The numbers are looking great for the US solar industry. In 2015 alone, 7.3 GW of solar power capacity were brought online across the nation, and the predicted growth for 2016 is 16 GW, which represents an increase of more than 100 percent! GTM Research and the Solar Energy Industries Association both agree on this growth projection, so the numbers can be trusted.
The solar industry also reached a significant milestone in early 2016, when the total number of photovoltaic systems in the US surpassed one million. According to SEIA, a new installation is brought online every 2.5 minutes! A favorable side-effect of this has been the creation of thousands of jobs in the solar industry.
Why is Solar Power so Successful?
America’s sunshine has always been there, which means there are other reasons why solar power became successful over recent years. The two main drivers of growth have been cost reduction and a favorable regulatory framework, and you can learn more about state-specific incentives by visiting www.solar-nation.org.
At the start of the century, it was normal for solar PV systems to cost more than $10,000 per kilowatt of capacity, but this number has been brought down significantly: The average residential PV system now costs between $3000 and $4000 per kW, while utility-scale projects are gradually reducing their cost towards $1000/kW. Of course, this is drawing the attention of more home and business owners, and well as investors seeking to develop utility-scale projects.
Favorable legislation has also played a significant role in pushing the solar industry forward:
- There is a federal tax credit equivalent to 30% of your solar power investment, and you can claim it as soon as you file your next declaration. The benefit was set to expire in 2016, but it has been extended until 2022, subject to gradual reductions in 2020 and 2021.
- Many states have introduced Renewable Portfolio Standards (RPS), which require utilities to obtain a minimum percentage of their energy from clean sources by a fixed date. For example, California is aiming to get 50% of its energy from renewable sources by 2030, and this helped it become the first state to obtain more than 5% of its energy from the sun.
- Finally, most utilities are required to give you credit if your production exceeds your consumption for a specific month. This scheme is called net metering, and it ensures you make a profit on the full energy output of your PV system, not only what you consume right away.
There is a tendency that repeats itself across the board: when a state introduces an RPS, plenty of incentive programs for solar power soon follow. These normally take the form or rebates that reduce upfront costs, or bonus payments that are calculated based on how much energy a residential PV system produces. Many state governments have also introduced their own tax credits and exemptions, which are added to the 30% ITC from the federal government.
Financial and Environmental Benefits of Solar Power
Solar power is one of those rare cases when an investment is favorable both for your pocket and the environment. The profit you can get from solar power varies depending on local conditions, but even in states without incentive programs, PV systems are yielding lifetime profits of more than $15,000. Of course, this value goes much higher in states with abundant incentives.
The environmental benefit can’t be overlooked either: every single PV system in operation reduces the amount of energy that must be generated with fossil fuels, and may prevent several dozen tons of CO2 from being released into the atmosphere over its service life.