By Jeff Juger, Hanwha Q-CELLS, number 11 on the Solar Power World Top 250 Contractors list.
Renewable Portfolio Standards (RPS) have been key drivers of utility-scale solar across the United States. However, utilities have cut back on projects after reaching RPS thresholds—in many cases years before projected. In 2012, Massachusetts reached its 250-MW target five years early. Fortunately, Massachusetts expanded the program to 1.6GW by 2020. In some states, such as North Carolina, legislators opposed to solar have vowed to repeal the RPS in its entirety. These intense battles underscore the fact that these standards are vital cogs in the solar machine, but show they are vulnerable to attack. While such standards are shining examples of state-level efforts to stimulate solar, they are hardly the only mechanism: Undiscovered solutions and realized innovations encourage solar progress.
Proximity of demand to supply affects solar progress. The Southwest has land readily available, but there is limited transmission line capacity to carry that power cost-effectively to end users. Consequently, concepts like net energy metering and distributed generation become more important. Distributed solar provides electricity on-site or near to demand, reducing transmission losses. It also mitigates peak demand, thereby reducing the need to hedge against fuel price swings. Many firms, like Hanwha Q CELLS, diversify their portfolios to include residential and commercial segments to aid in that development. Current solutions for solving lack of transmission line capacity are expensive, but drawing attention to this infrastructure issue and encouraging research into solutions ensure solar’s long-term viability.
Another innovation in solar is the emergence of creative financing, which allows solar to grow independently of the RPS. Five years ago, third-party financing was rare; now solar leasing companies, like OneRoof Energy, account for 70% of all residential installations in California and Arizona. In 2013, a crowdfunding site funded four projects (150kW combined) worth $300,000 within 24 hours, with an average investment of $700. Encouraging more financing innovation will help solar companies beyond mere reliance on the RPS.
Companies should engage lawmakers to encourage increased regional diffusion of ideas among states. The establishment of New York’s $1 billion Green Bank matches public and private funds for projects that might otherwise struggle to find investment. New York followed neighboring Connecticut’s lead, whose $30 million program has funded several projects in the state. Others are now considering similar programs. More concepts discovered and shared can reduce barriers to solar adoption.
Installed system prices have dropped 60% over the past four years and the levelized cost of energy (LCOE), an economic assessment of the system cost, has reached or approached grid parity in some markets. This means solar can rely less on RPS. In Hawaii, solar electricity competitive with local electricity rates is flourishing. With that in mind, Hanwha Q CELLS is driving down the LCOE for its systems. Hanwha Q CELLS USA is active in project development, financing, EPC, and O&M and has installed 110MW of commercial and utility-scale systems in North America alone.
Our job as industry leaders is to promote investment into research and the continued development of innovative solutions, which help solar become a mature, self-functioning industry.