Dropping my son off at school on Wednesday, I ran into Danny Kennedy, a fellow parent and veteran Australian Greenpeace activist turned solar entrepreneur. How’s business? I asked. Pretty bloody good, as it turns out. Kennedy’s startup, Sungevity, took in more orders for rooftop solar systems in March than in all of 2009.
That solar flare is being fueled in large part, according to Kennedy, by a new lease option Sungevity recently began offering its customers. The option is financed through a $24 million deal with U.S. Bank. Rather than purchasing a solar array, customers can lease the system through Sungevity for a monthly fee, thus avoiding the considerable capital costs of buying the system outright. The popularity of lease options, which are also offered by bigger installers such as SolarCity, is another indication that creative financing is as key to getting people to go solar as the performance of the hardware.
As it happened, the Solar Energy Industries Association annual report landed in my inbox later that same day. It showed that Sungevity isn’t the only solar company looking at a very good 2010.
Although the United States solar industry’s overall growth for all types of solar energy slowed somewhat as the Great Recession reached its nadir in 2009, residential rooftop installers had a record year. Companies like Sungevity installed 156 megawatts of residential solar panels in 2009, up 101 percent from the previous year.
That’s an amazing number, considering one could reasonably expect that putting a $25,000 solar array on one’s roof would fall to the bottom of the home improvement list during the greatest economic downturn since the Great Depression.
But there were other incentives. The Obama stimulus package’s lifting of the $2,000 tax credit cap on home solar systems certainly helped. As did solar panel makers’ price slashing due to the oversupply that resulted from a ramp up in production. Solar module prices fell more than 40 percent in 2009, according to the SEIA report. That led to a 10 percent decline in the cost of an installed solar array. (Installation costs typically account for half the price of a solar array.)
As photovoltaic power has gotten cheaper, solar panels have come off the roof and are being planted in the ground in huge solar farms. The dramatic price declines in solar modules got the attention of California utilities in 2009. The utilities signed power purchase agreements for hundreds of millions of megawatts’ worth of solar power plants.
Utilities have also initiated huge solar distributed generation programs. California’s two biggest utilities, PG&E and Southern California Edison, last year announced that, over the next five years, they would install a total of 1,000 megawatts on rooftops and in ground arrays near substations and cities. (SunPower, the San Jose, Calif.-based solar module maker, recently won a 200-megawatt contract with Southern California Edison). When the Sacramento Municipal Utility District put 100 megawatts of distributed solar up for bid, the program sold out within a week.
All the activity attracted the attention of Chinese solar module makers, whose California market share more than doubled (to 46 percent) in 2009. One company, Yingli, arrived in California at the beginning of 2009 and ended the year with nearly a third of the market share.
No surprise then that California remains the solar capital of the country. In 2009, the state installed 200 megawatts of solar capacity, nearly four times the amount of New Jersey, the No. 2 solar state. (It’s no coincidence that both states offer the nation’s most generous solar incentives.) Altogether, California now boasts a total solar capacity of 1,102 megawatts — 10 times that of New Jersey. (That’s impressive, but still less than about half of California’s wind energy capacity.)
Once you get past California and New Jersey, however, the numbers drop dramatically. The third biggest solar state, Nevada, had just 100 megawatts of solar capacity installed in 2009; No. 10, Massachusetts, had 18 megawatts.
Still, the growth in the solar industry meant more green jobs. Solar added 10,000 jobs plus 7,000 indirect jobs in 2009, even as the overall unemployment rate soared. According to the SEIA, total solar employment in the U.S. stood at more than 45,000 last year, about evenly divided between direct and indirect jobs.
The need to ramp up solar power is thrown into sharp relief when you compare how much capacity the U.S. added in 2009 compared to other countries. Germany, the world’s biggest solar power thanks to years of generous subsidies, installed 3,800 megawatts last year, according to the SEIA. That’s nearly twice the total U.S. capacity and eight times what the U.S. installed in 2009. Germany now generates 9,677 megawatts of solar electricity. (Even the Czech Republic installed nearly as much as the U.S. in 2009, putting 411 megawatts online.) Solar currently supplies less than 1 percent of America’s electricity.
However, if you consider the huge numbers of massive megawatt solar thermal power plants planned for the desert Southwest, the U.S. is poised to become a solar superpower. (Solar thermal plants use arrays of mirrors to focus sunlight on liquid-filled boilers that create steam to drive electricity-generating turbines.)
The SEIA says there are 10,583 megawatts of solar thermal power plants in the pipeline. Licensing those big solar farms — and securing the billions of dollars needed to build each one — has proven to be a laborious process. Only 81 megawatts in the pipeline are currently under construction.
But to put things in perspective, the solar thermal project closest to being licensed — BrightSource Energy’s Ivanpah plan in Southern California — will generate nearly as much electricity as all the photovoltaic panels installed in 2009.
Given the trends in the solar industry, the SEIA says prospects in 2010 are looking bright, with growth continuing. Expect a big bump in rooftop solar thermal systems, which collect sunlight to heat water, as a new California subsidy program kicks into gear.
All of which is good news for Sungevity’s Danny Kennedy. The boom in demand has him scrambling to secure supplies of solar panels. That’s a nice problem to have in the Great Recession.