The following essay is a guest post by Earl Killian.

California PV installationsCooler Planet looked at the solar photovoltaic (PV) installation data from the California Energy Commission and made it visual to show just how it is growing. A static view of their data is at the right, but go to the site and move the slider to see the growth from only 1,675 grid-connected photovoltaic installations in 2002 to 29,628 installations in 2008. According to SolarBuzz:

In 2006, 112 megawatts of solar photovoltaics were installed in the US Grid Connect market, up from 80 megawatts in 2005. Demand was led once again by California, which accounted for 63% of the national market. Notwithstanding funding program bottlenecks, New Jersey saw very strong growth in 2006, representing 17% of the national market.

Why would California and New Jersey, with only 12 percent and 2.9 percent of U.S. population respectively, account for such a large fraction of PV installations? Perhaps incentive programs (most recently the California Solar Initiative and the New Jersey Clean Energy Rebate Program) and other policies are working.

Internationally, Germany (8.8 x U.S. in 2006 MW installed) and Japan (2.6 x U.S.) (PDF) are the leaders in PV installations, with California a “distant third” (PDF) according to Lawrence Berkeley National Laboratory.

Most places where PV is economic have some combination of the following (but usually not all):

  1. Efficient use of energy, e.g. California, New Jersey, Japan, and Germany (but much of the U.S. is inefficient). Efficiency is cheaper than PV, so it pays to do that first. If you’re already efficient, PV may make sense.
  2. High retail electricity rates (E.g., California, New Jersey, and Japan, maybe Germany. Note: high rates do not mean high bills. California’s are about the same as the rest of the nation because of efficiency).
  3. Rebates/incentives (e.g., California, New Jersey, and Japan).
  4. Time of use (TOU) net metering available (e.g., California, probably others). With net metering, your electric meter runs backward when you generate more than you use, and runs forward other times. With TOU, the rate you pay or receive varies by time of day, typically with afternoon rates much higher than other times, reflecting the much higher cost of electricity to utilities during times of heaviest load.
  5. High insolation (e.g., California, but definitely not Germany or New Jersey).
  6. Financing (e.g., home equity loans in the U.S., “soft loans” in Germany), so that PV is profitable in the first month instead of requiring multiple years to break even (the payment on the equity loan should be less than the cost of the electricity purchases avoided).

Three other points probably help to avoid utility hostility:

  • Decoupling (the idea that utility profits are not tied to revenue, since customer PV reduces utility revenue).
  • Significant excess daytime load over nighttime (since PV avoids the need for costly “peaking” power plants).
  • Renewable Portfolio Standards (e.g., Germany, Japan, and California) that mandate certain percentages of renewable energy.

Of the various items, incentives (#3) are helpful, time of use net metering may be the most important. For example, under PG&E’s E-7 rate (PDF) for PV, one can sell PV electricity back to the grid during peak hours at $0.30/kWh, and then buy it back off-peak at $0.09/kWh. That factor of three makes a difference.

Imagine a map such as the above for the whole nation if Dick Cheney had favored PV incentives instead of coal power plant incentives after his infamous secret energy summit.

Perhaps some of our New Jersey readers can tell us about the New Jersey Clean Energy Rebate Program.

This post was created for, a project of the Center for American Progress Action Fund.