Thanks to competitive prices, technological advances and excellent financial and fiscal support, solar energy is at its most attractive yet. The time to make the switch from conventional energy to clean energy is now. Here’s why.
SOLAR: THE US’s TOP ENERGY RESOURCE
There is the same amount of energy in just 18 days of sunshine on Earth as there is in all of the planet’s reserves of coal, oil, and natural gas – and the US is blessed with exceptionally high photovoltaic power potential compared to other nations in the northern hemisphere.
While the sunny southwest states of California, Arizona, and Nevada have the greatest solar energy potential, outputs can be increased with specialized tracking mechanisms that allow panels to follow the sun and collect light at an optimal angle, which means a system set up as far north as Portland, Maine can generate 85% of what it would in Los Angeles.
Averaged over the entire country, a square meter collects the approximate solar energy equivalent of nearly a barrel of oil per year. Harnessing just a small proportion of this – around 0.6% of the nation’s total land area – could power the entire country with environmentally and economically attractive electricity.
SOLAR COSTS ARE AT THEIR LOWEST EVER
Unlike oil, which is seeing lifting costs increase as fields mature and much of the potential is already exhausted, the cost for producing solar energy has become increasingly competitive. Since 2010, the cost to install utility-scale solar photovoltaic (PV) power has plummeted by 82%, meaning it now costs less to build a new solar PV plant than it does to keep many existing coal plants in operation.
This also translates to lower electricity prices: research from the US Department of Energy (DOE) shows the solar industry achieved the 2020 utility-scale solar cost target three years early, in 2017, making it competitive with conventionally generated electricity even without subsidies.
TECH ADVANCES MEAN MORE FOR LESS
As solar has become more popular, there are now more installation experts, more producers of components, and more consumers, as well as decreasing material costs, which means economies of scale. In addition to this, clever engineering tricks have now pushed the efficiency of solar installations close to their theoretical maximum. Bifacial panels, which catch solar rays from both sides, as well as electronics that enable the panel to track the sun as it moves through the daytime sky, mean that it’s now possible to capture almost all of the available sunshine.
SOLAR PPA PRICES ARE AT THEIR LOWEST…
Another factor which has made solar as attractive as it is today is access to financing options and business models which make it even more affordable. The most exciting of these are power purchase agreements (PPA), long-term contracts under which a business agrees to purchase electricity directly from an energy generator.
According to research carried out by the International Renewable Energy Agency (IRENA), solar PV prices based on competitive procurement could average US$0.039/kWh for projects commissioned in 2021, down 42% compared to 2019 and more than one-fifth less than coal-fired plants.
In the US, PPA prices are now at their lowest yet, but as demand begins to outstrip supply, companies that act quickly will lock in savings ahead of their competitors.
… AND TOP US BRANDS ARE GETTING IN ON THE ACT
As a result of these historically low prices, corporate solar purchases have surged across the US, which is now the world leader in corporate PPAs for solar, representing over 60% of the global market. Today, 220 companies operating in the United States are already procuring renewables or plan to do so.
While in the past, tech companies like Google and Apple have led the way in solar procurement in the US, entering PPAs is no longer the sole preserve of firms with large data center operations. Today, we’re seeing manufacturers, retailers, and even oil and gas majors getting in on the action.
It isn’t just the cost savings that America’s major corporations are looking for. As shareholders and investors set decarbonization targets, demonstrating leadership in clean energy development has become central to corporate strategy, and investing in large off-site installations via PPAs has become a key way to demonstrate a company’s green credentials.
RENEWABLES ARE THE WAY OUT OF THE CLIMATE CRISIS…
Renewable energy systems don’t produce air pollutants or greenhouse gas emissions, which is why the American Lung Association advocates for switching away from fossil fuels to renewables to power the country. For example, the electricity generated at on-site and off-site commercial solar installations in the US alone offsets more than 8.9 million metric tons of CO2 emissions annually, equivalent to taking 1.9 million cars off the road or planting 147 million trees.
And Americans want to see more of this: after countless wildfires, hurricanes, and heatwaves in 2020 that scientists say are caused directly by climate change, the majority of Americans of all demographics say they are in favor of the bold action to combat global warming laid out by President Biden, which includes transitioning to 100% clean energy by 2035.
… AND SOLAR ASSETS PERFORM WELL IN A CRISIS
We recently saw how a massive, historic winter storm buckled Texas’ independent power grid. Data from the Electric Reliability Council of Texas (ERCOT) shows that the blackouts were primarily caused by a huge drop in thermal generation as coal piles froze and nuclear reactors were taken offline. Solar, meanwhile, produced 1,000MW more power than the grid operator expected – even under cloudy skies due to the storms.
Thanks to new technology, solar can also help restart the grid if it goes down. In the past, following a blackout, grid operators have been forced to first turn on a conventional energy source, like a coal or natural gas plant to set the beat of the grid, before they can add other energy sources, like solar. New “grid-forming” controls on solar inverters, which are being funded by the US Department of Energy Solar Energy Technologies Office (SETO), enable solar inverters to form voltage and frequency levels like traditional generators, which means reliability and stability, even in a 100% renewable grid.
THE US REGULATORY FRAMEWORK FAVORS SOLAR
In the US, the Investment Tax Credit (ITC) allows for a 26% tax credit on solar systems. This important federal policy mechanism supports and incentivizes the growth of solar energy in the nation – in fact, according to the Solar Energy Industries Association, since the ITC was enacted in 2006, the US solar industry has grown by more than 10,000%.
But all good things come to an end, and the solar ITC is set to start phasing down after 2023, meaning that projects that begin construction in the next two years will achieve a better dollar-for-dollar reduction than those set to start from 2023 onwards – another reason for companies to get into solar now and lock in the best savings they possibly can.
SOLAR INTEREST REMAINS HIGH DESPITE COVID-19…
Despite shelter-in-place orders and movement restrictions, most utility-scale solar construction was deemed essential. As a result, according to the SEIA, large corporations across the US reported few delays in their projects, and what’s more, they don’t expect any changes to their renewable energy goals or timelines.
By their very nature, renewable energy project sites lend themselves well to social distancing: even the smallest of our solar farms are measured in the hundreds of acres, and at Atlas, we’ve set industry-leading standards to keep people safe from Covid-19, ensuring the sustainability of our projects for many years to come – no matter what’s on the horizon.
…AND SOLAR CREATES MUCH-NEEDED JOBS TO DRIVE ECONOMIC RECOVERY
Renewable energy generation will play a transformational role in the economy post-Covid-19. As the US economy looks to bounce back from the pandemic, getting Americans back into work is a major priority. In the five-year period between 2014 and 2019, solar employment in the US increased 44%, five times faster than job growth in the overall US economy. Solar employment is also inclusive of all Americans: women make up 26% of the solar workforce, while people from minority backgrounds make up 34%. What’s more, almost one in 10 solar workers are military veterans, according to the latest National Solar Jobs Census.
Today, the solar industry in the US provides 250,000 Americans with well-paying jobs, and as the sector expands thanks to the fast-declining cost of technologies and its increased popularity, this number will only get higher.
THE TIME TO TRANSITION IS NOW
Solar is no longer a futuristic, expensive power source. Today, solar is more affordable, better and more reliable than traditional fossil fuels. Shifting to solar can create much-needed jobs, help clean up America’s air, and enable companies to meet profitability, environmental and performance targets.
The time to make the transition to solar is now. At Atlas Renewable Energy, we develop, build and operate large-scale renewable energy projects as a trusted partner for large energy consumers across numerous markets. Contact us to learn more about how your company can take advantage of all that solar has to offer today.