Solar power has been evolving as an industry for longer than most people realize. Believe it or not, the first solar panel was installed on a building way back in 1884. Years of research went by, and in the 1950s, the entire business of solar changed when practical solar cells that could power everyday devices were invented.
More recently, demand for solar energy dramatically increased beginning in 2010, when the cost of installing solar panels on residential and commercial buildings began to decrease enough to be more accessible for a wider range of consumers. Due in large part to government subsidy programs, new research and development and cultural pressure, solar became much more mainstream over the course of the 2010s.
While growth continues, there are still roadblocks stopping it from becoming as mainstream as many advocates would like. The market is ripe for a new disruption. Consumers want solar energy. But our infrastructure still needs to be refined for solar energy to truly be mass-market friendly.
Moving to the “me first” model
Currently, most residential consumers with solar panels on their roof have an AC-coupled setup that, instead of directly powering their home, feeds power first to the electrical grid, and then the home relies on that same electrical grid to power their lighting, heat, air conditioning, WiFi, computers and all other electricity-hungry devices we have accumulated as a society.
This means that when there are disruptions to the grid — storms, downed power lines, transmission failures and, increasingly, planned outages when supply outstrips demand — homes with solar panels are affected the same way as everyone else. This comes as a surprise to some customers, who thought they were covered since switching to solar.
In the next few years, look for that to change. Consumers want solar setups with battery storage that will allow them more independence without cutting them off from the advantages of the grid. DC-coupled power systems can use the solar energy generated by solar panels to directly power home appliances and systems. With a battery setup, excess power can then be stored for nighttime use.
DC-coupled solar arrays have long been used for microgrids and smaller setups but are not always up to the task of powering larger homes or commercial buildings. AC-coupled systems can handle a larger load and start induction loads, so it makes sense to use them in many circumstances. Each type of coupling serves a distinct purpose, and so the two options have historically been sold as separate systems.
The future of solar — giving consumers the opportunity to power their own home first, store energy and only then funnel energy back to the grid — is a shift away from the AC-only model to a simultaneous AC/DC-coupled system. This technology has been available for several years, but consumers are more than ready for this array to become the norm rather than the exception.
The impact on the industry
What does this change mean for business?
For solar panel and battery storage providers, new pricing structures and supply chain adjustments need to be addressed. AC-coupled systems are rarely sold with batteries, while the main appeal of a simultaneous AC/DC setup is the storage capacity it offers. DC systems initially often cost less than AC systems because they require only a single inverter and no medium voltage switchgear. The cost of battery storage is an add-on, so these types of installations generally end up costing more initially, but the cost savings are significant over the life of the system. An increase in battery usage also means that we must start looking for greater sources of lithium.
However, the biggest upset to the industry will likely fall on utility companies. Originally, a net-metering model allowed customers to install solar panels with an inverter that sent power back to the utility company for a credit against that homeowner’s energy bill. Solar energy was “sold back” to the power company at the same rate that the customer would pay for traditional energy sources.
In recent years, utility companies have begun pushing for changes to the net-metering policy in states like California and Florida, where most solar customers can reliably generate enough power to push their monthly energy bill to zero. Utility companies have become greedy, asking for solar rate adjustments or for solar customers to pay a monthly fee for being tied into the grid, even if they are producing more electricity than they draw. Some utility companies want to see an end to net-metering altogether.
As more solar customers switch to a setup that allows them to power their own homes without involving the utility company at all, it is time to reconsider the way utilities are structured and determine what direction we want to move as a country. Will we continue to provide incentives to move more of our power to a clean, solar source? Or will we cave to the demands of utility companies that have a vested interest in maintaining their status as the central source of electricity?
There were a record number of solar installations in 2020 and 2021, and demand doesn’t appear to be slowing down. A shift to a simultaneous AC/DC model gives consumers the chance to both save money and decrease their reliance on an increasingly unreliable energy grid. Look for these advantages to draw even more customers to the solar industry.
Even if a recession is on the horizon, don’t expect solar sales to decrease. Instead, look for savvy customers who understand they can save money by using the power they generate through solar panels instead of passing it back to the grid. We have to give them options that allow them to do that as efficiently as possible, especially when the sun goes down.
Those of us invested in the solar energy market must adjust accordingly. More focus on efficient energy storage and the advantage of the end user is needed. We also must keep ourselves in the policy conversation as decisions are made that will affect the future of our energy grid, the viability of solar power as a whole, and the future of our planet.
Glenn Jakins is the CEO of Humless, a businessman and an entrepreneur. Originally from South Africa, Glenn came to the United States in the 90s to find refuge from the social and political turmoil of the time. Glen Jakins is an entrepreneur at heart and has built a number of businesses. Some ideas were doomed, others moderately successful. Jakins’s fortunes have risen and fallen like a yo-yo. After a camping experience was ruined from a loud gasoline generator, he scoured the world for the perfect battery technology (lightweight and long-lasting) and established Humless. Humless and Glen are now on a mission to create better off-grid technology and energy storage systems while helping those who want more grid independence.