Why Solar Is on a Path to Dominance

by Yuri Horwitz


Despite the Trump administration’s recent decision to levy a 30 percent tariff on solar, we see tremendous opportunity ahead for the industry.

In the next year, the solar industry will develop, construct and finance $25 billion to $30 billion in solar assets. It will build 20 to 25 percent of the country’s new electricity capacity, and will continue to employ hundreds of thousands of people. The core drivers for this success are 1) public support; 2) rapid technological evolution that drives cost reduction and increased efficiency; and 3) significant and increasing support for the solar asset class by institutional investors.

By 2022, we fully expect solar to be the dominant source of new electricity generation in the United States. Here’s why.

America supports solar

Despite the current political headwinds, Americans overwhelmingly support renewable energy and believe climate change is real. As poll after poll demonstrates, we give priority to alternative energy sources, overwhelmingly support conservation of energy over extraction, and prioritize the protection of the environment over the amount of energy we produce -- now, more than ever.

This broad public support will be important in the next decade as we continue to invest in the infrastructure required to support a renewable grid (and we will need to). Depending on geography, solar and wind will scale to provide 35-40 percent of our country’s energy, and in real time, sometimes much more. As we’ve noted in the past, solar projects will do so at increasingly low costs, and will begin to compete head-on with natural gas. 

Competition is fierce, but solar competes

Although natural-gas generation fell between 2016 and 2017 from 35 percent to 32 percent of total national electricity production, it remained the primary fuel for power generation for the second year in a row, surpassing coal (around 30 percent) in 2016. Natural gas sets the clearing price in most markets and therefore drives wholesale electricity prices. Natural-gas production is projected to continue to climb in to 90 bcf/day in 2019 as new pipelines transport gas from the Appalachian region and from Permian shale.

In the short term, this increased gas supply should depress electricity prices even as natural gas exports increase; the U.S. Energy Information Administration (EIA) forecasts that natural-gas prices for electric generators will fall to $3.26/mcf in 2019. However, long-term, there is less certainty. Natural gas discoveries have fallen to a 70-year low and have continued to fall consistently in the last five years. Recent studies also indicate that many gas operators have harvested the least expensive wells to optimize short-term revenue and profitability, leaving more expensive gas in the ground and potentially raising extraction prices with time.

Even assuming these concerns are... Read the rest of the story on GreentechMedia.com HERE