Rooftop solar for all: Closing the gap between the technically possible and the achievable
Introduction
Across the globe, solar power is gaining market share, as governments and their citizens take advantage of declining technology costs and increasing evidence of a growing climate crisis. In 2019, the European Union (E.U.), China, and the United States (U.S.) produced 4.4% [1], 3.1% [2], and 2.6% [3] of their total annual electricity generation from solar systems, while just ten years earlier, solar systems were novelty products. In the U.S., the state of Georgia – the focus of this paper’s case study – solar generation accounts for 1.7% of its electricity consumption, slightly less than the average U.S. state [4].
A great deal of literature has examined the barriers and motivations that underpin this growth in solar energy [5], [6], [7], [8], [9], [10], [11]. Little attention, however, has focused on why rooftop photovoltaics (PV) grow more or less rapidly than utility-scale solar. This oversight has led to an incomplete understanding of the possible future for rooftop PV across states and countries. At one extreme, the E.U. has prioritized rooftop PV, which now accounts for 64% of its solar generation. On the other hand, only 27% of China’s solar energy is generated from rooftop PV. In 2020, the U.S. had an intermediate proportion of rooftop solar (31.4%), but its states are diverse. California, the state with the largest solar generation in 2020 (at 48,012 GWh), has a significant share of rooftop solar (at 36.4%). In fact, California accounts for 36.2% of U.S. total solar generation and 41.9% of U.S. rooftop PV generation. Massachusetts, another state with significant total solar at 3905 GWh in 2020, generates 60% of it from rooftop PV. The state accounts for 2.9% of U.S. total solar and 5.6% of U.S. rooftop generation. On the other hand, only 7.8% of Georgia’s 4,230 GWh of solar generation comes from rooftop PV systems. Georgia accounts for 3.2% of U.S. total solar but less than 1% of the U.S. rooftop generation. Other states in the Southeast similarly derive the vast majority of their solar from utility-scale systems. For instance, North Carolina, with significant total solar electricity (9,293 GWh in 2020), generates only 3.9% of it from rooftop PV [12].
Studies of the future growth potential for solar energy in the U.S. have devoted considerable attention to calculating the technical potential for rooftop PV and utility-scale solar systems based on viable land and rooftop areas, applying sophisticated methods such as geospatial analysis and housing characteristics. Gagnon et al. [13] employed GIS-based methods and LIDAR data to analyze rooftop suitability across to United States, while Kurdgelashvili et al. [14] used data on existing building stock and characteristics to calculate suitable areas for PV arrays in California, Arizona, and New Jersey. These studies focus on what is physically possible but overlook the role of market barriers, utility business models, state and local policy enablers, and public opinions that have been highlighted as obstacles to achieving what is technically possible. This literature also rarely considers the likely future appeal of solar farms compared to rooftop PV. Our study seeks to address this gap by introducing a methodology to estimate the achievable potential for rooftop solar, based on principles of social science, key attributes of electricity markets and rate designs, and evidence about the relative impact of alternative future policies that reflects its emphasis on utility-scale solar.
Specifically, we undertake a case study of rooftop PV on residential and commercial buildings in Georgia, a state in the Southeastern U.S. with considerable solar radiation and physical capacity for rooftop solar but also many socio-economic, business, and policy barriers. We investigate the financial dynamics of such systems in Georgia as they perform today and develop scenarios to characterize possible solar futures for Georgia in 2030. Couching this analysis in the context of the rapid growth of solar farms in Georgia provides valuable insights.
Section 2 sets the stage by explaining the motivation for our research, which seeks to improve forecasts of the market for rooftop solar by understanding the role of alternative policies and business models, and by comparing and contrasting the economics of solar PV from the perspective of the electricity provider that must choose a mix of electricity fuels and equipment and the “host customers” who can install solar on their rooftops. This context is important to forecasting achievable solar futures, and the relative prospects for investments in rooftop PV vs. utility-scale solar. Section 3 describes our mixed-methods case study approach. It includes an assessment of the current state of rooftop solar in Georgia, a comparison with two leading solar rooftop states in the U.S. (California and Massachusetts). Our methodology includes a business-as-usual forecast of solar PV based on minimizing utility costs using a general equilibrium model that forecasts the scenario with a minimum cost of providing electricity services. It also involves an assessment of Georgia’s technical potential for solar PV. Two “achievable” scenarios are examined from the perspective of “host customers”: in one case assuming a continuation of current policies use a diffusion model, and in the second case we a range of alternative policies and a cost-benefit analysis of them based on the economics of “host consumers” who are offered alternative net metering policies and adopt alternative rebound and curtailment behaviors.
Section 4 begins the presentation of results by first describing the meager prospect for solar PV in Georgia in 2030 based on a utility cost minimizing model. We then describe the vast gap between the technical potential and the achievable potential for rooftop solar based on current policies. Section 5 examines the economics of solar PV to Georgia’s host consumers with a continuation of current policies and with policy alternatives including low and high buyback rates and a range of electricity consumption s – from a rebound effect with higher electricity consumption to a curtailment effect with lower electricity consumption. The figure of merit is the payback period (the number of years required for an investment to “break-even”).
These findings are then contextualized by examining the risks and rewards of different stakeholders, and the challenges and promising approaches that could accelerate the growth of rooftop solar in Georgia (Section 6). Conclusions are presented in Section 7.
Section snippets
Motivation: improved forecasts of the market for rooftop solar
Among all of the U.S. states, California leads in rooftop-solar installations, with more than 1 million distributed solar projects and 9.4 GW of installed capacity in 2019 [15]. Massachusetts has installed 1.6 GW, and New York reached 1.5 GW of small-scale solar capacity in 2019 [16]. Based on analysis of Google Project Sunroof data, Georgia had only 16 MW of installed rooftop solar capacity provided by 1,906 rooftop solar systems in existing installations as of March 20201
Methodology
This research involved three major analytical steps applied to rooftop solar in the state of Georgia.
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First, we estimate the cost-effectiveness of solar rooftop systems in Georgia in 2020, 2025, and 2030 from the perspective of host customers, to indicate their likelihood of adopting PV. In a sensitivity analysis, we consider the cost-effectiveness of PV systems under alternative policy futures where buyback rates and financing costs are variable.
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Second, the baseline forecast for rooftop solar
The gap between achievable and technical potential
We begin by developing a baseline forecast for rooftop solar in Georgia, followed by an estimation of the technical potential for rooftop solar in Georgia. This sets the stage for assessing Georgia’s achievable potential assuming no changes to current policies and utility business models. Section 5 considers the economics of rooftop solar under alternative policy and behavioral assumptions.
Cost-effectiveness of rooftop solar to Georgia’s host consumers
The cost of rooftop solar systems in the U.S. has been declining rapidly, as documented by the National Renewable Energy Laboratory (Fig. B.2). The private costs and benefits of an archetypical residential and commercial rooftop system are evaluated assuming the continuation of current policies in Section 5.1 using “payback period” – that is, the years required for host customers to break even. Recognizing that behavioral factors as well as utility business models and government policies are
Contextualizing the Results: Key Stakeholders, Challenges, and promising initiatives
An array of stakeholders, barriers and accelerants are driving the solar transition [44]. These range from peer effects and social networks [40], to split incentives, non-monetary costs, and environmental motivations [41], as well as an array of utility business models and practices [42], and government regulations and incentives [8], [43]. These factors are discussed below.
Conclusions
Closing the gap between the technically possible and achievable levels of rooftop solar is a challenge faced by nations, states, and cities across the globe. Our stakeholder analysis and assessment of barriers and accelerants suggests that the gap in Georgia is driven as much by utility business models, government policies, and behavioral factors, as by techno-economics. The utility business model that prevails in the Southeastern U.S. has led to an emphasis on utility-scale vs. rooftop solar,
Declaration of Competing Interest
The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.
Acknowledgments
Funding for this research by the Ray C. Anderson Foundation and the Brook Byers Institute of Sustainable Systems is gratefully acknowledged.
The following individuals provided valuable inputs and feedback on the methodologies developed to estimate and monetize the value of avoided SO2 and NOx emissions:
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Michael Cohen and Joe Bryson from the Clean Air Markets Division of the U.S. Environmental Protection Agency
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Laura Martin and Thaddeus Huetteman, Electricity Analysis Team of the Energy Information
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