Extreme weather and higher electricity prices are leading American households to bolt a record number of solar panels to their rooftops, loosening ties to the power grid and the utilities that run it.
About 5.3 gigawatts of residential solar power capacity are to be installed this year, the biggest year for new installations and roughly equivalent to total rooftop solar capacity nationwide in 2015, the US Energy Information Administration has forecast.
Installations jumped about 40 per cent year on year with about 180,000 US homes adding systems in the second quarter, according to the latest data compiled by consultancy Wood Mackenzie.
Home electricity prices are forecast to rise 7.5 per cent this year after climbing 4.3 per cent last year, according to the EIA. Rates have climbed largely because of higher prices for natural gas used to fuel power plants.
“You’re going to continue to see some pretty big increases in monopoly utility bills over the next few months and quarters and we’re seeing growth because of that,” said John Berger, chief executive of Texas-based Sunnova, one of the US’s largest rooftop solar installers.
Executives and analysts also point to the numerous storms, heatwaves and fires across the country that have exposed deep vulnerabilities in the reliability of power grids across the US. Hurricane Ian last month knocked out power to 2.6mn customers in Florida. The storm came just days after Hurricane Fiona caused blackouts in Puerto Rico.
“In Puerto Rico right now, sales are just vertical . . . they’re just off the charts. I expect that is what’s going to happen in Florida behind this storm [Ian]. It’s just natural human emotion,” Berger said.
More households are pairing solar panels with back-up batteries that can keep the lights on when the sun is down during outages, in addition to saving surplus energy for later use. About 20 per cent of home solar installations include battery storage, a share that has roughly doubled since 2020, according to EnergySage, a solar market research group.
On his house outside of Houston, Kevin Lee said he installed solar panels and a Tesla Powerwall battery after a severe winter storm knocked out much of the Texas power grid in February 2021.
“I never wanted to go through something like that again, and having this really does make us feel safer when there are storms coming, whether they’re hurricanes or freezes,” he said.
A US energy department study on how to hit its goal of making the economy net emissions free by 2050 found that as much as 200GW of rooftop solar could be deployed by the middle of the century, up from about 26GW now. It said about 10 to 20 per cent of total solar capacity deployed would be bolted to rooftops.
Mary Powell, chief executive of Sunrun, the largest US home solar installer, told the Financial Times the company was easily outpacing its projections of 25 per cent growth in installed capacity it had expected for 2022. “We’ve had some of our highest sales records as a company ever in the last couple of months.”
Even as it expands, rooftop solar only accounts for about 1 per cent of total US power generation. Residential systems are also dwarfed by large, “utility-scale” solar facilities, typically built on the ground in vast arrays that feed directly into the grid. The EIA expects about 21.5GW of large-scale installations this year.
Sunny southern states like California, Florida and Texas are the fastest areas of growth.
The upfront cost of home solar systems is about $20,000, according to the Solar Energy Industries Association, a trade group. Customers are able to defray these costs with loans to lessen the upfront expenses as well as state and federal tax credits. The recently passed Inflation Reduction Act raised the federal tax credit available for new installations to 30 per cent, or about $6,000 off the average system.
Homeowners in some states are also able to defray expenses through “net metering”, which requires electric companies to buy excess energy generated by solar systems. The policy has triggered a backlash from utilities, which argue it is unfair when homeowners are paid for producing electricity but do not have to share the costs of operating and maintaining the grid. Utilities also fear that rooftop solar could dent demand for their electricity.
California’s public utility commission is expected in the coming weeks to announce new net metering rules that solar advocates fear could reduce incentives for rooftop solar.
In April this year, Florida governor Ron DeSantis, a Republican, vetoed a bill passed by lawmakers from his party that would have rolled back the net metering solar incentive. He said he did not want to impose new costs on Floridians amid rising inflation.
The fight over home solar energy has exposed splits within the clean energy industry. One of the backers of the vetoed bill was utility Florida Power & Light. FPL is a subsidiary of NextEra Energy, which also owns the US’s top developer of large-scale solar and wind power projects and has declared aggressive goals to end its carbon emissions. The company did not respond to a request for comment.
Sunnova’s Berger said the utilities were defending a “Soviet-style” system that prevents competition in the power sector because they worry that the growth of home solar will eat into their market.
“Consumers don’t have choices. They don’t get to choose their power provider, and I think they should be able to and I think more and more people are demanding that,” he said.
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Source: Financial Times