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Reason-behind-booming-US-Solar-Industry

Reason behind booming U.S Solar Industry

Posted on Aug. 23, 2019 by Sanghamitra Sinha Chowdhury

The decade 2008 to 2018, shall be inscribed in the history of the United States’ clean energy growth and deployment in various sectors. There had been, over the years, a 39-fold growth in annual solar generation, an increase of 75,132 gig watts. Annual wind growth of 5-fold, an increase of 198,891 gig watts. In 2017, total wind and solar power generation were 331,351 gig watts which were enough to power 30.8 million homes. Utility Battery Storage capacity was increased by 666 megawatts. As a matter of fact, no other country in the world has ever initiated and been able to execute “Green living” at such a steady growth. Today, even a blue-collar worker in North America can afford all kinds of renewable facilities within his reach. Consumption of fossil fuels such as coal, natural gas, and petroleum saw a rapid hike of 4% in 2018 and accounted for nearly 80% of U.S. total energy consumption. The fast adoption of wind and solar power and energy efficiency technologies made it clear in front of our naked eyes that, a transition to a clean and renewable economy can be within our reach. Not only this, even the battery storage technology industry is poised for growth. Energy storage technologies have done a lot in preserving the energy generated by wind turbines and solar panels. Thus, with the support of storage technologies, wind and solar energy have grown exponentially over the years.

What are the Initiatives Taken by the US Government to Promote Green Living?

The United Nations Conference on Sustainable Development (Rio+20), happened with respect to the two major global concerns. They are “Green Economy” apropos sustainable development and poverty eradication. Had the governments not agreed to join hands in the general principles and priority areas that will guide implementation of the green economy at all levels, the aftermath in the U.S would not have been like what it is today! Enactment of various green economy policies added further to the whole system. Tax credits, rebates, and savings during sales tax holidays are also there.

  1. Database of state incentives for renewables and efficiency (DSIRE) - Find programs and policies in your state that support renewable energy and energy efficiency.
  2. Department of Energy (DOE) – tax credits, rebates, and savings - Find savings that may be available for you or your business in your state.
  3. Offers and rebates from energy star partner - Search for rebates on certified energy-efficient products and other special offers in your area.
  4. Residential renewable energy tax credit - Qualify for tax credits for buying solar-electric, solar water heaters, wind turbines, geothermal heat pumps, and fuel-cell equipment for your primary residence. The investment tax credits are now extended far 2021. The value on the amount of discount is likely to go on decreasing throughout the period, till its extinction.
  5. Sales tax holidays - Find out if your state offers a sales tax holiday for buying energy-efficient appliances.

Key Challenges

The US-China trade war had a lot of impact over the prevalent solar industry. President Trump’s tariff-threats led to the downfall of the industry to a great extent. In fact, trade tensions might continue to impose threats on solar stocks for the short term. Monday, 5th of August, the US solar energy solution provider stocks witnessed one of the biggest falls. Last week, the solar energy stock soared the peaks through the hands of upbeat earnings guidance for the second half of the year. But on Monday, the stocks declined for the first time in several months and fell almost 6%. As mentioned at the beginning, the US-China trade war got intensified last week, and consequently, the US solar industry had to redeem for Trump’s deliberate actions. He announced a 10% additional tariff on the remaining 300 billion dollars of Chinese goods. China retorted with constricting its currency to a decade-low. This was done with the intention of making China’s export mechanism lucrative (imposing a counteracting effect on the US solar industry). On Monday, First Solar (FSLR) stock fell 7%. SunPower (SPWR) incurred a loss of 11%; Enphase Energy (ENPH) had the top loss of approx. 6% among other famed solar stocks! Now several companies in the U.S. solar industry are assisting on lawmakers for having a hold on the solar ITC, which was passed by a Republican-controlled Congress in the 2005 Energy Policy Act. Due to the hazardous situation that the US solar industry has been facing since last week, (SEIA) sent a mass-petition to Congress (signed by nearly 1,000 solar companies across the U.S) urging them to kindly extend the investment tax credits scheme. As it is proudly known as one of the most successful clean energy policies in history.

Current Trends in Solar Energy

By the end of 2017, more than 2% of America’s net electricity has been totally solar power – generated, which is, on an account enough to power nearly 7 million American homes. Also, in 2017 electric vehicles broke past 100,000 in annual sales for the first time. This should be the biggest answer when we are asserting that solar energy is indeed not only a rising topic in America but also it has got a long way to go in the future. Ironically, today the net energy consumption of America is far less than what it was in 2000, when the country had 44 million lesser inhabitants. Clean energy technologies are booming across America over a decade, when the nation’s solar rooftops and utility-scale power plants produced 0.05 percent of its net electricity, which was, at that time enough to lit 180,000 average American homes. Many other countries around the world have taken inspiration from the third largest country in the world. In the US, the rapid progress on renewable energy and the technologies enabled them to shift their economy to clean energy. There are various reasons as to why the United Nations has gone through a major solar evolution. In the past decade, there had been adoption of wind and solar power and energy efficiency technologies along with the emergence of electric vehicles and energy storage. Very wisely mentioned by the natives itself, “Transitioning the economy to renewable energy means ending the use of fossil fuels to power our cars and trucks as well as our homes.” Flexibility is the quality that enabled batteries to play a vital role for a renewable energy grid. The decade entailing 2008-2018, saw the addition of 666 megawatts of utility-scale battery storage for 708 megawatts, which is actually an increase of 17-fold in the battery storage power capacity. According to the present-day survey reports, if renewable energy generation grows by 14 percent per year, slightly more than two-thirds of the rate of growth which is ongoing, then wind and solar energy alone will produce enough electricity to account for the whole country’s net electricity consumption. Just a decade ago, when clean energy technologies were taking baby steps into the market, only the niche market or elite group of businessmen could have had access to these technologies. In a flash of an eye, renewable energy growth, especially solar power has now reached even the congested counties of United States. Not only US, all the nations around the world shall come in cooperation to catalyze clean energy progress and end dependence on fossil fuels for preventing the worst impacts of global warming.

Future Outlook of Solar Energy in the US:-

According to reports and specialists, the long-term growth prospects for the solar industry seems pretty good in many ways. So far, the stocks have risen more than 50%, this year. Coming of age large scale corporate investments powered by lucrative solar incentives represented the industry as a sea full of fishes for all solar investors who were aiming for high-profits. With the growing success, even competition came thriving from the neighboring solar markets, like the Chinese solar panel market! Solar modules prices in the United States have traversed in the past few months due to the trend of steady declines of the past few years, as many U.S. solar companies are taking advantage of the full solar subsidy that is set to step down in early 2020. According to the recent reports by Bloomberg NEF (BNEF), perpetual fall of battery costs, and rising capacity and benefits of clean energy are set to result in booming global stationary energy storage over the next two decades, which will require total investments of at least not less than 662 billion dollars. Over the last decade, several such technologies evolved that helped America to drift off their only form of renewable energy consumption- erstwhile the fossil-fuel consumption. These types of technologies are solar panels, wind turbines, LED light bulbs, energy storage and electric cars. Furthermore, to reach the 10% goal, solar photovoltaic companies would need to make solar power a "plug-and-play technology", or simplify the deployment of solar systems. We should also take into prior consideration, the importance of future "smart grid" technologies. While there are ongoing plans to build more of large-scale solar plants in the United States, the recent prices of solar modules have seen an increment of 10% since early 2019, due to the obvious high demands. BNEF’s latest forecasts also suggested that, Energy storage installations across the world are expected to soar to 1,095GW, or 2,850GWh, by 2040, compared to a modest current deployment of just 9GW/17GWh as of 2018. Comparatively, cheaper batteries in recent times has also contributed a lot to increase the world’s energy system – battery applications. It includes dispatch-able renewable energy to the grid and peaking in the bulk power system, as a way out to manage demand spikes!

Conclusion

The gradual decline in prices for solar panels is another factor for the surge in stock prices. The coming of age Tax credits benefits and other benefits for all residential and commercial solar installers has added a cherry on top of the cake! Today, a residential 10-kilowatt solar panel system costs between 25,000 and 30,000 dollars. A decade ago, when the government subsidies were not on a roll, a similar residential system cost nearly three times as much, without the tax credit. All the large utility type solar panel projects, representing nearly 70% of the entire market makes it about one-third of the residential rate for a solar panel installer. Not only in US, if we go worldwide, a bountiful of governments are adapting to these solar-renewable pathways. California's government has made it mandatory for all residential buildings to get upholstered with solar panels from 2020 onwards. Hawaii has planned for 100% renewable-sourced electricity by 2045. The US accounted for nearly 15% of the annual global solar industry growth this year. The solar tax credit has gifted the US solar industry with 57% surge from the start of the year in the 390 million dollars Invesco Solar ETF (TAN). Distributed generation implementation flung its wings through the world's first grid-connected, pole-attached solar panels of the Public Service Enterprise Group in New Jersey. During this installation, the streets of New Jersey witnessed more than 1,00,000 PV panels being mounted on utility poles; with aggregated capacity of 40 MW. Recently, EIA implemented a generator-level production cost model that simulates hourly generation at individual power plants. This enhances the insight from fast-growing renewable sources like wind and solar. With comparison to 2019, in 2018 wind, solar, and other non- hydropower renewables together provided for 10% of U.S. total utility-scale generation. It is expected to pay for a 10% growth in 2019 and 12% growth in 2020, in succession. Now let us see what is waiting!

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