Is Residential Solar on the Rise in Texas?

iStock_Solar_InstallerLast week, I wrote about the continued success of Texas’ wind energy industry, but the growth in solar is also impressive. Nationally, solar energy accounted for 74 percent of all new electric generation in the first quarter of 2014. Plus, residential solar installations surpassed commercial projects for the first time in history earlier this year. This is significant, proving that more homeowners are making the switch and investing in a cleaner energy supply.

According to the Center for American Progress, “more than 60 percent of solar installations are occurring in zip codes with median incomes ranging from $40,000 to $90,000.” This is an important revelation as the price of solar comes down quickly, projected to be cost-competitive with fossil fuels by 2020, more homes can and will add solar panels. In fact, experts expect more than half of all American homebuilders to offer rooftop solar as an option in new single-family homes by 2016. That’s a significant uptick from just 12 percent in 2013.

These findings make clear that people are taking their energy use into their own hands, highlighting the power of people in the new energy landscape, where customer-centric demand-side resources – rooftop solar, energy efficiency, demand response (which compensates electricity customers for conserving energy), electric vehicles, and energy storage- will play a key role. I discussed this trend in a radio interview with Voice of Russia a few weeks ago in a segment entitled Whole Home Automation: Promising for Consumers and Climate.

Texas’ chance to shine

Texas, with its vast, open plains, millions of rooftops, and year-round sunshine, has the greatest potential for solar energy production in the nation. Despite these advantages, the state is only ranked 8th for actual solar energy generation, behind Delaware and New Jersey. So what’s stopping Texas?

Texas suffers from not having a Renewable Portfolio Standard (RPS), an incentive or goal, for solar (unlike the wind RPS, which enabled Texas to lead the nation), and it is also struggling to define the value of the electricity produced from rooftop solar panels.

Electricity customers with solar are typically offered a “net-metered” electric rate, meaning any energy produced by the solar is subtracted from the customer’s electricity bill at the end of the month. But utilities and conservative interest groups have begun pushing back against net metering, claiming the policy pushes costs onto customers without installed solar. Understanding the benefits provided by the customers for powering their own homes – like reducing stress on the grid – while balancing the costs associated with the electric utilities’ services, like transmission, distribution, and reliability, is the conundrum. But any way you look at it, both the utility and the customer in this case provide value.

Another obstacle facing solar adoption is the difficulty securing a loan to finance the up-front cost of the system. Inconsistent prices for residential solar electricity have contributed to uncertainty among the banks, making them uncomfortable with solar financing.

One solution to this problem is Property Assessed Clean Energy (PACE) financing, which allows homeowners to finance clean energy using loans seamlessly repaid through an additional charge on their property tax bills. EDF is collaborating with its partners to develop PACE in a Box, which can be expanded from commercial customers to include individual homeowners.

Rays of hope

Austin Energy was one of the first U.S. electric utilities to introduce a “value of solar” tariff, an alternative to net metering that calculates the all-inclusive benefits of residential energy in order to establish a price to compensate customers for their solar generation. By considering avoided fossil fuel generation, offset investments in new power plants, increased reliability and backup for the power grid, Austin Energy established a price for solar even higher than that assigned by a net metering rate, helping to increase adoption of solar panels on Austin Energy’s grid. This has helped Austin earn, along with San Antonio, national rankings for solar PV capacity, the only two cities in Texas ranked at all, thanks to progressive policies from Austin Energy and CPS Energy, San Antonio’s municipal electric utility.

Austin is also home to one of the largest customer-driven smart grid experiments in the world. In partnership with EDF, Pecan Street Inc. has provided solar rebates to hundreds of Austin-area homeowners. The center of this project, Austin’s Mueller neighborhood, now has solar panels installed on 200 of its 250 homes. In exchange for the incentives, Pecan Street is collecting detailed electricity data from each of the homes in its study, proving the energy potential of rooftop solar in Austin and other communities.

Our future’s so bright?

Texas stands at a crossroads. It’s clear that we have the potential to continue our leadership in renewable energy. But, to date, we have lagged way behind in solar capacity. Texas should look to its regional clean energy leaders as it develops the pricing and financing required to unleash a solar revolution. By doing so, the state could become an international example for the transition from fossil fuels to an economy driven by clean energy technologies, keeping Texas “open for business” and empowering Texans.

This commentary originally appeared on our Texas Clean Air Matters blog.

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