June 6, 2018

The State(s) of Distributed Solar

2017 Year-End Update

Energy production from renewable sources continues to expand in the U.S. at a rapid clip, thanks in no small part to the substantial growth of solar energy—and distributed solar in particular—in recent years. More states than ever are making solar a priority. But where have these gains been greatest, and what are the economic implications for residents from one state to the next?

States with policies supporting a larger proportion of distributed energy from small-scale, often locally owned solar, give their residents and businesses big energy savings and their local economies an economic boost, more so than when solar investments are left to incumbent, often investor-owned utilities.

An updated map of the size of each state’s solar market (in yellow, orange, and red) and pie charts showing the corresponding share of distributed solar (1 megawatt and smaller) illustrates how this state-by-state landscape has changed since our original analysis published in 2016.

Total Solar and Percent Distributed by State – 2017

A majority of states—32 to be exact—now boast at least 100 megawatts of solar power in their energy mix, up from only 20 states two years ago. Even with this expansion, similar regional patterns in the state-by-state landscape remain:

In the Southwest and along the west coast, abundant sunshine and availability of space continue to deploy large amounts of utility-scale solar in states including Nevada, New Mexico, and Texas, while other states in the region including California, Oregon, and Arizona, have had greater success in balancing that utility-scale growth with distributed solar.

In the Southeast and along the Gulf Coast in states including Alabama, Florida, and Georgia, lackluster growth in total solar has continued despite readily available sunshine, as incumbent monopoly utilities continue to hinder its development. Few states in this region have large solar markets, with the exception of North Carolina, where utility-scale solar dominates as a result of long-term contracts the state’s monopoly utility Duke Energy has made with third party solar developers, who have been able to offer competitive prices to the utility but are not currently authorized to sell electricity directly to customers.

In the Northeast, Mid-Atlantic, and to a lesser extent the Midwest, many states have seen relatively strong growth in their solar markets and, as a whole, larger than average shares of distributed generation than other regions. Growth has occurred in these regions, despite comparably less sunshine than the country’s sunbelt.

Of the nine states that each contribute more than 1,000 megawatts of solar power, three boast shares of distributed generation greater than 50 percent and all three happen to cluster in the Northeast: New Jersey (1,926 megawatts of total solar, with 66 percent from small-scale sources),  Massachusetts  (1,810 megawatts, also with 66 percent from small-scale), and New York (1,135 megawatts of total solar), where a whopping 87 percent of total solar has been invested in small-scale, distributed sources.

When one accounts for the mix of state-level policies that help or hinder distributed solar, factors underlying these statistics become even clearer. In recent years, New Jersey, Mass., and New York, the three leaders in distributed solar, have each expanded policies, such as net metering  and power purchase agreements, that are favorable to distributed generation, while keeping attacks from their incumbent, monopoly utilities at bay.

Even in states that have not yet claimed a majority of solar power from distributed sources, there are still examples of important policy shifts that can increase the rate of growth in distributed generation moving forward. For example, in California, the nation’s leader in solar power capacity (with nearly 16,000 megawatts, 41 percent of which from small-scale sources), recently passed a landmark solar homes rule that will couple distributed solar with all new home construction, when it takes effect in early 2020. Meanwhile, Minnesota has pursued a different tactic to keeping generation local, broadening access to solar energy beyond those who own homes through the nation’s leading  community solar program.

Over time, these and other state policy strategies that prioritize distributed generation in their solar and energy markets will work to the benefit of residents, particularly as small-scale solar pays off and brings more substantial local benefits than its utility-scale alternative.

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