The growing political contentiousness of PV net-metering schemes in key US solar states will have little effect on the sector’s momentum in 2014, but beyond that the case for optimism gets more uncertain, says IHS.
The US solar industry continues to grow strongly, and is likely to have added more capacity in 2013 than Germany – the first time it has done so in 15 years.
Yet 2013 was a worrying year for the trajectory of net-metering in the US, with powerful utilities in California and Colorado lobbying for changes, and Arizona’s energy regulator determining to begin imposing a monthly fee on owners of new PV systems in 2014.
Net-metering schemes, which effectively allow owners of residential PV systems to “roll back” their electricity meters based on the amount of power they produce, have been a critical driver in the uptake of distributed solar across the US.
Some 85% of the country’s installed distributed PV capacity is located in states with net-metering schemes that compensate owners at the full retail-rate for electricity – an equation some utilities are keen to alter.
While utility-scale PV has usually accounted for the largest chunk of the total US solar market over the past few years, distributed PV is expected to make a larger contribution in the long run – thus making any changes to net-metering schemes a significant cause for concern among companies like SolarCity and SunRun.
In the immediate term there is little to worry about, IHS argues.
Wade Shafer, senior analyst for North American PV at IHS, notes that California’s current system will remain in place until the state has 5.3GW of net-meter-linked PV capacity. It had just 1.7GW at the end of the last quarter.
Meanwhile, the $0.70/kW fee that is being imposed on new systems in Arizona – the country's second largest statewide solar market – will have a “negligible” impact on project economics.
Nevertheless, the arguments over the future shape of net-metering schemes are going to rage throughout 2014 and 2015, with unknown consequences for the latter half of the decade.
Arizona looks set to reform its net-metering scheme in 2015, and California will create a new tariff structure by 2016.
“Regulators seem to recognize a cost-shift occurring between [net-metered and non-net-metered] customers, even though its magnitude is undecided,” warns IHS, adding that the schemes remain “critical” to the economic case for distributed PV in most states.