Solar power picks up steam

Solar energy is becoming increasingly popular thanks to dropping cost of solar, new technology innovations and new business models. Businesses, policymakers and utilities should work together to drive the growth of solar, says writer Emma Bailey.

new mexico solar panels
Homes with solar panels in New Mexico, USA. Image: Joseph Sohm /

Fossil fuels have powered the development of civilization and technology for more than a century, but the effects of oil and coal on the environment are now driving interest in alternative energy sources. With Tesla’s new Powerwall and solar power leasing, it seems that solar power, in particular, is becoming a more viable and affordable option for renewable energy. Homeowners now have a prime opportunity to explore many of the environmentally friendly options for powering their homes.

Until recently, solar panels were rarely used by homeowners because of high cost, and cumbersome installation. Even when homeowners have expressed interest in getting their own solar power system, many banks have been reluctant to finance such small projects. Solar leases address most of these issues. By signing a contract with solar leasing companies, homeowners can have solar panels installed on their home for free. Homeowners then lease the panels on a monthly basis and enjoy a variety of perks along the way.

SolarCity, a firm headed by South African CEO Elon Musk and headquartered in San Mateo, California, has pioneered the solar leasing business in the United States. With lease payments lower than what homeowners would pay for electricity from the local grid, SolarCity starts saving homeowners money as soon as they install the panels for free. Upgrades, insurance and repairs are all part of the deal.

Other companies, including Google, are now entering the market. Other American companies offering solar leases include Vivint Solar, Clean Power Finance, SunPower and Sunrun. Some of these companies, such as SolarCity, market their products themselves while many others let their installers handle sales. More than half of the companies install panels while the rest contract with installers around the country.

Despite the environmental upsides of solar leases and the warm reception of this service among consumers, some utility companies have taken issue with the industry. This is partly because solar panels complicate management of the grid—evident in its intermittency issues, in which the majority of power is generated during the day but no power is generated at night.

However, utility companies have also expressed concern that the addition of solar panels to homes connected to the grid will increase their costs related to repair and administration of the panels. Of course, the success of solar leasing companies in some regions has also cut into profits for the utility companies.

It seems that solar power, in particular, is becoming a more viable and affordable option for renewable energy. Homeowners now have a prime opportunity to explore many of the environmentally friendly options for powering their homes.

The clash between the existing power grid and the emerging solar lease business has led some state and local governments in the United States to pass laws regulating the new industry. Some states, such as Florida, have simply banned consumers from using such services. Near Phoenix, Arizona, the Salt River Project utility company has begun imposing fees of $50 per month on customers who use solar panels. The average monthly bill increase footed by its customers easily overshadows the savings they would receive from leasing solar panels. Naturally, this fee discourages many property owners from leasing solar panels.

In contrast, the state of Georgia has welcomed solar leasing with its own legislation, which encourages people to use solar power and allows them to sell it back on the electric grid. SolarCity filed a lawsuit against the Salt River Project to protest these fees because they constitute anti-competitive behavior, and the conclusion of the case will clarify how future interactions between utilities and solar lease companies may pan out.

The greatest diversity of alternative energy options is found in states with deregulated energy markets. States like Ohio in the US and Alberta in Canada, which allow solar providers to compete with traditional energy providers, are seeing a higher adoption of renewable energy, wholesale. Amid the conflict between solar lease companies and utility companies, do-it-yourself solar panels also remain an option.

However, this can be a major undertaking with requirements to plan the project, install the panels and meet local regulations. Not only does using a solar lease company eliminate the work involved in getting solar panels, but it can actually save money that would otherwise be spent on parts and installation.

What about consumers who do not live in states where solar leasing is available? In many areas, local utility companies actually offer power from solar and other renewable sources. In fact, some of these programs also sell renewable energy for less than they offer electricity generated through traditional sources and similar to the fees associated with solar lease companies like SolarCity.

Around the world, solar power is set to become the primary energy source as solar panels are becoming more affordable. Although the United States is moving forward rapidly in this area, China and South-East Asia are still the leaders in adopting solar energy. China, in particular, is working on solar projects to reduce regional pollution and plans to triple its solar power production by 2020. Over time, differences in policy among countries are likely to determine solar power growth rates in separate areas.

Whether purchased or leased, solar power is a viable energy source that does not contribute to global pollution. SolarCity and other solar lease companies are making the transition away from fossil fuels easier. While regulations in some areas may challenge the growth of the private solar industry, increased participation of local utilities will also foster the changes we need for the benefit of everyone.

Emma Bailey is a writer in the greater Chicago area who covers technology, entertainment, and business. This article was written exclusively for Eco-Business.

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