Addressing the Slowdown in Residential Solar PV Adoption in the United States

Abstract

This project explores factors that are influencing Arizona residents in their decision to install solar photovoltaic power systems at their homes in order to identify potential solutions that improve the falling adoption rate in Arizona and other locations. More specifically, through home owner surveys I identify their concerns and examine which of these concerns have been addressed. I examine residential solar policies in Arizona and other leading solar adoption states in the United States to identify these potential solutions. In 2017, solar energy accounted for about 1.3% of the United States electrical supply, (US Energy Information Administration, 2018). Residential solar photovoltaic (PV) capacity growth fell 15% from 2016 to 2017 and is projected to remain flat in 2018 (Merchant, 2018). This plateau occurred despite a 58% reduction in installed residential system costs between 2009 and 2016 (NREL, 2017). After 2021, federal residential tax credits expire; utilities are struggling to integrate increasing distributed solar energy into their grids and utilities are less willing to pay for excess residential solar energy sent back to the grid. These factors place the ability of residential solar to further replace nonrenewable energy sources at risk. The payback period is a primary factor in solar installation decisions (Miller, 2013). However, there have not been detailed analyses of other factors that deter residential PV installation and how effectively these issues have been addressed regionally. I surveyed Arizona homeowners’ concerns and analyzed how actual AZ installation rates correlate to these concerns. Of the top two concerns, installation rate data indicates that the concerns over unforeseen repair costs have been addressed by the availability of leased third party owned solar PV systems. The second issue is that of utility companies changing the terms of the rate plan for solar customers in a manner that reduces the savings derived over time. This concern has not been addressed as there is a national trend in which utilities are changing rate plans for solar customers to be less financially favorable. Representatives from many utilities and their advocacy groups state that there are significant challenges in integrating increasing amounts of cyclic and difficult to predict solar generation into the power grid and that with increasing solar penetration, solar customers are not paying their equitable share to maintain the fixed costs of operating a power grid that solar customers do rely on regularly. A major integration challenge stated is that the peak solar generation window does not coincide with the peak power demand window, causing utilities to curtail production from their power plants more in the afternoon, and then more sharply ramp up production each evening, which is more and more difficult with increased solar production. The challenges stated by utilities are driving less favorable rate plans and solar buyback rates, making solar much less attractive to homeowners and flattening growth. Solutions to this challenge include improvements in energy storage solutions to make generated solar more valuable to homeowners and the utilities, continued reduction in solar PV prices, and methods for utilities to be able to ramp up and down production from traditional plants more effectively.