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How Solar Energy Is Taking Over the U.S.

A decade ago, the solar industry was almost nonexistent in the U.S. There was a large solar thermal power plant in the Mojave Desert that was completed in 1984; but between then and around 2008, there was almost no solar activity in the U.S.

That all changed as costs quickly dropped for solar energy, and solar panel prices fell. Today, solar power plants are competing with fossil fuels on a cost-per-kW-hr basis to provide energy to the grid, and homeowners are now beginning to create their own power from the sun. Quickly, solar energy is taking over the country.

Solar costs continue to drop like a rock
The biggest reason why solar energy is growing is because it is cost competitive with other energy sources. The chart below shows how fast system installation costs have fallen during the past four years, lowering solar energy's cost to below grid parity in sunny or high-energy-cost regions.

Source: GTM Research.

Costs have come so far that, today, SunPower is building a solar plant in Chile without a subsidy, and selling its power into the competitive electricity market. Here at home, SunPower and First Solar are selling power from new power plants to utilities for competitive wholesale prices. SolarCity is able to build residential installations and lease them to customers for $0 down, lower cost per kW-hr than what energy costs from the utility, and make a tidy profit in the process.

Costs are now falling to the point where solar energy made up 74% of the new electricity generation built in the U.S. in the first quarter of this year. That's up from nearly nothing just a few years ago.

The growth of solar energy
According to GTM Research, installations rose 41% in 2013, to 4,751 MW; in the first quarter of 2014, they grew 79%, to 1,330 MW.

As installations have grown, so has the amount of power coming from solar power plants. According to the Energy Information Administration, utility solar power hitting the grid will soon pass 2,000 MW-hrs per month, or enough to power over 67,000 homes, and is growing rapidly from there.

Source: U.S. Energy Information Administration.

Solar energy is also accounting for more and more of the new electricity generating capacity in the U.S. each year. Solar energy accounted for nearly 22% of new power plants built last year, and that doesn't even include nearly 2 GW of distributed power on residential and solar rooftops. 

Source: U.S. Energy Information Administration.

In the first quarter of 2014, the percentage of new capacity grew to a whopping 74%, as costs continued to fall, and large plants came online. 

The solar energy revolution has just begun
As fast as solar energy is growing, it's still just a sliver of the energy produced in the U.S. every day. You can see below that coal and natural gas both dwarf solar energy right now, meaning the upside for the industry is immense.

Source: U.S. Energy Information Administration.

There's no reason to think that the solar energy industry won't keep cutting costs, and fossil fuel costs will continue to rise over time. That means that demand should continue to grow.

SunPower, First Solar, and SolarCity are just beginning to realize their potential, and experience the growth they're capable of. As they do, solar energy will continue to take over the U.S. and countries around the world, which is good news considering the benefits that come with homegrown clean energy.

Read/Post Comments (4) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 03, 2014, at 1:58 PM, phillipzx3 wrote:


    All I read after this:

    "It is impossible to have solar panels and wind turbines without fossil fuels, especially natural gas,"

    was the cut and paste rant of an ignorant idiot.

    Have you not heard of hydroelectric?

    Have you not heard of geothermal?

    Have you not heard of batteries?

    Have you not heard of the Columbia Gorge? (pretty much non-stop wind, FWI)

    You are a fool! So, tell us again how clean fossil fuels are, well to the wheel (or to the burner). )

  • Report this Comment On August 03, 2014, at 4:44 PM, bonsaibean wrote:

    Adding to position in TAN with this drop. I can't say when, but feel quite safe that this will make money over a reasonable period of time. Solar WILL continue to make strides, it's the ultimate unlimited resource, we just need to tap it!

  • Report this Comment On August 07, 2014, at 3:09 PM, jessievera wrote:

    I love how solar energy is taking makes such big improvements in the market. I try to be an Eco friendly as possible and I would love to have a solar powered home someday. I hope it keeps growing and that we all become more green as a nation.

    Jessie |

  • Report this Comment On August 13, 2014, at 5:59 PM, Frantz101 wrote:

    I work inside an electric utility to advance the deployment of solar energy and believe we need to move as fast as possible toward an electric power system based on zero-carbon sources. However, as investors, we must be careful about policy and market changes that could put the brakes on today's rapid expansion, which is starting from a very small base. First, changes in net energy metering (NEM) policies could quickly alter the value proposition of rooftop solar, which now depends on capturing the full retail price for energy the NEM customer exports to the grid. Second, rapid expansion of utility-scale solar will eventually depress the wholesale market price of solar generation and in some seasons reduce it to zero. Solar has huge untapped potential but only the smartest companies will weather market vicissitudes that will impact the current business models.

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Travis Hoium

Travis Hoium has been writing for since July 2010 and covers the solar industry, renewable energy, and gaming stocks among other things.

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