher than any other module on the market, reaching up to 450 watts per panel. In addition, the panels will also be more durable with less degradation over time, especially in the harsh heat conditions of Southern California. Even with all of these improvements, there will only be a minimal increase in the cost of the modules, which are already priced competitively with lower quality modules. FreeVolt USA’s PV Graph™ systems will come with their industry leading 30-year warranty.
2018 is going to be an eventful year in the solar industry. While some might argue that the industry is down, it is simply changing like it typically does. Companies that are able to adjust will survive, while others like FreeVolt USA will drive the industry to new heights.
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