Many opportunities full of great ambition were also born during historical times of crisis. Today is no different. While the COVID-19 pandemic continues to wear on, there are signs that the United States is starting to get serious about rebuilding it infrastructure, including massive deployment of clean energy.
Last week a far-reaching climate plan was unveiled in Congress that envisions both implementing a national clean energy standard and extending the solar Investment Tax Credit (ITC) with a “direct pay” option, among a number of other measures.
The ITC extension/direct pay has made it into actual legislation, which will be voted on in the coming weeks. And while it is a long road to get through both the House and Senate, the odds of the bill passing may miss the point. This plan is a combination of ambition and attention to detail more aggressive than anything we’ve seen yet, and as a result, the national conversation about energy is shifting.
The House’s clean energy plan follows on and cites a breakthrough report put out by UC Berkeley which modeled moving to 90% clean electricity—solar, wind, batteries and legacy zero-carbon generation—by 2035 nationwide. Unlike other plans, this one did not rely on a nationwide HVDC grid. And perhaps what is most promising is that it showed that even with a lot of batteries, electricity costs would be lower than today.
Both the plan in Congress and the Berkeley study envision a massive role for solar, with a scale of deployment unlike anything we’ve seen in this country to date. There simply aren’t any more excuses to delay a massive transition to clean energy: distributed generation is more reliable and solar is less expensive than fossil fuels in more and more parts of the country—and getting cheaper all the time.
But it isn’t just national policy and academic findings that are hopeful. The introduction of more and more 500-watt modules show that the solar industry is also continuing to evolve. Who would have thought, even a few years ago, that you could get 1 kW from just two modules?
With SEIA and WoodMac predicting that the United States will install a record 18 GWdc of solar in 2020—despite the pandemic—it’s a good year for ambition. And it is times like these that we have to ask ourselves what we are waiting for to make the promise of the future a reality on the ground.
These are challenging yet hopeful times.
Crises force change, whether they are economic crises, public health crises or political crises—or a combination of all three. And while less dramatic than the demonstrations in the streets of our cities, the energy sector in the United States is under pressure.
Since March, electricity use has fallen enough to upend market dynamics. This has accelerated the decline of the U.S. coal industry, creating opportunities for other energy sources. Natural gas has also had a rough go of it. Who would have thought six months ago that tankers would be arriving at the Sabine Pass terminal in Louisiana to offload liquefied natural gas (LNG), instead of filling up there? A superabundance of gas in Europe is overflowing everywhere, even to the United States.
Perhaps the biggest blow has come to the oil industry. From late January through the end of April, oil has decreased from more than $60 per barrel to less than the cost of a 12-pack of craft beer. The damage to market capitalizations of oil companies has been no less harsh; and while oil prices and stock prices have recovered somewhat in the last six weeks, they are nowhere near pre-crisis levels.
Among the major energy sources, solar and wind have fared the best during this pandemic. The zero marginal cost nature of solar and wind means they continue to operate in wholesale power markets even as other fossil-fuel based generators must shut down due to diminishing electricity demand and depressed prices. And for the first time in more than a century, U.S. renewable energy sources generated more primary energy than coal during the first quarter of 2020. The solar industry is competitively positioned for the future and as costs continue to fall, we will emerge from these crises stronger and more sophisticated, and ready to take a bigger share of the global energy market.
However, the solar sector has also not emerged from this without its own disruptions. The interruption of business that this pandemic brought with it has been hard to quantify, but numbers released by SEIA show that a full quarter of the solar workforce has been furloughed in recent months, in what was supposed to be a boom year.
Yet recently, solar companies from the residential sector are reporting a spike in interest in new projects with batteries as homeowners look to offset energy usage as they spend more time at home while also seeking reliability amid uncertainty. And while there has been a recent 40% drop in the commercial and industrial sector due to the Covid-19 pandemic, as the economy continues to re-open many postponed projects are making renewed progress.
The good news is solar demand is returning quickly. Because this is what solar offers: security, economic certainty and resiliency. Change is on the horizon.