The solar energy industry is part of a very dynamic market. Many factors — including government policies, fossil fuel costs, solar energy technology advances, commodity prices, and even public awareness of the climate crisis — impact solar energy deployment across the globe. What’s in store for the next year? Let’s explore some trends in solar energy to better understand what is on tap for 2020.
Solar Battery Prices Are Falling
Solar energy is an intermittent energy source. This means that solar panels produce power when the sun is shining and not when it isn’t. Energy storage allows the solar system to supply power when the sun has set or in cloudy weather, expanding the capabilities of solar energy systems.
There are two main types of solar batteries: lead-acid batteries (like you have in your car) and lithium-ion batteries. The latter is far more advanced, longer-lasting, and requires less maintenance. Not surprising, lithium-ion batteries have a higher upfront cost, but the price has been decreasing significantly in recent years. The cost of lithium-ion battery storage fell 35 percent from the first half of 2018 to now (December 2019) and 76 percent since 2012. This downward price trend is good news for renewable solar energy in 2020 — and it’s likely to continue.
Natural gas plants are often used to meet peak energy loads because they can more easily be turned on and off than coal or nuclear power plants. Lower costs make it easier for intermittent renewable energy sources — such as wind and solar — to be cost-competitive with dispatchable fossil-fired power plants. Price decreases in utility-scale battery banks now make solar plus energy storage competitive in many areas on price alone. Battery banks can make it unnecessary to fire up power plants during times of peak demand, reducing fossil fuel consumption. The greater the capabilities of solar, the less attractive and financially viable these peaker power plants become.
On the residential side, more homeowners are relying on solar systems with battery storage for emergency power during grid outages than ever before. This is an especially attractive option in areas prone to extended power outages due to natural disasters or with inadequate utility infrastructure, like Puerto Rico.
Federal Solar Tax Credit Starts Decreasing
A tax credit is a dollar-for-dollar decrease in taxes owed to the federal government. A tax credit is more valuable to the taxpayer than a write-off. The solar Investment Tax Credit (ITC) is a valuable incentive by the federal government that reduces the total cost of going solar. The solar credit was not extended by Congress, so it will be tapering down each year, starting in 2020. This means that the incentive will be greater in 2020 than in subsequent years.