Don’t let low oil prices eclipse solar in state
After years of political, financial, and cultural momentum towards wide scale adoption of residential solar energy in Connecticut and across the nation, it’s become something of uncertain time for the promising renewable.
High-interest rates have recently pushed several residential rooftop solar companies into bankruptcy. Many federal and state incentives for solar adoption are expiring this year. Meanwhile, oil prices are relatively low and are projected to remain flat through 2025, according to the U.S. Energy Information Administration. Both the urgency and the financial efficiency of solar seem to have waned, and energy analysts have predicted the residential solar market will shrink by 12% in 2024.
Still, the fundamental problem—the catastrophic, long-term effects of polluting, nonrenewal energy—and its solution—clean renewables such as solar and wind—remain. The challenge for solar providers and environmental advocates alike is maintaining the kind of demand that allowed solar to grow at an average annual rate of 24% over the past decade, according to the Solar Energy Industry Association.
Indeed, there are now more than 162 gigawatts of solar capacity installed nationwide, enough to power nearly 30 million homes. In 2023, Connecticut ranked 10th in the nation in electricity smallscale solar generation, capacity, and adoption. According to Yale University, solar accounts for 4% of Connecticut’s total power generation, a small but significant percentage that can and must grow. But how?
A common rallying cry for advocates of renewables is reminding consumers that the sky is in fact falling. It is a moral imperative to adopt renewables, say my fellow solar evangelists, because the effects of climate change are becoming irreversible and will soon overwhelm our capacity to mitigate them. They are right, of course.
However, the key for maintaining and growing demand for solar is not just the science. It’s always been the economics too. High interest rates are toxic to rooftop solar installation. Lower oil prices, as welcome as they are, incentivize complacency on transitioning to renewables.
The good news for getting rooftop solar back on track is that the Federal Reserve Bank is signaling that lower interest rates are on the horizon, a welcome signal for both new, solar-powered home starts and for solar finance lenders to retrofit existing dwellings. And Connecticut’s two biggest incentives are here to stay. These are the 30% federal solar tax credit and the 6.5%% Connecticut solar system tax credit. Connecticut also has a range of generous rebates and sales tax exemptions. When combined, these credits and rebates can reduce the cost of going solar by more than 40%.
And, as a result of President Biden’s signature “Inflation Reduction Act”, the US Environmental Protection Agency is now just months away from awarding $27b from its Greenhouse Gas Reduction Fund. It’s worth noting that $27b is more than double the entire budget of the EPA — and represents the largest investment in solar energy ever. The focus of this effort is to ensure that everyone — not simply the wealthy — can participate in the benefits of solar power.
The democratization of solar is a crucial component for how we market solar power to America in the future. Research shows that recommendations of friends or family members have far more influence over purchase decisions than influencers, politicians, environmental advocates, etc. The same peer-to-peer and neighbor-to-neighbor forces that drive a decision on a Netflix movie night, also drive solar adoption decisions. According to Yale University Center for Business and the Environment, over a six-month period, the presence of one solar rooftop project increased the average number of installations within a half-mile radius by nearly 50 percent.
So while the economics for solar improve throughout 2024, we need to get better at education and outreach to consumers. Through workshops, informational sessions, and outreach events, programs like Yale University and Smartpower’s “Solarize,” we can equip homeowners with the knowledge and resources needed to make informed decisions about solar energy adoption. By demystifying the complexities of solar technology and navigating the intricacies of financing options and incentives, we can empower individuals to take control of their energy future, and act as ambassadors for solar to their friends, neighbors, and families.
A transition of the scale that solar energy presents is as difficult as it is important. It must endure economic troughs, loud but misplaced skepticism, and the vagaries of politics. But endure it must. A strong peer-to-peer adoption strategy is the surest way to achieve the expansion that future generations deserve.