Modeling the U.S. Rooftop Photovoltaics Market to 2030

A paper on rooftop solar photovoltaic (PV) capacity and market penetration in the U.S., written by three National Renewable Energy Laboratory colleagues (Easan Drury, Paul Denholm and Robert Margolis), shows that fully 1 gigawatt (GW) of the world’s 15 gigawatts of solar PV was installed in the U.S. alone by December of 2009.

First released as part of the SOLAR 2010 conference, the market model report shows that distributed rooftop solar PV – comprised of small, grid-tied rooftop solar PV systems, ranging in size from 1 kilowatt (kW) to about 15 kW, represents the largest segment of both U.S. and global PV markets.

Market penetration models for renewable energy technologies are based on costs (including installation), as buffered by regional electricity rates and incentive policies like net metering and feed-in tariffs, with carbon prices a driver toward greater adoption.

For solar energy, specifically solar PV, high solar insolation attributes in certain areas are a compelling incentive toward increased take up of the technology in the presence of supportive regulatory policies.

Outside the U.S. the rooftop solar PV expansion is understandable in terms of feed-in tariffs, or FiTs, which provide retail (or close-to-retail) electricity rates. A case in point is Ontario, where the government pays up to 80.2 cents per kilowatt hour (kWh).

In Germany, even after significant cuts because of increasing economic woes, the government still pays 25.01 - 34.05 cents (EU; 31.6 cents to 43.01 cents USD) for each kWh of electricity generated by small to medium-sized rooftop PV systems.

The highest FiT rate in the U.S. is in Gainesville, Florida, which pays 32 cents per kWh, up to 4 MW per installation. In Vermont, customers get 30 cents. In Sacramento, California, providing they are not already part of a net-metering program, solar PV owners can sell their power to the Sacramento Municipal Utility District (S.M.U.D.) for up to 30 cents per kWh on a high-demand day.

The NREL report, available from the American Solar Energy Society (ASES), shows that rooftop solar PV deployment has not only benefited from falling PV prices and incentives, but – even in the U.S., where policies are piecemeal and sometimes even negatory – has managed to reach a stage where costs of $4 per watt (by 2015) may make even small solar PV a better value than traditional energy sources like coal, oil or gas, especially where legislation imposes costs that can be passed down to the consumer.

The report admittedly focuses on a market penetration model called Solar DS (Solar Deployment Systems) put together by NREL, which evaluates uptake based on PV prices; financing terms; net metering; and carbon prices.

Prices are evaluated at two levels; EIA 2009 projections, and DOE SETP parameters. Financing terms explore the gamut from standard financing (through a bank or credit union, as part of a home improvement project) to PACE (Property Assessed Clean Energy) financing, which federal lenders like Fannie Mae and Freddie Mac have threatened to refuse because the loans represent a lien.

Net metering is evaluated either as none or full-value, with electricity prices at retail rates. Carbon prices range from zero to $50 per ton by 2025. The report is also based on the 30 percent federal ITC (through ARRA) credit being extended to 2030.

Described as a “geospatially rich, bottom-up, market penetration model,” the report suggests that a best-case scenario could see almost 200 GW of rooftop solar PV installed in the U.S. by target year 2030, with an added potential of installed costs dropping as low as $2.10 per watt.

If authors Drury, Denholm and Margolis (the first two members of the NREL’s Energy Forecasting and Modeling Group, the latter a member of the lab’s Technology Systems and Sustainability Analysis Group) are correct, the report describes the leading edge of a perfect storm of rooftop solar PV installations that will see the technology growing by more than a factor of 10 over the next two decades.

This prediction would likely come as no surprise to the DOE’s Matt Rogers, who has the enviable job of distributing ARRA funds. As Rogers noted earlier this month, energy innovation historically occurs over a multi-decade time frame.

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