The Economic Feasibility of the Path to 100% Renewables and Residential Solar Power
By: Sarah Gerarden
Researchers are looking at the factors of residential low price photovoltaic solar installations to encourage larger rates of residential solar adoption, thus pushing forward in the path to 100 percent renewable resources by 2050.
The world is traveling slowly to 100 percent renewable resources, but according to leading scientists, this mission can be completed by the year 2050 with current technology. To accomplish this, electricity must replace conventional forms of power such as combustible engines and other systems which run primarily on gas or require a lot of heat. Although many major aspects of the world are already powered by electricity, barriers in industry, transportation, homes, and businesses need to be resolved before the path to 100 percent renewables are a conceivable option. Specifically, two main attributes come into play when considering the path to 100 percent renewables: technical and economic feasibility. In other words, is it even possible to run solely on renewable resources by the year 2050? Considering the fact that the United States currently obtains approximately 10 percent of energy from renewables, there is still a substantial amount of work to be done. One aspect of this question focuses on the economics of residential solar energy.
Eric O’Shaughnessy, a market research analyst at the National Renewable Energy Laboratory, described his research regarding the economics of residential solar. O’Shaughnessy is involved in an academic partnership with Dr. Greg Nemet as well as researchers from Lawrence Berkeley National Lab, the University of Texas, and Yale University, who are studying how to decrease the price of photovoltaic (PV) solar system installation. Their goal is to induce higher rates of residential solar adoption in the United States. A key factor in residential solar adoption is price, so O’Shaughnessy and his team are looking at the factors that make low-priced systems affordable. “If you can figure out the factors that make low price PV systems, you can shift the distribution of prices in that direction,” O’Shaughnessy says. Currently, the installation prices of PV solar systems have a wide price distribution due to location, installer company size, and installer experience. The high prices prevent customers from adopting solar in their homes. O’Shaughnessy is working to use economics as “a tool to create smart environmental policies” and inform policymakers for creating the most economically efficient systems.
“If you can figure out the factors that make low price photovoltaic systems, you can shift the distribution of prices in that direction.” — Eric O’Shaughnessy
O’Shaughnessy’s research is data driven, and his team is working with some of the largest solar data sets that are available. One data set, Tracking the Sun, summarizes price trends of PV solar systems installed in the United States. One issue that the researchers must contend with is poor data quality. A variable that is almost always missing is the characteristics of the houses themselves. If a house has a high-pitched roof, the cost to install a PV system will increase because of variables that affect the difficulty of the installation process. O’Shaughnessy and his team are continuously creating ways to control the quality of data to ensure that the data are not problematic. The data are used to make conclusions about market structures; the knowledge gained about the solar market can be used to efficiently increase adoption in residential communities. Right now, both small businesses and large national corporations do installation. The researchers have noted the importance of a firm’s experience with PV system installation as a leading factor in low-price PV systems. O’Shaughnessy and his team are “dissecting installer-customer interactions to see what the data can tell us.” It was also found that some level of competition among installers is important.
Another possible method to decrease the cost of residential solar power is to utilize community solar farms. Rather than each customer installing individual solar panels on their roofs, multiple residential customers would be allowed to subscribe to a much larger system. Because larger systems tend to yield lower prices in an economy, each individual customer would have a lower cost-basis for the same utilization. More research would need to be done to compare this method of residential solar with the smaller individual roof solar panels. One issue that arises in either case is storage of solar energy. Because batteries are so expensive, they are not a practical solution. Fortunately, there is a mechanism to take advantage of solar energy when residents are not home. For example, it is possible to configure water heaters to heat water while no one is home, or to configure air conditioning to plunge the temperature of the air on a hot day so that residents can come home to a cool house. This concept improves the thermal capacity of a house by leveraging solar energy with smart technology.
A special result of this research would be for citizens to adopt solar power in their homes, regardless of their degree of concern for the environment. For example, someone who is not particularly concerned for the environment will likely adopt solar if they feel they directly benefit from the transition. It is safe to say that people do not like paying their electric bills, so if a company tells them that they can save hundreds of dollars a year by utilizing solar power, people will be interested.
O’Shaughnessy’s academic partnership is ongoing. This team of researchers will continue looking more specifically at price dispersion, effects of the current market structure, appropriate level of competition, the ideal number of installers, and experience level of installers to improve policy and increase adoption of residential solar power.
It is important to remember how small the share of electricity produced by residential solar power is compared to industrial power generation methods. Transportation, manufacturing, and business also use huge amounts of energy, so there is much to accomplish before the goal of 100 percent renewables can be reached. However, with our current capabilities, a large impact can be made in reducing the economic burden of renewable energy generation.
