Heating Up

Jennifer Duffield White

Few things in our world are as certain as the existence of the sun. (Whether or not it actually shines next Saturday—on your plants, or your solar panels—is a more fickle matter, of course.) While solar energy has long been touted as the sustainable energy of the future, the actual modern-day technology that turns it into usable forms of energy has been challenged by costs, technological hurdles and the landscape of utilities, incentives and
politics.

In the last five years, solar energy has gone from a steady but niche energy source to an industry that’s growing in leaps and bounds. So just where is it headed?

Pictured: TrueLeaf rolled out its own solar PV line in 2012, making it easier for growers to adopt a system and install it themselves.

A brief history
Humans have been harnessing the sun for centuries. Greeks and Romans used mirrors and the sun to light fires. Long before electricity, buildings relied on passive solar heat. An inventor filed a patent for the first commercial solar water heater in 1891. Less than 15 years later, Einstein wrote about the photoelectric effect. Scientists and inventors fiddled with solar for decades, making important strides. But the landmark moment came in 1954 when the first silicon photovoltaic cell was developed in the U.S. It was the first solar cell that could convert enough of the sun’s energy to actually run everyday electrical equipment. That first solar cell had 4% conversion efficiency. It wasn’t until 1994 that an experimental solar cell exceeded 30% conversion efficiency. Still, that means 70% of the sun’s energy was not getting converted into electricity. (Thin-film PV cells have a much lower efficiency percentage.)

But what solar lacks in conversion efficiency, its advocates argue, solar makes up for in being renewable, bringing with that label a long list of advantages, from its low carbon footprint to portability and reliability.

Growth
2014 was the biggest year ever for solar PV installations. While all segments demonstrated growth, the majority of it occurred in the utility solar PV market. The U.S. installed 6,201 megawatts of solar PV in 2014, according to the U.S. Solar Market Insight Report, a 30% increase over 2013 and 12 times greater than 2009. They also installed 767 megawatts of concentrating solar power (CSP). That accounted for 32% of the newly built electric-generating capacity in the U.S.

But take a step back for a moment and consider that 2014 was another milestone for solar energy: it now makes up 1% of all U.S. electricity. While the growth is exciting, it has not, by any means, replaced fossil fuels. 

Who’s buying in? Private citizens, corporations and power utilities. A total of 41,803 businesses, nonprofits and government locations now have solar PV installed, with Walmart and its 4,000-plus stores registering the highest solar capacity of any U.S. company.

On the consumer front, a new nationwide Gallup Poll (March 2015) showed strong support for solar energy. Ninety-one percent of respondents said the U.S. should place more emphasis or the same amount of emphasis on solar development. Yet, they aren’t necessarily abandoning support for other technologies: 84% said the same for wind, 87% for natural gas, 68% for oil and 55% for coal.

Cost
The plummeting cost of solar installation is one of the main drivers in the industry’s growth. While the sun’s rays may be free, historically the technology that converts solar into electricity has been far from cheap. Solar cells, once priced at $100 a watt, fell to $20 a watt in the 1970s, largely due to design improvements. In the last two years, the cost of solar took another dramatic drop, one that the International Energy Association (IEA) says put the PV sector five years ahead of where it should be.

The International Renewable Energy Agency calculates that solar PV module costs have fallen 75% since the end of 2009, with the cost of electricity with utility-scale solar PV falling 50% since 2010. In fact, the agency claims that solar (and other technologies) are now less expensive than traditional fossil fuels in many regions around the world. Coupled with incentives—regulatory and financial—solar has suddenly become a widespread, viable and easier option. And everyone is talking about it.

Take the greenhouse industry, where a grower can install a 24 kW PV system for about $4 per watt. Five or six years ago, that would have cost $8 to $10 per watt.

The desert region of Dubai has solar down to 5 cents per kilowatt hour. Germany’s solar power plants deliver electricity at about 10 cents per kilowatt. (A new coal or gas-fired plant falls between 5 and 10 cents per kilowatt hour.) 

The IEA, which Renewable Economy calls a “highly conservative” organization, announced in 2014 that they expected solar to become the largest single source of energy by 2050, projecting that rooftop solar will account for half of all solar PV installations. One of the key reasons? Lower capital costs. This forecast from IEA is considered by many in the solar industry to be one of the more moderate predictions.

In early 2015, a study by the Fraunhofer Institute for Solar Energy Systems declared that by 2025, solar energy plants will be the most inexpensive power available in many parts of the world, predicting that by then, solar power in parts of Europe will have declined to 4 to 6 cents per kilowatt hour. 

In the greenhouse
The adoption of solar energy can save money in the long run, but for many greenhouses, it’s also part of the sustainability story they want to tell about their businesses. Yet those reasons often don’t add up to action. Incentives such as grants and tax breaks still function as the main enabler for installing solar systems.

The real boost for horticultural businesses looking to install solar power may be yet to come. The spring of 2015 marked a new funding cycle under the new Farm Bill, with mandatory funding of $50 million for the Rural Energy for America Program (REAP) each year for five years. (That’s a significant increase over recent years.) Solar energy projects, as well as other renewable energies, will be among the funded projects.

In addition to REAP, growers can tap into the USDA’s Natural Resource Conservation Service (NRCS) and their Environmental Quality Incentives Program (EQIP) for energy audits and rebates. Plus there are tax credits and at the state level, rebates and incentives. All of these can make a big difference in how long it takes to pay off a project. And once it’s paid off? The electricity you generate is free.

The dangers of rapid change
Rapid change has marked this industry, and for some that may be a red flag that it could shift yet again.

A few years ago, China began “dumping” solar PV panels on the U.S. market, selling them below their own manufacturing cost, with the help of their government subsidies. The downward spiral of prices took a toll on U.S. solar manufacturers, a market that was arguably overcrowded. It forced many companies out of business.

In a somewhat controversial move, the U.S. and the European Union placed new trade restrictions to counteract that downward price pressure, including anti-dumping duties of up to 78% and anti-subsidy duties ranging between 27% and 49%.

But several other factors play into reduced solar costs. The price of polysilicon, used in panel production, has dropped. Manufacturers have improved their production and conversion efficiencies. Prices for other components needed in PV installations, such as racking and inverters, are still falling as those companies make inroads in efficiencies and innovations. Many of those trends are expected to continue. Also of note, at the recent World Energy Conference, the Deutsche Bank predicted that installation costs in the U.S. may fall by as much as one-third in coming years.

Like any industry, solar will no doubt have its ups and downs in years to come. Early adopters argue that installation was worth it all along, but for others seeking a cleaner form of energy that can, in many cases, make them energy independent, the benefits are finally outweighing the costs.

3 Kinds of Solar Energy

• Photovoltaics (PV): What most people think of when they think of solar energy. These PV panels convert sunlight into electricity, which can then be used, stored, or converted for transmission.
• Concentrated solar power (CSP): Reflective materials concentrate sunlight to generate thermal energy, which then drives electric turbines. Generally used for utility-sized power plants.
• Solar heating/cooling: Various technologies, including passive solar, that collect thermal energy, which is used to heat water and spaces. Can also be used for cooling. GT