Solar Energy: Changing the Balance of Power

AMA11-11-14The sun is rising on solar energy.

After a long stint on the fringes of the alternative energy movement, solar power is hitting the mainstream – and giving conventional utility providers a run for their money.

Solar energy was once the darling of the well off environmentally conscious homeowners who could afford to outfit their roofs with solar panel arrays, and off the grid activists who feared a malfunction of existing power grids.

But according o a new Bloomberg report, solar energy has achieved “grid parity” in the ten states that are responsible for producing 90 percent of US solar energy. Those states are led by the obvious choice, California but also including a surprising number of Eastern sources including New Jersey and Maryland. Here, solar has achieved parity in cost and availability with conventional utility supplied power.

Those states are not alone. New figures suggest that by 2016, solar energy is aiming to be as cheap – or cheaper- than conventional power in at least 47 of the 50 states. The rise of solar comes at a time when those traditional “in-grid” sources are raising costs, solar suppliers are offering packages that encourage middle and lower income homeowners to give it a try, and the government is offering a powerful (no pun intended) incentive in the form of a 30 percent tax credit.

That tax credit is set to expire in 2015, but it isn’t expected to vanish completely, so it will still help homeowners offset the cost of installing solar. What’s more, the emerging solar energy industry is creating jobs and encouraging the development of new technology with an eye to leading the energy industry for the long term.

And they may be right. The key difference between the solar industry and energy sourced from fossil fuels is that solar isn’t a resource. It’s a technology that continues to evolve and become cheaper and more accessible with time. The earth’s supply of solar energy won’t be depleted.

But fossil fuels are a resource – a finite one that will be depleted over time with no way to replenish supplies. The technology that makes these fuels accessible is limited too. And although interest in solar energy has typically peaked when gas, oil and coal prices are high, in recent years interest in solar has continued to rise regardless of the cost of those other fuels.

That rise in interest comes at a time when concerns about the environment are also at an all time high. Solar companies are taking advantage of the situation with more sophisticated marketing to a wider customer base and their own incentives, such as rebates, financing and cooperative arrangements.

All this has put conventional utility companies on the ropes. When solar energy was a pricy playtoy for well off eco-enthusiasts, no one paid much attention. But as solar power continues to steadily nibble away at the utilities’ customer base, these big energy providers are fighting back – and fighting dirty.

At issue of course is rising costs, but it’s also a question of relevance. As solar use increases, that means fewer users of power from the utility company. The company then has to raise its rates, which are then passed along to customers who don’t use solar – typically lower income households. And, utility company officials argue, reduced revenue means that the mainstream power grid could be in jeopardy.

To increase pressure on solar providers, utility officials in some of solar’s biggest markets, such as Arizona and California, have even sponsored ballot initiatives to change zoning laws and impose penalties for instilling solar panels on homes – effectively making it harder for consumers who want to make the switch to solar to do so.

Consumers are fighting back, though. In California, a group of solar companies joined with a number of physicians and environmentalists to form a coalition called CAUSE (Californians Against Utilities Stopping Solar Energy). CAUSE challenges the utility companies’ stranglehold on the power market on a number of fronts, claiming that solar is cleaner power that has benefits not just for the environment but also for consumers’ health, and that it’s ultimately more sustainable than conventional power sources.

The emergence of solar power has touched a number of consumer sectors. The demand for solar power has boosted the demand for materials and qualified builders. It’s also helped the housing market. Solar installations are a highly desirable feature that can boost a home’s saleability – and some home construction companies are offering solar options as a buyer incentive.

Solar power has come a long way in a very short time. Though it’s still a small percentage of the total power generated in the country, it has utility companies worried – and that may confirm its future as the leader in powering American lives.  (Top image: Flickr/evgeniydodorov)

Randall, Tom. “While You Were Getting Worked Up About Oil Prices, This Just Happened to Solar.” The Grid. Bloomberg Business. 29 Oct 2014

“The Utility vs Solar Fight: Why? What’s At Stake?” Clean Technica. 22 Aug 2013

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The American Monetary Association Team



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