Whenever I speak to non-solar audiences across the country, inevitably the conversation steers to some version of “Where does my state rank in solar electric power?”
In taking a second look at SEPA’s 2012 Utility Solar Survey Data1, obviously California is the gross megawatt and installation leader but when standardizing state markets by population, a different picture appears:
||# Installs per
||Watts per Capita
So the natural follow-up question is what’s driving solar electric power adoption in these states and not others? My response is always three things: solar resources, electricity prices, and utility and state policies.
1. Solar Resource
Everyone naturally thinks of solar resources - Arizona is sunny and Washington is not. Yes, there are differences - a Phoenix kilowatt will produce more than a Seattle one, by a lot... but a Miami kilowatt only produces 5 percent more than a Minneapolis one. Electricity prices and state policies can more than equalize resource differences. The figure below illustrates solar resource differences across the country.2
2. Electricity Prices
PV can operate at either the wholesale or retail level, i.e. a utility buys the power directly or consumers lower their electric bills. Electricity prices differ significantly depending on whether they’re wholesale or retail AND from utility to utility AND in the numerous rate or contract options.
Electricity prices can matter more than solar resource differences for where solar is used most. As an example, I live in Utah but used to live in Maryland. In Maryland I paid around 18 cents/kWh, whereas in Utah it’s around 10 cents/kWh - that’s an 80 percent difference. Utah is sunnier than Maryland, but not by 80 percent. The figure below illustrates average residential retail prices in 2010, just to get a flavor of the variation.3
3. Utility and State Policies
Every utility and state influences a different solar market by providing different levels of incentives, renewable or solar requirements, net metering rules, resource and procurement plans and economic development activities. The figure below illustrates state renewable portfolio standard requirements, one of MANY instruments states and utilities utilize for solar market development.4
Solar Market Mashup
Interestingly, when you visually mash up the three maps, you can see approximately where solar markets have developed over the last ten years. This is obviously not a GIS mapping or statistical exercise, but you can see the pattern below, which represents the number of megawatts by state.5
So the next time you hear someone talking about solar markets say, “But INSERT STATE isn’t sunny!”, remind them that electricity prices and state or utility policies are just as important. Or just give them this formula - everyone loves equations!
X (Solar Resource) + Y (Electricity Prices) + Z (Utility & State Policies) = Solar Megawatts
1 The full data set is available for purchase. SEPA members get a significant discount. If you join or renew your membership, we'll throw in an additional 25% off.
5 http://openpv.nre.gov/visualization/index.php Note: While the relative comparison between states likely holds true for this illustrative point, NREL's OpenPV does not represent a complete picture of the total market. For example through 12/31/12, SEPA's aggregate data set from utilities showed over 304,000 systems versus OpenPV's showing 238,000+ on 10/1/13. (SEPA collects aggregate data from utilities whereas OpenPV collects individual system data, a much harder task.)