Since its inception 10 years ago, the Greentech Media Solar Summit has offered a look back at solar, briefly assessed the solar present, and then taken a long view into the future. As always, this year’s conference had a wealth of solar analytic storytelling, with many excellent presentations by members of the GTM Research team. There was also a special guest who brought his unique perspective to the event: Richard “Dick” Swanson, co-founder and former CEO of SunPower, who shared his paradigm of the renewable energy transition. According to Swanson, we’re just getting started.
Phase 1 of the renewables transition is over
In Swanson’s view, there are three phases for the world transitioning away from fossil fuels, and we’ve accomplished Phase 1 in 2016 by driving down the cost of renewables to make them affordable. Congratulations to all the solar industry pioneers, utilities, commercial, industrial, residential, and other early adopters who helped make this possible.
As we’ll see, the GTM analysts offered some great data to back up Swanson’s claim, but if Phase 1 is over, now what? Swanson said the next phase—from 2017 to 2050—has the harder but more profitable goal of decarbonizing the electric grid. After 2050, we’ll tackle everything else and remove the lingering carbon footprint of transportation and heat-intensive manufacturing operations like steel and cement.
Looking back at part of Swanson’s Phase 1 transition, GTM Research Senior VP Shayle Kann showed in the next chart just how far we’ve come since 2000, when the first grid-tied inverters began to be deployed in the U.S. market. Not only have we made remarkable progress, but all the market sectors—residential, commercial/industrial, utility—saw dramatic growth in 2016, with the total amount of new installations in the U.S. closing in on 15 GW (DC).
But as far as we’ve come, we still have a very steep road to climb to accomplish Swanson’s Phase 2. Solar still accounts for only a small fraction of today’s electricity generation capacity. In the graph below, the grey area represents what we need to replace with solar and other renewables, and that sliver of black at the bottom is where solar is today.
Other challenges and solar opportunities
As Swanson’s paradigm notes, solar has become cost competitive all over the world, largely as a result of plummeting manufacturing costs and more efficient installation practices. This price drop has not been just a boon to the increasingly diversified group of utilities, businesses and other institutions adopting solar, but also to our solar installer partner networks.
For the first time, solar energy was the largest source of new generation capacity in the U.S. in 2016, outdistancing natural gas, coal and even wind. Kann said that even without the investment tax credit, in an increasing number of cases, solar has become the least expensive type of new energy for utilities.
Furthermore, GTM reports that heading into 2018, more than two-third of U.S. states will be at grid parity for rooftop solar. As the chart below illustrates, only a handful of states— including our own Indiana—still need to catch up, but most of the country now has the opportunity to take advantage of cost-competitive residential and commercial rooftop solar.
While all this data paints a very positive picture, recent political news may slow down our Phase 2 transition. Suniva, a U.S. module manufacturer that recently announced Chapter 11 bankruptcy, has filed a trade complaint that asks the International Trade Commission (ITC) to tack on tariffs that would raise the price of modules to dollar-per-watt-level pricing that we haven’t seen since 2012 in the U.S., which would raise the cost of solar installations across all sectors. If recent reports and the buzz at the summit turn out to be accurate, Suniva’s request will not be granted, but we won’t know until October or so, when the ITC renders its decision and the Trump Administration must affirm, modify, or reject that decision.
Solar in the near future
Assuming the Suniva case is rejected, GTM reported that module and system prices will continue to fall, moving the rest of the states closer to grid parity. Solar stands at 2% of U.S. generating capacity, and if all goes well, solar will account for 5.5% of our national grid by 2022.
Stationary storage will also begin to play an increasing role in solar and clean energy’s near- and long-term future. As with solar panels and other components, the cost of energy storage systems will come down significantly, and the various storage technologies will find an increasing number of economic use cases across the residential, commercial, educational, industrial, community, governmental, and utility sectors.
“Flexibility” was a key buzzword repeated by Kann during his discussion of energy storage, due to the increasing number of applications that storage is suited for. Not only will we be using batteries for our homes to offset the decline of net metering and to become more energy independent, storage will also be used to reduce demand charges and increase resiliency for businesses, universities and other sectors. It will also be deployed by utilities as a flexible, cost-effective alternative to natural gas peaker plants, the most expensive type of utility power plants that are always on standby and turn on to serve the grid when needed.
To achieve the big, hairy, audacious goals set out in Swanson’s Phase 2, many challenges remain. While storage will certainly play a critical role, we also need to have grid-management software that delivers distributed and centralized renewable energy to utilities when and where it’s needed. Without these smart storage and grid-edge software solutions, more solar may be generated, but it also may be curtailed if it cannot be harnessed as a flexible resource for all.
For full coverage of the GTM Solar Summit, we recommend you read the Part 1 and Part 2 recaps of Kann’s presentations on the Greentech Media website.
By Nathan Vogel, director of strategy, Inovateus Solar
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