What will further accelerate the adoption of solar?

Written By: Kyle Pennell, Content Manager at PowerScout
March 1, 2018

solar financing

Thanks to Kyle Pennell from PowerScout (a home solar marketplace that lets you compare multiple quotes for home solar) for contributing this article.
Since 2010, the solar power industry has seen a huge boom period, growing over 68% in just shy of a decade. Many governments throughout the world appear to have embraced this alternative and renewable power source as an answer to the climate change issues and over dependence on finite resources that have been plaguing the planet.

The US solar industry has done more than simply save money for homeowners on utility bills while decreasing their carbon footprint. It is also one of the fastest rising job creation industries in the nation, rising at a rate 17% higher than the national average.

But is this meteoric rise permanent? Will we continue to see accelerated solar generation in the future? Or has the American market turned on the solar industry, creating an environment that will halt its growth? What can we do as a nation to further accelerate this beneficial industry?

Stop Passing Laws that Hurt the Solar Market

US President Donald Trump often boasts about his ability to create jobs for the American people, however a recent tariff passed by his administration could see the loss of over 23,000 American solar jobs.

In January of 2018, Trump approved a tariff on all foreign-made solar panels, citing an inability for domestic manufacturers to compete with low cost materials coming out of Asian countries, like China and India. This tariff adds an additional 30% onto all imported panels, offsetting one of the largest contributors to the growth of solar power, affordability.

When you take note of the solar learning curve, you realize that, historically, as panel prices fall by 20% the industry sees a cumulative doubling in the number of installations. By increasing the cost of affordable panels by 30%, the president has effectively placed a cap on the solar learning curve, which has been steadily boosting the industry since 1977. (More on solar costs at PowerScout.com)

Trump, in his state of the union address in January 2018 touted his energy policy, while fabricating a war on “beautiful clean coal.” This tariff and those comments in his address illustrate a war on renewable energy by this administration, which seems to be favoring power that draws upon finite natural resources, like coal.
Time Magazine described Trump’s tariff as “the biggest blow he’s dealt to the renewable energy industry yet.”

Increase State Government Initiatives

Many state governments have embraced the solar industry and seek to make installations more affordable for their residents. Solar helps states reduce their carbon footprint and adhere to their individual solar carve out programs.
While many states have offered a number of helpful bonuses that will make solar far easier on the wallets of their homeowners, an alarming number still offer little to no aid.

If your state government is holding out on offering incentives, here are a few cost saving measures that you’re missing out on.

  • Property Tax Relief – Adding solar panels to a home increases its value. Normally such an advancement is accompanied by a bill from your local tax accessor. Many states have taken to eliminating property tax increases for solar customers, making their renewable power journey easier while maximizing their savings.
  • Elimination of Sales Tax – Another tactic many states have employed in helping their residents afford solar and hasten a return on investment has been the partial or complete abolition of sales taxes. In Manhattan for instance, there is a high sales tax rate of 8.88%. So, a solar system costing $20,000 would see an additional $1,776 tacked on after the fact. Eliminating this tax helps make solar a more affordable and beneficial experience, aiding both the homeowner and the state itself.
  • Net Metering – States with net metering incentives ensure that no energy produced by a solar power system ever goes to waste. Normally, if your system produces more energy than you need, you can sell that power back to the grid. Then, if in another month your solar system produces less power than needed to meet your needs, you’d have to buy additional energy from the utility company. Net metering is a process in which you can “bank” unused solar energy to use at a later date. Instead of selling energy back to the utility company, they simply hold onto it for you and, on a month in which your system output does not meet your needs, you can draw upon that saved energy before having to spend money on additional power.

Control Soft Costs

Another threat facing the advancement of solar comes in the form of soft costs. These are non-hardware related expenses which compose 64% of the cost of a solar installation. Soft costs are the greatest single threat to American solar affordability.

Some common soft costs, according to the US Department of Energy, include:

  • Permits – 2%
  • Permitting, Installation, Interconnection Labor – 2%
  • Sales Tax – 5%
  • Transaction Costs – 6%
  • Installer/Developer Profit – 9%
  • Indirect Corporate Costs – 9%
  • Customer Acquisition – 9%
  • Installation Labor – 11%
  • Supply Chain Costs – 12%

The high price tag associated with American soft costs continues to hold us back from the solar success enjoyed in European countries. In 2011, Germany was adding approximately $1.20 per Watt onto their installations from soft costs, whereas American installers were forced to tack on $4.36 per Watt.

Can We Succeed With Solar?

Creating a system in which soft costs are contained, all 50 states are offering incentives, and the federal government stops creating roadblocks could lead to increased solar advancement. However, this administration’s loyalty to fossil fuels brings the odds of such an endeavor into doubt, at least for the foreseeable future.
Unless we as a nation unite behind the renewable energy industry, we will be forced to watch the rest of the world benefit from the power of the sun, while we sit in a cloud of coal dust.

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