On May 18, 2016, the Energy Department released the On the Path to SunShot reports, a series of eight research papers examining the state of the U.S. solar energy industry and the progress made to date toward the SunShot Initiative’s goal to make solar energy cost-competitive with other forms of electricity by 2020. The solar industry is currently about 70 percent of the way towards achieving the Initiative’s 2020 goals, but as solar has become more affordable, helping the industry grow by an astonishing 23-fold since the beginning of the Obama Administration, new challenges and opportunities have emerged.
The reports released today explore the lessons learned in the first five years of the ten-year Initiative and identify key research, development, and market opportunities that can help to ensure that solar energy technologies are widely affordable and available to power millions more American homes and businesses.
“Solar energy is an integral part of our nation’s ongoing energy revolution,” said U.S. Secretary of Energy, Dr. Ernest Moniz. “The U.S. has over 10 times more solar installed today compared to 2011 when the SunShot Initiative was first launched, and the overall costs of solar have dropped by 65 percent. The Administration’s continued efforts through the SunShot Initiative will help to further reduce costs to make solar energy more accessible and affordable for American families and businesses.”
Launched in 2011, the SunShot Initiative was created with the goal to reduce the cost of solar energy technologies by 75 percent within a decade across the residential, commercial, and utility-scale sectors. Since then, solar technologies, solar markets, and the solar industry have changed dramatically. The On the Path to SunShot series serves as a follow-up to the 2012 SunShot Vision Study, which analyzed the economic and environmental benefits that would result from achieving SunShot’s ambitious 2020 goal. This new study series explores the areas of focus that could help the United States to achieve cost-competitive solar energy.
Among the conclusions from the study series, a recurring theme emerges that sustained innovation across all levels of the industry—from cell efficiency improvements, to faster and cheaper installation methods— will help to achieve the Energy Department’s SunShot goals.
The On the Path to SunShot series was developed in collaboration with leading researchers from the National Renewable Energy Laboratory, Lawrence Berkeley National Laboratory, Sandia National Laboratories, and Argonne National Laboratory.
On the Path to SunShot demonstrates that the technologies and strategies used to facilitate this evolution will affect system-wide costs and improve the value of solar energy, which will be enabled by a total installed cost of solar energy systems reaching $.06 per kilowatt-hour.
Reports and Key Findings
- Grid flexibility options and smart inverters, among other technologies, could enable solar penetration levels at 25% and beyond.
- Continued advances in science and technology will play a critical role in meeting cost reduction targets and offer potential pathways to further reduce costs.
- Further lowering solar costs will enable the development of solar energy systems with higher value at higher levels of penetration.
Achieving the SunShot targets would reduce electric power-sector greenhouse gas emissions by 10% between 2015 and 2050 as greater levels of solar are installed, purely based on price competitiveness. Compared with conventional fuels, solar produces far lower lifecycle levels of greenhouse gas emissions and harmful pollutants, including fine particular matter, sulfur dioxide, and nitrogen oxides. By displacing incumbent generation, solar could produce up to $426 billion in savings from future health and environmental damages and save more than 25,000 lives.
From a utility perspective, the value of solar increases when it can be used throughout the day. Operators, who must balance energy generation and consumption on the grid, will benefit from grid flexibility solutions including integration of energy storage; these innovations—which SunShot is advancing through our research and development programs—could enable 25% or higher levels of photovoltaics (PV) on the grid at low cost. The reports also introduce other low-hanging fruit: simply expanding the use of already commercially available advanced inverters could more than double the existing capacity of utilities to integrate solar on existing distribution circuits. By optimizing the flexibility of solar, these solutions will increase solar’s value to the grid and lower its cost.
Homeowners would most benefit from an “easy button” for solar—in other words, a way to easily get started through financing. Financial innovations that make it simple to go solar—similar to buying a big appliance for your home—could cut the cost of solar energy for customers and businesses by 30%-60%. With the development of a larger, more mature solar industry, financial transparency and investor confidence will increase, bringing with it simpler, lower-cost financing methods. In addition, real estate appraisers and other home professionals will be able to quickly and easily assess the impact of solar on a home’s value, just as they do with state-of-the-art appliances or other home features.
The solar industry made huge strides in the last five years, and solar is expected to continue its important role in the nation’s energy mix. Although it still only represents about 1% of total electricity consumed in the nation, solar accounted for more than 30% of the new generation brought online in 2015. Achieving the SunShot targets would mean that by 2030, solar could account for 14% of the nation’s electricity needs and 27% by 2050.
Emerging Issues and Challenges with Integrating High Levels of Solar into the Electrical Generation and Transmission Systems (Denholm et al. 2016, NREL)
- As the deployment of photovoltaics (PV) increases, it is possible that utility system operators would need to reduce PV output to maintain the crucial balance between electric supply and demand. As a result, PV’s value and cost competitiveness would degrade.
- This loss of value could be stopped by increasing system flexibility through enhanced control of variable-generation resources, added energy storage, and motivating electricity consumers to shift consumption to lower-demand periods.
Emerging Issues and Challenges with Integrating High Levels of Solar into the Distribution System (Palmintier et al. 2016, NREL)
- Widespread use of advanced inverters and voltage management solutions could double the electricity-distribution system’s hosting capacity for distributed PV at low costs.
- Improvement of interconnection processes, associated standards and codes, and compensation mechanisms is critical to facilitating distributed PV deployment so they embrace PV’s contributions to system-wide operations.
The Role of Advancements in Photovoltaic Efficiency, Reliability, and Costs (Woodhouse et al. 2016, NREL)
- Additional reductions in the levelized cost of electricity of 40%–50% will be required to reach the SunShot Initiative’s targets.
- Understanding the tradeoffs between installed prices and other PV system characteristics, such as module efficiency, module degradation rate, and system lifetime, are vital.
Advancing Concentrating Solar Power Technology, Performance, and Dispatchability (Mehos et al. 2016, NREL)
- The ability of concentrating solar power (CSP) to use thermal energy storage—and thus provide continuous power for long periods when the sun is not shining—could give CSP a vital role in evolving electricity systems.
- Developing enhanced thermal energy storage is critical because its flexibility increases the electricity system’s ability to balance supply and demand over multiple time scales, which is increasingly important as more variable-generation renewable energy is added to the system.
Emerging Opportunities and Challenges in U.S. Solar Manufacturing (Chung et al. 2016, NREL)
- Improvements to standard PV modules have produced deep cost reductions, but the returns on such incremental improvements appear to be diminishing. More dramatic innovations in module design and manufacturing are required for cost reductions to continue.
- This need for innovation could benefit U.S. PV and CSP manufacturers, as our country is a global leader in PV and CSP R&D and patent production. The U.S. has also been rated one of the world’s most competitive and innovative countries, as well as one of the best locations for PV manufacturing.
Emerging Opportunities and Challenges in Financing Solar (Feldman and Bolinger 2016, NREL)
- Financial innovations could cut the cost of solar energy to customers and businesses by 30%–60%. Development of a larger, more mature U.S. solar industry will likely increase financial transparency and investor confidence, enabling simpler, lower-cost financing methods.
- Utility-scale solar might be financed more like conventional generation assets are today, non-residential solar might be financed more like a new roof, and residential solar might be financed more like an expensive appliance.
Utility Regulation and Business Model Reforms for Addressing the Financial Impacts of Distributed Solar on Utilities (Barbose et al. 2016, LBNL)
- The success of net energy metering has raised concerns about the potential for higher electricity rates and cost-shifting to non-solar customers, reduced utility shareholder profitability, reduced utility earnings opportunities, and inefficient resource allocation.
- A new analysis estimates that eliminating net energy metering nationwide would cut cumulative distributed PV deployment by 20% in 2050, which is stimulating the development of alternative reform strategies that address concerns about distributed PV compensation.
The Environmental and Public Health Benefits of Achieving High Penetration of Solar Energy in the United States (Wiser et al. 2016, LBNL)
- Quantifying the environmental and public health impacts of solar energy is essential to understanding the true costs and benefits of solar technologies. It is estimated that these benefits could add approximately 3.5 cents per kilowatt-hour to the value of solar energy.
- Compared with fossil fuel generators, PV and CSP produce far lower lifecycle levels of greenhouse gas emissions and harmful pollutants, and could produce $167 billion in savings from lower future health and environmental damages while also preventing 25,000–59,000 premature deaths.
U.S. Department of Energy www.energy.gov
May 18, 2016