Picking Solar Winners and Losers at Intersolar North America

A panel weighs in on industry trends

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The ample rains that ended California’s historic drought this year may have dampened the state’s residential solar industry, but the weather can’t claim as much credit as net metering changes.

That’s right — when it comes to solar’s success, it’s still all about policy, as illustrated by a panel on the North America solar market at this week’s Intersolar.

With 35% fewer installs in Q1 year over year, is California residential solar a loser? And who were the winners in 2016 – 2017?

Policy trumps — well, just about everything else

Stress about the slowdown of the residential sector has moved beyond industry insiders to the pages of the New York Times, which cited saturation of the California market as one cause. That’s too bad, because the negative press is itself a cause for the slowdown, according to Kelly Knutsen, Senior Policy Advisor at CALSEIA. Bad lead gen tactics haven’t helped either.

Still, the biggest culprit, not surprisingly, is policy. We can blame the weather, but Knutsen’s chart on the San Diego area — which had about the same rainfall this year as last year — shows what happened when Net Metering 2.0 kicked in there in the middle of its sunniest season:

Image courtesy of Kelly Knutsen

What’s often as harmful as bad policy is policy uncertainty. A looming uncertainty is the “national proliferation” of net metering and retail rate reforms, said Galen Barbose, a research scientist at the Lawrence Berkeley National Laboratory. That includes time of use (TOU) rates, which may be shifted in a way that would slow solar adoption.

Fixed charges can also have devastating effects on the rooftop solar market. While some utilities have proposed charges as high as $50 a month, that’s unlikely to happen, said Barbose — which is good, because it could reduce nationwide residential solar growth by 90%. Even more modest increases of about $10 could reduce the sector’s long-term growth by 15% nationwide.

Demand charges represent a serious threat for residential solar, said Barbose, since residential customers don’t have the ability to moderate those charges. When Salt River Project rolled out demand charges in 2015, that led to an abrupt dropoff in residential solar:

Image courtesy of Galen Barbose

And then there’s Suniva — speaking of uncertainty. Elizabeth Sluder, a partner at Morrison Foerster, noted that while uncertainty about the case isn’t freezing investment, it’s already slowing down solar development, something that’s been corroborated by more than one solar company.

What’s working in solar

Not surprisingly, policy is also a leading character in solar’s success stories. Sarah Wright, Executive Director of Utah Clean Energy, showed how strong policies moved Utah from an F to a double A in the Freeing the Grid assessment, and helped the state more than double its rooftop solar in the last few years.

Community Choice Aggregation (CCA) shows early signs of becoming a big success story in California, facilitated by a 2002 law that enabled the programs in the state. Already, 1 million California residents are part of a CCA, and CCAs now being considered would cover another 15 million — that’s about 40% of the state’s population. By some estimates, in 5 years, 60% of California investor-owned utility (IOU) customers will be part of a CCA. That means that a large percentage of California solar customers wouldn’t be subject to utilities’ rates and regulations, and it could open up more solar markets through programs like community solar and feed-in tariffs.

Image courtesy of Kelly Knutsen

Storage could also be a major bright spot — again, if we have the policies to support it. Storage is key to solar’s future success, and as Aram Shumavon, founder and CEO of Kevala, pointed out, storage can help balance local and system needs with customer needs.

According to Knutsen, nearly 1 GW of utility-scale storage will be installed in California by 2018, with another 130 MW behind the meter. He wasn’t the only one at Intersolar to declare that storage today is where PV was in 2007 — and we know what happened there.

Too soon to declare victory?

Andrew Beebe of Obvious Ventures believes “we should all be declaring victory right now.”

He conceded that we’re about to enter into “a whole new world of annoyance,” which includes, of course, the Suniva case. But he insisted that the planet is winning, small businesses are winning, and we’re on an “inexorable move toward 100% renewable.”

A nice note to end on, but as inevitable as clean energy seems to those of us in the industry, they don’t call it the “solarcoaster” for nothing. And most would consider the trade case more than an “annoyance.”

Just a day after a rousing social media push at Intersolar to support SB 700, which aimed to be a “California Solar Initiative for storage,” the bill was halted in the state Assembly. That underscores both the volatility of the policy landscape and the need to keep fighting to move clean energy forward.