Community-Scale Solar: Why Developers and Buyers Should Focus on this High-Potential Market Segment

Rocky Mountain Institute (RMI)

Author +
Kevin Brehm, Peter Bronski, Kieran Coleman, Stephen Doig, Joseph Goodman, Thomas Koch Blank, Titiaan Palazzi

Year: 2016

Solar photovoltaic (PV) in the United States has been growing impressively, driven in part by steep cost reductions. From 2005 to 2015, the average installed cost for PV systems dropped almost 70%, from $8.00/W to $2.60/W.i Over the same period, U.S. solar PV installed capacity grew an average 57% annually, from 79 MW installed in 2005 to 7,000+ MW installed in a recordbreaking 2015. For the first time ever, in 2015 solar PV beat natural gas for U.S. electric generating capacity additions.

Despite this growth, solar PV generated only 1% of U.S. electricity in 2015.Hence tremendous potential remains for solar PV’s future.

To date, solar PV’s U.S. growth has been concentrated in two markets: utility-scale solar and behind-the-meter solar (i.e., residential rooftop and C&I). Most of solar PV’s growth in the residential rooftop segment—which is now a multi-GW annual market—has been confined to middle- and upper-income households.

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Utility-scale and behind-the-meter solar will both play a large role in a high-solar-penetration future, but both solar market segments could face headwinds in the years ahead. Utility-scale solar could face transmission constraints and siting challenges. Behind-the-meter solar, which in most places benefits from retail net energy metering, faces challenges to its economics in places where export compensation is being reduced to avoided cost, wholesale rates, or other terms less than the retail rate (such as in Hawaii and Nevada).

Yet between traditional behind-the-meter (e.g., residential rooftop) and utility-scale solar exists a substantial untapped opportunity, one that can expand the U.S. solar market and provide affordable solar energy access to millions more Americans.