The solar sector continues to generate results as installation costs drop and research and development into cheaper materials and manufacturing processes flourishes. Pundits predict a big spike in solar installations and capacity in five years. However, tariffs and other issues are currently posing challenges to the sector.
On the good news front, solar power achieved a milestone last year, overtaking biomass as a means to generate electricity. “Electricity generation from solar resources in the United States reached 77 million megawatt hours (MWh) in 2017, surpassing for the first time annual generation from biomass resources, which generated 64 million MWh in 2017,” notes a May 9, 2018 press release from the U.S. Energy Information Administration (EIA), a branch of the U.S. Department of Energy.
A kilowatt (kW) is equal to 1,000 watts, while a megawatt (MW) is equal to one million watts and a gigawatt (GW) equal to a billion watts.
Solar has come a long way in a short time. Back in 1985, utility-scale solar generated a paltry 11 million kilowatt hours (kWh) of electricity in the U.S. This rose to 399 million kWh in 1990, topped 3.5 megawatt hours in 2010 then soared to over 39 megawatt hours in 2015. For the first seven months of 2018, solar generated 58 MWh of power, reports the EIA.
“Solar’s increasing competitiveness against other technologies has allowed it to quickly increase its share of total U.S. electrical generation from just 0.1 percent in 2010 to over two percent today … Over 250,000 Americans work in solar – more than double the number in 2012 – at more than 9,000 companies in every U.S. state. In 2017, the solar industry generated a $17 billion investment in the American economy,” states the Solar Energy Industries Association (SEIA), the major trade group for the sector.
Solar currently generates sufficient electricity to power roughly eleven million U.S. homes in the U.S. Until recently, solar had been enjoying an annual growth rate of over fifty percent.
Now, the bad news: thanks in part to a thirty percent tariff on imported solar panels announced by the White House this January, the solar market has temporarily cooled.
“This is the first quarter where the data clearly show that tariffs took a bite out of the solar market. Some previously-announced projects were cancelled or delayed due to the tariffs. In Q2 2018, the U.S. market installed 2.3 GW of solar PV, a nine percent year-over-year decrease and a seven percent quarter-over-quarter decrease,” says a September 13, 2018 SEIA press release, regarding an SEIA/Wood Mackenzie Power & Renewables U.S. Solar Market Insight report.
As of mid-2018, over fifty-eight gigawatts of solar capacity have been installed in the United States. Some 1,828,000 solar power systems have been installed nationwide. These are built around photovoltaic (PV) materials and devices plus additional equipment, such as inverters.
Individual PV devices – or cells – each produce around one or two watts of power. Cells are usually linked in chains to create a larger unit, called a panel or module. Electricity gathered by the solar system can power household appliances or be stored in batteries, which can be used at night or during inclement weather.
PV cells use semiconductor materials, primarily crystalline silicon to convert sunlight into electricity. Thin-film PV cells, which use different semiconductor material, are also available.
“Silicon is by far the most common material used in solar cells, representing approximately 90 percent of the modules sold today. [Silicon is] the second most abundant material on earth (after oxygen) and the most common semiconductor used in computer chips. Crystalline cells are made of silicon atoms connected to one another to form a crystal lattice. This lattice provides an organized structure that makes the conversation of light into electricity more efficient,” explains the Office of Energy Efficiency & Renewable Energy (OEERE), a branch of the U.S. Department of Energy.
There are definite benefits to using crystalline silicon. “Solar cells made out of silicon currently provide a combination of high efficiency, low cost and long lifetime. Modules are expected to last for 25 years or more, still producing more than 80 percent of their original power after this time,” adds the Office of Energy Efficiency & Renewable Energy.
Thin-film solar cells, meanwhile, have semiconductor materials deposited in thin layers on a substrate such as glass, metal, or plastic. Thin-film PV modules are cheaper than their silicon counterparts and “can be more flexible, lighter and easier to handle than crystalline silicon,” says a December 13, 2017 EIA press release.
For now, crystalline silicon tends to be the semiconductor material of choice in panel production. “Most of the growing number of installations of utility-scale solar photovoltaic (PV) operating capacity across the United States have been systems that make use of crystalline panels. In 2016, seventy percent of U.S. utility-scale PV capacity used crystalline silicon modules. Thin-film technology accounted for 28 percent of capacity,” continues the EIA press release.
As crystalline silicon becomes more widely used, construction costs of solar systems using the material have decreased, further enhancing its appeal. “Crystalline silicon has become the most widely used photovoltaic technology as the technology has matured and construction costs have dropped. Its installed costs declined $400-500/kW per year to $1,000/kW lower than that of thin film as a result of demand and economies of scale,” states an August 8, 2018 EIA press release.
Crystalline silicon’s dominance is reflected in state-level statistics. At the end of 2016, California had almost 8.5 GW of installed utility-scale solar PV capacity – the most of any state. Second-placed North Carolina had 2.4 GW of installed solar capacity. In both states, the majority of capacity was based around crystalline-silicon panels. Of all the states with the highest levels of solar capacity, only Nevada has more thin-film capacity than crystalline silicon.
If the current tariff on imported solar panels represents a setback, the U.S. government has proven highly helpful to the solar industry in other ways. The SEIA, for example, credits the 2005 Solar Investment Tax Credit (ITC), which offers a thirty percent tax credit for residential or commercial solar installations, with propelling the industry forward.
“The ITC has proven to be one of the most important federal policy mechanisms to incentivize the deployment of both rooftop and utility-scale solar energy in the United States. As a result of the multi-year extension of the credit enacted in late-2015, solar prices have continued to fall while installation rates and technological efficiencies are continuing to climb,” states an SEIA fact sheet on the ITC.
While renewed for the time being, deductions under the ITC are set to drop in 2020 with a scheduled phase-out of residential credits after that. Government support has also come from the Solar Energy Technologies Office (SETO), a branch of the Department of Energy.
In its own words, SETO, “supports the early-stage research and development of photovoltaic (PV) technologies that improve efficiency and reliability, lower manufacturing costs, and drive down the cost of solar electricity. The program funds innovative concepts and experimental designs across a range of materials that have the potential to make solar energy among the least expensive forms of energy available by reaching a levelized cost of energy of $0.03 per kilowatt hour.”
The three cents per kilowatt hour is for utility-scale solar installations. SETO hopes to reach this target by 2030 by funding research into better equipment, materials and manufacturing methods.
“New device architectures, system designs, and improved materials can enable PV systems to generate more electricity from the same amount of sunlight, helping to lower costs. Projects target improvements to crystalline silicon cell absorber layers and contacts, advance the crystal quality and lifetime of cadmium telluride cells, and support the development of emerging and potentially disruptive PV technologies,” says SETO information.
The group adds, “Using less expensive materials and more efficient fabrication processes can improve manufacturability and lower system costs. For example, projects are employing flexible substrates in a roll-to-roll fabrication process and are developing low-cost deposition techniques such as hydride vapour phase epitaxy, which can be used to grow materials for high-efficiency multifunction solar cells.”
The U.S. Solar Market Insight report foresees a future in which solar quickly recovers from its current slump. “The report projects a flat 2018 for the solar market as a whole. Most of the utility solar being procured today will come online in the 2020 timeframe. By then, 28 states in the U.S. are expected to be adding at least 100 megawatts of solar annually and 25 states will have more than one gigawatt of solar PV—compared with only two states at that capacity in 2010 … Total installed U.S. PV capacity is expected to more than double over the next five years. By 2023, over 14 GW of PV capacity will be installed annually,” states the September 13, 2018 SEIA press release.
In other words, tariffs and other issues might pose some challenges, but expect installations to increase eventually and with it, solar capacity and the amount of electricity generated by the sun.