Looking back at 2015 there was apprehension about Investment Tax Credit (ITC) downgrading to 10% starting in 2016. Every company in the solar industry whether Installer/EPC, Developer, financial institution and the 150,000 employees were bracing for a minimum 50% reduction in business and potentially as many jobs lost. What they forgot is that on December 17, 2010 President Obama signed into law the cash grant against all odds.
Although it seemed as though the ITC was going to disappear as well, the shrewdness of adding it to the finance bill allowed for the extension without a fight between the Republicans and Democrats. Finally, the two sides did something for the long term reduction in cost and security of energy via solar and wind. The ITC has helped annual solar installation grow by over sixteen hundred (1,600) percent since the ITC was implemented in 2006 – this is a compound annual growth rate of 76 percent. The existence of the ITC through 2016 provided market certainty for companies to develop long-term investments that drove competition and technological innovation, which in turn, lowered costs for consumers.
Five-year extension of ITC
With the success in securing a five-year extension of the ITC, by 2022 a minimum of 100 GW of solar power will be generated in the United States, this equals approximately 150 Terawatt-hours (TWh) of electricity each year. This means the solar industry will generate enough electricity to power over 20 million homes. Solar will account for 3.5% of U.S. electricity generation – up from just 0.1% in 2010. Every year, solar power will offset 100 million metric tons of carbon dioxide (CO2) emissions, equivalent to shutting 26 coal-fired power plants or taking 20 million cars off the roads.
The future of solar is expected to keep growing at a minimum of 27% per year after the end of the ITC in 2022. The reason for the continued growth will be because by 2022 the price for solar and the increase in electric rates will make solar a better investment.
Renewables become the norm for electricity
How much of our electricity can come from renewables? Although it may seem like renewables will always be a small part of electricity, this is a fallacy. As more and more utility, commercial, and residential projects get completed the understanding and interest in renewables increases. It is similar to our fire hydrants, when we first starting using them few were available but because of the value they brought to communities in ensuring rapid dousing of fires with an unending supply of water they became a norm. In the same respect solar and wind will ensure we have an unending supply of low cost energy. Energy price from our utilities will continue to rise at their 6 ½% rate over time. For home owners and business, they can put an end to this continues increase of energy cost.
If you project a 27% increase per year for solar it would take a long time before we reach 40% of our energy coming from solar and 40% from other renewables. Yet my prediction is that by 2050 the United States electricity will be 80% renewables. Of course we do not know about any new technologies which may be added to this mix. For end users, utilities and the planet renewables give back, where fossil fuels take away from our planet.