The demand for rooftop solar panels for residential and commercial buildings is growing every year. Although solar energy provides a meager 0.5% of the electric power in the U.S., we can imagine a future when every single solar-ready roof will be transformed into a solar roof. This is not a far-fetched scenario: it took telephones about 65 years to reach 40% market penetration in the U.S. For smartphones, one of the fastest spreading technologies in human history, it only took 10 years to do the same. Solar power seems to be on a similar trajectory. As a homeowner or business owner, you may be asking yourself are solar panels worth it?
Determining the “technical potential” of rooftop solar power in the United States
Researchers from the National Renewable Energy Laboratory (NREL) tackled this exact question. In their latest study (2016), NREL concluded that, if all of the residential and commercial rooftops suitable for solar panels are used, a grand total of 1,118 gigawatts (GW) of solar power capacity can be installed in the U.S. This corresponds to an annual energy production of about 1,432 terawatt-hours (TWh), representing 39 percent of the nation’s electricity sales. Thus, leaving aside utility-scale solar projects, rooftops alone have enough solar “juice” to power 2/5ths of the whole country. This new study doubles the previous NREL estimate for solar rooftop potential in the U.S.
The latest NREL analysis included a more detailed assessment of the suitability of rooftops for hosting solar photovoltaics (PV) in 128 cities nationwide (representing approximately 23% of U.S. buildings), using light detection and ranging (lidar) data, geographic information system (GIS) methods, and PV-generation modeling. One interesting finding was that small buildings actually provide the greatest promise, with the potential to accommodate up to 731 GW of PV capacity and generate 926 TWh per year of solar energy (approximately 65 percent of the country’s total rooftop technical potential). This is due to the great number of this class of small building rooftop. Combined, they can contribute considerably to the nation’s electricity needs.
The study assumed a solar panel efficiency of 16%, but noted that if an efficiency of 20% were assumed (which corresponds to currently available premium systems), then the technical potential estimates would increase by 25%. Moreover, the report only took into consideration roof-mounted systems and not the immense potential of ground-mounted systems.
Economic impact of a 100% solar roof scenario
Aside from the direct effects of environmentally-friendly electricity generation, the potential rooftop solar market creates millions of job opportunities in the U.S. According to material scientist Tao Zheng and venture capitalist David Anthony, assuming 100% residential market penetration by 2030, 5 million new jobs could be created.
Arguably, the greatest economic impact is felt by electricity consumers themselves. As we discussed in an earlier article, once the cost of solar electricity reaches or dips below the retail price of electricity (a.k.a grid parity), we see a greater shift towards solar. An NREL figure of the average cost of solar clearly shows the trend in decreasing solar module costs. The number of states where grid parity has been reached is increasing as a result of these decreasing costs, combined with incentive programs that further reduce the cost to consumers.
Technology s-curve for solar panels
The adoption rate of many technologies follows a trend line that looks like the letter “S”. Over time, with increasing performance and decreasing unit cost, more and more people opt for a new technology. At the initial stages, there is a slow rate of adoption as the technology is undergoing intensive research and development (R&D). Great effort may be spent exploring different paths towards improvement and some of these will result in dead ends. Eventually, the improvements will accelerate and developers will shift out of the research stage to focus on commercialization. This is when the market expands and companies start working on new iterations of their products, as well as decreasing their prices to beat the competition, further spurring the technology’s adoption. As the technology matures and more and more people acquire it, diminishing returns set in and the rate of growth slows down. At this stage, the overall market for the technology reaches its peak.
Solar power is only at the very early stages of its own “S-curve”. Decreasing installation costs, new financing options, and increased reliability of products are creating a very favorable environment for increased adoption of solar panels by homeowners. In order to determine where solar energy is headed, researchers from the Stern School of Business at New York University (Melissa A. Schilling and Melissa Esmundo) compared the trajectory of solar energy with other forms of energy generation (including other renewables, as well as fossil fuels). They concluded that, while fossil fuel technology has reached maturation, with little noticeable gains in kWh (energy) generated per dollar from further investment in research and development, solar photovoltaics are just starting to demonstrate remarkable improvements in performance. The figure below shows how the R&D expenditure directly correlates to a faster growth in solar panel performance.
Rooftop solar panels have a bright future ahead. Cross checking various metrics suggest that we are currently at around the 1% point of technology adoption in the United States. Technology forecasting is a very tricky business, so we won’t even attempt to declare when solar will truly go mainstream. However, it is clear that if the underlying cost and performance trends continue to support the growth of this business, you’ll be hearing more and more of your neighbors boasting about the beauty of solar (remember the day your friend showed you a gizmo called the “iPhone”?).
If you haven’t yet started investigating solar panels for your rooftop, you haven’t missed the boat. As the market matures, consumers will have more options to benefit from solar energy. But don’t forget that the federal solar Investment Tax Credit (ITC) of 30% is set to decrease at the end of 2019, and will be phased out completely after 2022. As part of your research, why not run the numbers for your home and see if solar energy makes sense for you? When you feel ready, we can help you find highly-qualified installers where you live and get you quotes.
Updated version of an article originally published 8 October 2014