As people seek to cut their electricity bills and after the passing of the most transformative energy policy in U.S. history, switching to solar seems like a great move for homeowners. However, inflation is directly affecting cost of living and the effects of the pandemic on supply chains is not yet completely settled. All of this and more have homeowners wondering whether now is the right time to take the plunge and switch to solar.
At the recent RE+ clean energy conference in Anaheim, Fixr.com spoke to Shawn Rumery, Senior Director of Research at Solar Energy Industries Association (SEIA) to get his take on the outlook for the solar industry in general, current challenges, and what all this means for homeowners.
In this article, we explore 6 of the main takeaways from the RE+ conference, and answer the question: Is now the best time for homeowners to switch to solar?
Historical Inflation Reduction Act Includes Huge Incentives
Undoubtedly one of the biggest takeaways from the RE+ conference was the enthusiasm surrounding the recently passed Inflation Reduction Act (IRA). As the name suggests, this $700 billion bill has the objective of bringing down inflation, and about $369 billion will be invested in energy security and climate change with clean energy industries, especially solar, taking a big part of the funding. Probably one of the biggest wins is the increase to the federal solar tax credit, from 26% to 30%, which is set to drop back to 26% in 2033.
Shawn Rumery points out the widespread benefits of the IRA, saying, “For homeowners, obviously there's a ton of opportunity there just in, obviously, rooftop solar, in storage and EVs, but also in things that aren't discussed as much - there's money in there for main panel upgrades.”
Solar Is More Accessible Than Ever - and Not Just for Homeowners
Despite what some people may think, solar isn’t only an option for homeowners in sunny parts of the country, but residential solar is available countrywide. California has the most solar installations, but other states are seeing rapid growth, and this trend will continue as the demand for solar increases.
Another aspect to this is the emergence of community solar programs in more states. Community solar is when multiple parties connect to a single source of solar energy, sharing the resulting financial benefits. What was once dominated by New York, Minnesota, and Massachusetts, community solar is now more accessible to people than ever before. It opens the door for those who have an unsuitable roof for solar installation, strict HOA rules, people who want to keep their home’s aesthetic, and for low-to-moderate (LMI) incomes who can’t afford upfront installation costs.
Other beneficiaries of community solar programs are renters. Rumery mentions that, “We do need to reach rentals, [...] so markets like community solar are ideal for that. So this allows folks to basically get reductions on their electricity bill by investing in solar, without having to own a home and without having to put panels on the home.”
Solar Is Becoming More Affordable
Over the last 10 years we have seen a huge decrease of over 60% in the cost to install solar. What once cost $40,000 (pre-incentive) for an average sized residential system in 2010, costs around $20,000 today, according to data from SEIA/Wood Mackenzie, making solar panel installation considerably more affordable for homeowners. Moreover, there are options to lease and finance solar panels, giving homeowners more options than ever before to reap the benefits of going solar.
There was an exception to the decreasing installation cost trend in 2021. U.S. solar average blended PV system pricing changed from $1.29 per watt to $1.38 per watt from 2020 to 2021, mainly due to supply chain issues and shipping constraints from the fallout of the pandemic.
Supply Chain Issues Could Still Cause Problems
Demand is expected to grow for residential solar, and with that comes added pressure on supply. This was one of the main topics of conversation at the RE+ conference. Current supply chain problems are still lingering. Rumery comments that, “We need a lot more supply. We're already having some supply issues coming from COVID stemming from trade. We're going to really need to build out our domestic supply chain a lot more.” This could cause delays in projects but Rumery goes on to say that, “Fortunately, there's some components of the IRA that are going to lead to tax credits for both investment and production of those domestic facilities, which will hopefully over the medium term alleviate some of that supply print that we're seeing.” SEIA projects this to happen around the middle of 2023.
Batteries Are Becoming More Commonplace
Some reasons homeowners decide to switch to solar is to have more reliability on their energy source. One key component to achieving this is by installing batteries. A key takeaway from the RE+ conference is the increasing availability of batteries on the market for homeowners.
Rumery echoes the questions homeowners have, by asking, “Instead of using the grid as a battery, can you have a battery at your house? And improve the flexibility of the entire grid?” He continues to affirm that, “that is absolutely something that we're gonna see more coming forward.”
Restrictions to having batteries have been due to lack of availability in certain areas of the country. Rumery states, “a lot of that [batteries] is focused here in California, but we're going to see it elsewhere.” He continues to mention that there is still room for prices to decrease, “the key is driving battery cost down, because right now it's still a little pricey.”
Benefits Outweigh Temporary Issues
There is no denying that the IRA is going to have a huge impact on the solar industry overall. Homeowners are going to be able to benefit from plenty of incentives and rebates, and despite a slight increase in 2021, the cost of installing solar panels is the lowest it has been in the last 10 years. Moreover, varying options such as financing solar panels and community solar mean that this form of energy may be available for those who once believed solar was out of reach. All of these aspects favor homeowners who are seriously considering installing solar panels in 2023.