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From pv magazine United States they analyze four trends that they have observed in residential solar energy this year that has just ended.
The rooftop solar industry is no stranger to ups and downs, often referred to as the “solar roller coaster.” Despite these oscillations, the long-term story is one of growth.
In 2023, that growth continued, although more modestly than in previous years. Wood Mackenzie reported 24% growth in installations during the first three quarters of 2023. 2022 supply chain restrictions were eased and California saw a large increase in installations from customers looking to secure legacy NEM 2.0 rates. Below are four rooftop solar trends that pv magazine US has published this year.
High interest rates
The US Federal Reserve raised interest rates to levels not seen in many years in an attempt to curb the sharp rise in inflation. This posed a particular challenge for rooftop solar, as many companies rely on loans to provide solar equipment to their customers.
High interest rates pressured solar financiers to raise lending rates or charge up-front fees to dealers. In both cases, these changes reduced the value offered to customers, leading to a difficult year for solar company stock valuations and a slowdown in installations.
High Utility Rates
Although financing a solar project has become more expensive, so have utility rates, which is another factor to consider. In California, electricity rates have skyrocketed in the last three years, well above inflation. Another 13% increase in utility rates is planned for 2024.
This has caused a change in thinking about the benefits of solar energy and storage. Although customers often focus on payback periods or return on investment (ROI), this can be very difficult to calculate with changing utility electricity rate assumptions.
Instead, solar installers are focusing the debate on solar plus batteries as a hedge against unpredictable electric rates, which have continued to rise sharply across the country. Although solar and storage buyers typically use a rule of thumb of a 3% to 4% annual increase in utility rates to estimate long-term savings, double-digit rate increases are common in the present. What will your electricity rate be in 25 years?
Political Mistakes
There have been numerous policy changes in the US, many of which have reduced the value of net metering, or the process by which solar customers export excess solar generation to the grid in exchange for credits.
Net metering has been critical to the rollout of rooftop solar in the United States, and while net metering solar rates must take into account the utilitys cost to operate the transmission lines, proponents of solar energy argue that net metering rate cuts have come down too much, too fast.
The best example of this is California, where the sudden 80% cut in net metering caused an 80% drop in installations in the following months. According to the California Solar Energy and Storage Association (CALSSA), more than 17,000 jobs have been lost.
Virtual Power Plants
Rooftop solar energy is evolving. In many US markets, with the active elimination of net metering, off-grid solar installations cannot capture the same value as in the past.
Increasingly, home battery energy storage systems are being installed alongside rooftop solar to ensure homeowners can store and consume the clean energy they produce locally, avoiding afternoon demand peaks. .
However, solar plus battery systems can do more than store and self-consume energy in a day-night cycle. These distributed energy resources can work in concert, along with HVAC systems and appliances, to smooth demand across the grid, creating more stability in electricity markets and eliminating the supply-demand imbalance phenomenon. known as “duck curve”.
Programs that coordinate these distributed resources are often called virtual power plants (VPPs). By participating in a VPP, customers using rooftop solar and batteries can leverage their resources and be compensated by a VPP manager.
In California, customers receive between $100 and $250 annually for enrolling their batteries in PG&Es demand response programs. On Long Island, New York, PSEG customers receive up to $6,250 upfront for allowing their battery to be tapped by the company during ten peak demand periods throughout the year.
Looking ahead
In 2024, some of the strong headwinds, such as high interest rates, are expected to partially subside. Manufacturers and distributors will try to eliminate excess stock in distribution channels created by falling demand.
“I think 2024 will be a recovery year,” said Raghu Belur, co-founder and chief product officer of Enphase Energy, in an interview with pv magazine United States . “I dont see the market getting worse, but I dont see it improving drastically either. We will not return to the growth of 2022. It will probably take another year. But in 2024 things will start to change and slowly recover.” |
