Incentives Drive U.S. Solar Into Higher Gear: Five Key Findings

As part of Consumer Energy Alliance’s (CEA) Solar Energy Future campaign, the organization has released a 2018 update to its 2016 report, “Incentivizing Solar Energy: An In-Depth Analysis of U.S. Solar Incentives,” and revealed several findings related to rooftop solar incentives.

CEA recently commissioned ScottMadden Inc. for the update, which offers a comprehensive review and quantification of solar incentives for consumers across multiple states that have greatly contributed to the expansion of solar power across the country, the organization explains.

The new report analyzes the cost of a typical solar facility in 25 states and details the federal, state and local incentives available for rooftop solar photovoltaic systems.

Five key findings of the report are as follows:

  1. Existing incentives for residential PV are significant. In all but five states, direct owners receive at least 75% of total system costs in total incentives under a standard rate structure.
  2. Utility-scale solar installations are less expensive to install but are incentivized at lower rates per watt than residential solar PV systems. Residential solar PV systems receive, on average, between 104% and 140% of total system costs in incentives. Utility-scale solar installations receive only about 45% of total system costs in incentives.
  3. Third-party-owned solar PV owners receive the most significant incentives. In contrast to direct-owned solar, third-party solar owners are able to generate additional tax benefits through accelerated depreciation.
  4. Solar PV installation may shift costs to other customers. Net metering programs pay residential PV solar customers full retail rates for their excess electricity production. CEA is concerned this may shift fixed utility infrastructure costs onto non-solar and less affluent customers.
  5. Incentives for residential solar PV vary widely among states. For example, in net metering, the amount of the incentive varies by the amount of energy that the system is able to produce (which varies by state) and the applicable tariff for electricity
    (which varies by state), less the utility’s avoided costs (which also varies by state).
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ScottMadden analysis (Source: CEA)

The analysis covers Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Illinois, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, Ohio, Oregon, Rhode Island, South Carolina, Texas and Utah. These states were selected to capture diversity in location, state incentive policies, retail tariff designs and wholesale electricity prices, explains CEA.

Incentives, combined with the substantial declining cost of installing PV systems over the past several years, has led to significant increases in the use of rooftop PV systems across the country, notes CEA. As a result, many states are re-examining the scope and methods surrounding their incentive programs and are now considering programs that rely more on a competitive marketplace to provide the economically optimal levels of rooftop solar adoption, according to the organization.

“Solar energy is an important and growing part of America’s diverse energy mix. We strongly support solar’s growth across the country, and we want to ensure that our nation’s solar policies continue to keep pace with the dynamic changes taking place in today’s markets so that its continued growth is assured,” comments Brydon Ross, vice president of state affairs for CEA. “Solar brings with it tremendous benefits for all consumers.”

He adds, “Because of the rapid transformations in both the economics of solar PV systems and the policy dialogue over solar incentives in the states, we hope that CEA’s updated analysis will help policymakers by quantifying current incentives provided for solar PV systems.”

The full report can be found here. CEA has also released an executive summary here.

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