Solar PV in California could be rebate-free by 2016
SACRAMENTO, California, US, May 4, 2005 (Refocus Weekly)
If the state of California would commit to long-term market development of solar, the upfront cost of solar could drop to the point where rebates are no longer needed by 2016.
“The biggest roadblock to solar power becoming as mainstream as McDonald's
is its price tag," says Bernadette Del Chiaro of Environment California
Research & Policy Center and co-author of ‘Bringing Solar to Scale:
California’s Opportunity to Create a Thriving, Self-Sustaining Residential
Solar Market.’ “By driving up demand, California can catapult solar power
from the backwoods boutique of the 70's to having its own aisle at Home
Depot.”
The report examines how California can make solar power affordable for average
homeowners and businesses within ten years, and details how development of a
thriving and self-sufficient solar market would benefit the state through
reduced air pollution, protection from volatile power prices, and less need for
expensive upgrades to electricity transmission and distribution systems.
The best way to ensure that the state sees a future expansion in capacity of
solar PV is to commit to long-term market development programs that include
financial incentives and new construction design policies. Experience has shown
that such programs can lead to increased demand, lowered prices and, ultimately,
a “robust, self-sufficient solar market in which government incentives are no
longer necessary.”
It is unlikely that the goal of governor Arnold Schwarzenegger to install one
million solar roofs (3,000 MWp) of new solar PV capacity and half of all new
homes built with PV within the next decade, can be achieved without “a
sustained, guaranteed program that combines incentives for both residential and
commercial systems, as well as policies that encourage the inclusion of solar
power systems into the construction of new buildings.”
The most important factor in reducing costs is from increased production, it
explains, and the solar industry “has learned how to improve production
methods, improve the efficiency and life of various components, and operate more
efficiently,” it notes. Increased production resulting from solar incentives
offered by the California Energy Commission have spurred increased installed PV
capacity and decreased price, with the price of retrofitted residential PV
systems dropping by 36% from 1998 to 2004, down to US$8.98 per watt.
Prices will need to drop to $4 for homeowners to break even on their solar
investment without financial incentives, the report estimates. If no residential
incentive program were offered after this year, California would install 53 MW
of residential PV systems by 2015, with a system price by then of $5.69 per
watt, “not yet within the range of being economically self-sufficient for the
consumer.” With a ten-year incentive program that scales down $0.20 per watt
each year from its current level of $2.80, California would install 1,278 MW of
residential PV by 2015, when the system price reaches $4.40, “a price that
would put solar within the range of cost-effectiveness for California homeowners
without financial incentives.”
Getting to this point would require an average annual budget of $180 million for
incentives to create the demand for residential installations, it adds. Under a
more optimistic estimate, the residential incentive could be scaled down even
more quickly, with installation prices reaching the break-even point in 2012 or
sooner.
Since Japan launched a residential incentive program in 1994, average system
costs have fallen 75% and that country is approaching a point where government
rebates will no longer be needed, it adds. Japan’s average annual investment
of $115 million over the last ten years has led to a 35-fold increase in PV
capacity, despite reductions in the incentive from 50% of costs to 10%. It
achieved its goal of equipping 70,000 homes with solar PV by 2000, and is on
track to meeting its goal of installing building-integrated PV systems on half
of all new homes by 2010.
“A strong commitment to solar PV now can create long-lasting results,” the
report concludes. “California already has the third-largest PV market in the
world, after Japan and Germany, and has great potential for solar generation
given its high sunlight exposure. Pursuing the right policies can develop this
market and the industries that serve it.”
The state should commit to a sustained incentive program for residential and
other small systems, with a new dedicated solar fund of $180 million per year to
be paid through a surcharge on electric bills. It should also commit to a
sustained incentive program for commercial systems, incorporate solar into new
home design and construction, and raise the net metering cap.
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