Is basic solar technology the key to an energy revolution?

Plain old photovoltaic panels and innovations in energy storage and distributed generation could remake our electricity system.

  • A solar field in Lancaster, California, one of many that help generate nearly a quarter of the city's peak energy. It's shooting for a "net zero" status, wherein it produces more clean energy than it consumes.

    David McNew
  • Lancaster, California, Mayor R. Rex Parris poses with the solar panels that sit atop City Hall. Parris wants to ban dirty energy, and is battling neighboring Palmdale over its proposed hybrid gas/solar plant.

    David McNew
  • A SolarCity solar panel-covered parking structure at the JetHawk stadium, above, which generated 70 percent of the energy it used last year.

    David McNew
  • Heather Swan works for the tiny Lancaster Power Authority, which may someday produce enough energy to break free from Southern California Edison.

    David McNew
  • Residential solar in Lancaster, California, where a law mandates new housing developments average 1 kilowatt of solar per home.

    David McNew
  • A Borrego Springs resident checks real-time energy use with a monitor hooked to the town microgrid. The microgrid program allows 60 residences and small businesses to see when the grid has a heavy load, a sign for them to conserve energy.

    San Diego Gas & Electric
  • The SolarCity website updates energy production and consumption every 15 minutes, as well as historically.

    SolarCity
 

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Even the solar-home ordinance pays. More expensive homes bring the city more money through property taxes, and every kilowatt of solar, a Lawrence Berkeley Laboratory study found, raises the price of a house by $5,900. More importantly, solar is excellent stimulus: Every resident who saves money on electricity contributes more to the local economy, explains Deputy City Manager Jason Caudle. "Sometimes what they save is enough for a new car payment."

"We are not a rich city," says Heather Swan, Lancaster's senior solar project developer. "I cannot do things just for their green value. Everything has to make economic sense. We're saving the planet, yes. But we're also creating a revenue stream. Solar power could turn this city around."

Five years ago, if you asked why all of California's rooftops weren't plastered with solar panels, you'd get a list of reasons: The state's utilities profit more from centralized power plants; financial incentives are too meager; the grid can't handle part-time bursts of energy. But the biggest deterrent in California and elsewhere was always the expense, which not even the most generous state incentives and a 30 percent federal tax credit could overcome. When Ellensburg, Wash., for instance, began its 109-kilowatt community solar garden in 2006, it cost $1 million for the panels and their installation – about 24 cents per kilowatt hour in a state where the retail price dips as low as 6 cents. "It was a feel-good deal at the time," says Shan Rowbotham, the city's power and gas manager. "It was an investment made with no potential return."

Back then, inventors were chasing hard after the next innovation that would make solar more efficient and thus less expensive: cylindrical designs, special concentrating lenses, nanomaterials. The U.S. Energy Department, under then-Secretary Steven Chu, offered loan guarantees to companies working on the problem, as well as on lowering "soft costs" with easier installation, faster permitting and streamlined integration with the grid.

In the end, though, the big breakthrough turned out to be not an imaginative new technology, but plain old polycrystalline solar, combined with China's formidable manufacturing discipline. Starting in 2009, the Chinese government invested billions of dollars in speedier production, and the price of PV solar dropped like eBay bids on obsolete iPhones. Ellensburg paid $3 to $5 per watt for its panels in 2006. The ones going up at Lancaster's solar farm cost one-third of that.

Other factors have contributed to solar's affordability as well. Forty-three states allow solar homeowners to offset the electricity they use at night with the excess they generate during the day, spinning their meters backward to zero, an arrangement called "net energy metering." Some utilities – including the Los Angeles Department of Water and Power – have rolled out "feed-in-tariff" programs that pay certain small generators outright for their production. And companies like SolarCity allow residents and businesses to reap solar's rewards without even buying a system. California's average retail rate for electricity is about 16 cents per kilowatt hour; SolarCity charges Lancaster just 10 cents per kilowatt hour to power the city's five civic facilities.

SolarCity was founded in 2006 by brothers Peter and Lyndon Rive, cousins of Tesla Motors' Elon Musk. Their business model was forged when only large producers could take advantage of the federal tax credit; households had a $2,000 cap. But even after the cap was lifted in the 2009 stimulus, their strategy endured. The company functions like a sub-utility, installing, permitting and claiming all incentives and tax credits in return for charging a reduced electricity rate. In November, the company added 10 cities to its roster of 14, which means there's a SolarCity office within 30 miles of almost everyone in California, as well as in Colorado, Arizona, Washington and Oregon, and on the East Coast.

Other companies, among them Sunrun, Clean Power Finance and Sungevity, provide similar services throughout the country. Greentech Media Research, which monitors energy trends, reports that leased installations account for 80 to 90 percent of new solar in California and Arizona.

Cheap solar combined with the leasing model has spawned Lancasters all over the sunny West. Sebastopol, Calif., has gone a step beyond Lancaster in mandating solar not just on homes, but on all new construction; Boulder, Colo., buoyed by inexpensive PV, is in the process of  wresting its electricity production away from investor-owned Xcel Energy with the intent of establishing a municipal utility. SolarCity has covered the rooftops of 22 Walgreens stores across Colorado and 120 California Walmarts with solar panels. For the first time in 15 years, the U.S. outpaced Germany in new solar installations.

Solar PV still generates only 0.3 percent of the nation's electricity, but that's 15 times more than it contributed in 2009. If prices continue to decline, solar may soon cost no more to put on the grid than the cheapest coal.

And rooftop solar already has utilities running scared. Last January, investment analyst Peter Kind wrote a report for the Edison Electric Institute called Disruptive Challenges, warning of all the ways that for-profit utilities could fall to self-generation. "(It) was written to create a shock," says Jeff Navin, a consultant with Boundary Stone Partners who until recently served as a deputy chief of staff in the Energy Department. "And it did." It was also a cry for help to regulators who might not recognize the threat to utilities. "It was the first step in the effort to roll back net-metering laws," Navin says, "and to slow down the growth of distributed solar."

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