Data from a recent report by the Solar Energy Industries Association (SEIA) and GTM Research shows that the U.S solar industry is performing well so far in 2017. During the first quarter of the year 2,044 megawatts (MW) of solar PV were installed, reaching 44.7 gigawatts (GW) of total installed capacity, enough to power 8.7 million American homes. Solar now provides about 1.6 percent of U.S. electricity, and should reach 2 percent by the end of this year. The research projects that the industry will nearly triple over the next five years, surpassing 100 GW nationwide.
It is important to note that there are state level incentives in place for adding renewables to the grid. The 30 percent solar investment tax credit for example has been very helpful to the industry, and is extended through 2021. In addition, solar panels and solar power itself are getting cheaper, and the industry is becoming more and more competitive.
The U.S. is home to some major solar energy companies, like First Solar, Inc. (NASDAQ: FSLR), SunPower Corporation (NASDAQ: SPWR), NextEra Energy Inc. (NYSE: NEE), 8Point3 Energy Partners LP (NASDAQ: CAFD), Sunrun Inc. (NASDAQ: RUN), Vivint Solar Inc (NYSE: VSLR), TerraForm Power Inc (NASDAQ: TERP) and of course SolarCity Corp, which is now owned by Tesla Inc. (NASDAQ: TSLA).
Solar energy is an attractive alternative for several reasons. The industry creates jobs, lowers cost of power over time, but most importantly, it reducers the burning of fossil fuels. The long-term implications can be, quite literally, life-saving. A report by the National Renewable Energy Laboratory (NREL) called, “On the Path to SunShot: The Environmental and Public Health Benefits of Achieving High Penetrations of Solar Energy in the United States” discusses in detail the potential benefits from the industry’s increasing popularity.
“Reductions produce global benefits of $259 billion in the form of lower future climate change damages when applying a central value for the social cost of carbon (SCC), which is equivalent to a levelized benefit of solar of 2.2¢/kWh-solar. If, instead, solar is viewed as a way to meet future legal requirements to reduce carbon emissions—and therefore offsets the cost of complying with those regulations—then, under a medium trajectory for the cost of those future regulations, the SunShot Vision scenario yields $238 billion in savings, which is equivalent to a levelized benefit of 2.0¢/kWh-solar.” The NREL report explained.
“It is important to recognize that the environmental and health benefits of solar are strongly dependent on not only the amount of solar deployment but also the location of that deployment—solar that displaces higher-emitting coal generation has substantially larger benefits than solar that displaces lower-emitting gas-fired (or even wind) generation,” the research also indicated. “About two-thirds of total end-of- 2014 solar generation is delivered to California, and California accounts for roughly half of the recent total global GHG benefits. On a normalized ¢/kWh-solar basis, recent GHG-reduction benefits range from 1.9 to 3.2¢/kWh-solar depending on the region, when a central value for the social cost of carbon is applied.”
In fact, California has too much solar power, and other states are being paid to use it. New York Times has reported recently that California has produced so much solar power that on 14 days during March it paid Arizona to take excess electricity its residents weren’t using to avoid overloading its own power lines.
Yet, despite all the positive statistics, the long-term success of the solar industry is not guaranteed. There are reasons for concern. A Georgia based company called Suniva has been one of the most successful solar panel manufacturers in the country, but failed to compete against cheap panels brought from China and Taiwan, and filed for bankruptcy.
Competitors from Asia, which have flooded the U.S. with cheap panels, drove prices down 60 percent over the past five years, according to Bloomberg.
Somewhat Ironically, Suniva’s majority owner is a panel manufacturer based in Hong Kong, Shunfeng International Clean Energy, which bought a 64% stake in the company in 2015 for $57.8 million.
Bloomberg reported that Suniva invoked an obscure law to ¬initiate a government trade investigation. This law allows the president to unilaterally impose tariffs simply on a merit that imports are hurting U.S. manufacturers. Suniva is asking for import duties of 40¢ per watt for solar cells, which currently sell for 25¢ to 33¢ a watt. Taking into consideration that the current administration has loudly and proudly criticized current trade policies with China, there is a chance that Suniva’s lawsuit will prevail, which means the price of panels imported into the U.S. could double.
Much of the industry opposes Suniva’s filing. An increase in the price of solar panels may lead to a dramatic decline in sales demand that will result in thousands losing their jobs, especially in California. Abigail Ross Hopper, chief executive officer of SEIA, the industry’s main trade group, described this case as “an existential threat.”
In an unexpected turn of events, how bright the future of solar businesses will be now depends on the President of the United States, who, when it comes to energy, has shown great affection to the dying coal industry. Then there is the withdrawal from the Paris climate agreement.
Tom Werner, the chief executive officer of SunPower, told the Washington Post that Trump’s withdrawal from the Paris climate agreement poses “one more challenge” for the industry, but he remains optimistic in the long run. “I would say that it’s likely that the industry will sort that economic challenge out… I think the broader picture is still quite positive for solar, I just think there’s a little bit of friction by not supporting the Paris accord … and the general demeanor of the administration,” Werner said according to the Post. Werner’s optimistic view is based on what we have learned over this decade, that renewable energy and solar power is in high demand.