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How did solar get to where it is today? And how will the solar future pan out? John Farrell at the Institute for Local Self-Reliance has written an interesting history of solar economics which illustrates that an important part of solar’s past success will also be key to its success in the future.
The past, says Farrell, is characterized by subsidies and net metering: a revolutionary concept “allowing smaller scale arrays...to connect to the grid at low cost, and for that solar energy to be credited to the producer’s electric bill as though it were a comparable amount of energy conservation.”
Source: Institute for Local Self-Reliance
The present, he says, is marked by a new dynamic in solar economics, ushered in by solar growth and falling prices. “For the first time in many places, solar electricity from the rooftop is cheaper than utility-provided power -- without subsidies. And in particularly sunny places, the levelized cost of solar may even be below the ‘value of solar,’ meaning that solar energy producers...could make a return on investment just on these merits."
Source: Institute for Local Self-Reliance
This present phenomenon, says Farrell, will occur in different parts of the U.S. at different times, but will happen throughout the entire country within five to seven years. “What’s important to note is that there’s a convergence: the retail electricity price, the value of solar, and the levelized cost of energy from solar panels are all relatively close," Farrell notes.
As for the future, Farrell predicts significant political problems if policies remain unchanged. But the key to “the continued expansion of distributed solar power may rely on modifying a bedrock of distributed solar policy,” he says.
Source: Institute for Local Self-Reliance
“No matter the changes, it’s important that future distributed solar policy embrace the same principle as net metering: democratic access to the means of producing local energy with reasonable and equitable compensation.”
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Editor's note: This article is reposted from RenewEconomy. Author credit goes to Sophie Vorrath.