With political winds shifting in Richmond – resulting in modest legislative progress for clean energy in 2014 – Virginia holds open a window of opportunity for solar energy customers. The decades-long drop in solar panel prices has brought solar generated electricity even closer to achieving grid parity with electric prices in Virginia. Yet despite these gains, further delaying on installing your solar generation system poses potential risks – here are four reasons why you should consider installing solar today:
1. Panel prices reveal the bottom of the hockey stick.
For over a decade, the industry has experienced dramatic decreases in solar photovoltaic (PV) prices, driving larger demand for solar as a cost competitive energy source. However, PV prices may have found the bottom of the hockey stick. 2013 saw decreasing panel prices slow to a snails pace, even showing a 9% increase and researchers at GTM Research are expecting a 9% rise in 2014.*
2. Increasing Solar Renewable Energy Credit (SREC) prices
In January, Pennsylvania SREC prices traded anywhere between $40 – $50/SREC – doubling 2013 SREC prices. PA SRECs were selling at nearly $300 in 2009, yet an oversupplied market, largely fueled by Pennsylvania’s $100 million solar grant program from 2010 through 2012, drove prices down to a mere $9 by the end of 2012. Prices are rebounding in 2014 and we expect the trend is to continue as demand meets supply.**
3. Rising electricity prices
The renewable energy source for solar PV remains fixed (free), and as solar installation costs drop such that solar generated electricity achieves grid parity – solar becomes cost competitive with traditional fossil fuel electricity. Due to extreme weather, new regulations and increasing awareness of the effects of fossil fuels, traditional energy sources are getting expensive. The graph below shows electricity prices in the U.S. on average, and in VA on average, based on information from the EIA.
While prices remain lower in Virginia on average, from 2007-2012, VA electricity prices rose an average 5.5% p/yr. Over that same period, U.S. prices increased 1% p/yr on average.
4. The looming 2016 Investment Tax Credit deadline
2016 holds two important dates for the solar industry: 1) a presidential election and 2) the expiration of the 30% Federal Investment Tax Credit (ITC). The expiration of the ITC could cause 1) a spike in system prices, while the industry develops new financing methods that do not rely on tax credits and 2) a shortage in panels and price increase starting in 2015 as demand surges to install systems before the anticipated 2016 deadline.
*The expected increase in panel prices is the result of trade factors and international demand for solar. The United States imposed tariffs on Chinese solar manufactures in 2012 – the European Union followed suit in 2013. International manufacturers are driving up prices to cover their costs or doing business with friendlier trade markets, such as Japan, that experienced a huge demand for clean energy following the Fukushima event.
**Pennsylvania’s Mandatory Renewable Portfolio Standard (RPS) requires utilities to purchase a growing percentage of their generation from renewable energy. Utilities can meet those requirements by purchasing RECs. PA has a solar carve out, requiring that a percentage of the renewable generation requirement be derived from solar. This percentage continues to increase at an accelerating pace starting in 2014.