Despite federal tax benefits for solar installations disappearing and the implementation of tariffs on imported photovoltaic panels, market forecasts show a continued growth for the industry, with installed capacity expected to double over the next five years. This growth is driven by continued reductions in the price of solar installations and the advancement of technology in the industry. With this unprecedented growth, the solar industry is looking at every opportunity to further penetrate existing markets and expand into new ones.
As solar developers are keenly aware, significant barriers restrict project siting and limit market opportunities. For example, GTM Research indicates that 77% of households in the U.S. cannot install rooftop solar because they don’t own their home, have low credit scores, or live in a state without net metering options. Additional barriers exist when sites have obstructions or shading issues that impact viable production, where roof condition or other deferred maintenance issues limit the suitability for solar installation, or where the capital outlay is simply not realistic. Similar barriers exist for commercial or institutional applications as well. These barriers create a greater urgency for new market expansion as the industry grows and competition begins to accelerate.
"Serving low- and moderate-income communities is currently a mission-driven effort, but can also provide a competitive advantage to solar developers with the foresight to bring solar to these communities first"
One important market that has been systematically left out of the clean energy economy is underserved communities. This includes communities with a high density of low- and moderate-income householdsas well as the nonprofits, institutions, and small businesses that are in and serve those communities. Forty three percent of all households across the country are considered low- or moderate-income (LMI)(i.e., more than 50 percent of households are at or under 80 percent of the area median income). This represents a significant, untapped market for those segments of the solar industry serving residential markets.A recent National Renewable Energy Laboratory (NREL) study indicates that LMI rooftop solar capacity could total 320 gigawatts of potential.While credit scores have been tracked as a primary barrier to accessing these underserved residential markets, average FICO scores for low-income households across the country are 664 and 716 for moderate-income households. This suggests that a significant percentage of these households would qualify for traditional solar financial products. Many residential solar developers ignore entire communities, missing a significant piece of this market opportunity.
As technology innovations within the industry advance more quickly, new applications may prove important in tapping into these markets. In many applications, solar-plus-storage systems may prove not only viable in these markets but may significantly reduce overall operating cost and payback. For many critical facilities (e.g., schools, multifamily housing, assisted living facilities, community centers, etc.), the critical loads are moderate. They often have rate structures akin to commercial customers, where demand charges are incurred. These may be optimal scenarios for solar plus storage. In many regions, such as PJM Interconnection territory, these projects can also enter ancillary service markets, realizing not only energy savings, but creating new revenue sources as well.
The technology used to integrate solar, storage, and ancillary services has advanced quickly, and costs have gone down measurably. These technologies can facilitate additional energy-saving practices, such asload shifting or peak shaving, allowing the storage device to manage how and when energy is used from the grid, minimizing grid use when energy costs are highest. This can reduce demand charges and even rates where time-of-use programs exist. These technologies also facilitate revenue-generating services, such as quick-response frequency regulation, operation reserves, voltage control, demand response, and capacity reserves. Advances have made these technologies easier to access and operate. Innovative ownership structures have been created where a third party operates the components to facilitate these services and shares the ownership and revenues, opening new, long-term revenue streams for the industry. Studies by the Clean Energy Group provide good insight into these applications and a clear rationale for serving these communities.
Community solar has long promised to overcomethe biggest barriers to solar access, offering solar energy to renters and properties that are not suitable for onsite generation while reducing the overall installation and upfront costs. Advances in community solar technologies have also accelerated growth in that sector and now expand the opportunities for tapping into underserved communities. Tools that simplify subscriber management processes have drastically reduced the customer acquisition and long-term management costs for community solar. New platforms exist that offer out-of-the-box integration with utility customer informationsystems, with some even providing customer billing integration that eliminates the need for two monthly bills for their customers. Inroads are quickly being realized with community solar projects targeting or even being dedicated to low- and moderate-income communities in many states.
While each market and legislative framework has implications on the approach and the bottom line for each project, understanding these technologies and their applications will provide a competitive advantage as the solar industry moves quickly into its fastest period of growth and competition over the next five years. Serving low- and moderate-income communities is currently a mission-driven effort, but can also provide a competitive advantage to solar developers with the foresight to bring solar to these communities first.