7 Reasons Why The Solar Revolution Took Off
The shale revolution has gotten a lot of attention in the past few years, and rightfully so.
But during pretty much the exact same time, a solar boom has occurred, as you’ll se in the chart at the right.
It shows percentage growth of various forms of electricity generation.
Solar is up 700% since 2001.
Fossil fuels and nuclear barely even register.
But we wanted to chronicle how solar has been able to explode in the past decade.
No one thing has helped push solar over the top.
It’s more like a bunch of events building to a head.
1. Climate change got real
Even before Columbia University astrophysicist James Hansen published his warning in 2005 that climate change was spiraling out of control — and then was told by the Bush Administration to keep quiet — there was concern about rising temperatures and more extreme weather.
The very first line of the New York Public Service Commission’s 2003 introduction to their proposed Renewable Portfolio Standard is, “We are increasingly concerned with the effects on our climate of fossil-fired generation.”
According to Hansen’s model, ocean heat content — the amount of heat, as measures in Watts, in the ocean — had increased 600% in the previous decade:
2. Oil and gas prices started increasing
When they first introduced a renewable portfolio standard, the New York Public Service Commission noted that energy prices were becoming increasingly volatile after a decade of stability
Here’s what they were talking about (for reasons you’ll see in a moment we’ve extended out the dates): first is natgas, second is oil
Gas prices began to feel effects from shut-ins caused by hurricanes, while oil prices shot upward as a result of global demand.
Plus, peak fossil fuels apparently had come back on everyone’s minds.
“Inasmuch as there is a finite supply of natural gas and other fossil fuels, over-dependence on such will leave the State vulnerable to price spikes and possible supply disruptions,” the commission said.
3. Everyone got a renewable fuel standard
Twenty nine states plus Washington DC now have enforceable renewable portfolio standards (RPS), meaning a percentage of an electricity supplier’s sales or new generating capacity must be green. The two previous steps help explain why more than half of states with RPS adopted their standards between 2004 and 2007, according to a University of Michigan study.
Sixteen of these have specific requirements for solar (the biggest solar generators like California don’t even need them).
4. And everyone was ordered to get net metering
Net metering allows a homeowner with a renewable power supply to sell electricity back to their utility. The Energy Policy Act of 2005 mandated that all public utilities offer net metering upon request.
5. Solar incentives get packed into The Bailout (yes that Bailout)
The Energy Policy Act also created federal incentives for solar — a 30% investment tax credit (ITC) for commercial and residential solar energy systems. Between 2006 and 2007, the amount of solar electric capacity in the U.S. doubled.
The ITC, as originally conceived, was only supposed to last until that year, though it ended up getting an initial one-year extension.
But then the ITC received a major expansion — in Emergency Economic Stabilization Act of 2008, aka The Bailout, of all places:
- It got extended for eight years
- A monetary cap on eligible residential installations was eliminated
- Companies and and utilities paying the alternative minimum tax could now qualify for the credit
6. European subsidies unleashed a global tidal wave of cheap solar panels
Of all the items on this list, this may be the most consequential.
For almost a decade, European countries poured billions of dollars into their renewable sector, with solar often leading the way. Germany was at one point spending €1.5 billion a year on its solar industry.
It paid off there: Between 2000 and 2008 photovoltaic generation increased from 32 million to 4.4 billion kilowatt hours.
Sheep graze between the solar panels of a solar park in Waghaeusel, 20 km (12 miles) southeast of Karlsruhe, March 21, 2011.
As a result of Europe’s head-first dive into solar, the Chinese began rolling out enormous quantities of solar modules, ultimately capturing a full 25% of the market:
Not surprisingly, solar module costs plummeted:
This ultimately led to a big fight, with Europe accusing China of dumping.
As the New York Times noted, tariffs often to backfire:
“The opponents argue that the duties would make it more expensive for American families and companies to install solar systems.”
The Commerce Department ended up structuring the tariffs such that U.S. firms could buy Chinese-made solar panels from other countries, and GTM Research’s Shayle Kann told the New York Times that there wouldn’t be much of an impact.
But the supply glut created by the Europe-China dynamic is expected to last until next year — meaning costs are going to remain pretty low.
7. Solar got its own Moore’s Law
Moore’s Law dictates that computer processing speeds increase exponentially every year thanks to ever-improving technology.
The same phenomena is now true in solar: every year, solar cells get incrementally more efficient, meaning they’re able to convert more electrons into energy.
The following chart from the National Renewable Energy Laboratory shows what this looks like:
While these represent efficiencies achieved in a lab, efficiencies on retail panels have gone up more than a third of a basis point each year since 2000, from 11.2% to 16.1%.