Increasing Tax Incentives, Declining Costs And More Innovations May Be Propelling U.S. Residential Solar Industry To New Heights

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Solar-generated energy in the nation rose from 0.34 gigawatts in 2008 to more than 121.4 gigawatts in 2021 — enough to power more than 23 million homes, according to the Solar Energy Industries Association. 

Of the total new electricity-generating capacity added in the United States last year, 46% was solar power.

Even as supply-chain disruptions lead to increased costs for solar panels, 2021 broke records with more than 500,000 solar installation projects completed in a single year for the first time ever. Here are some things that have been driving the trend and why it might keep breaking records in the coming decade.

Growing Government Support Is Fueling Serious Growth in Solar

Despite the impressive milestones achieved in 2021, solar power still accounts for less than 4% of the total electricity generated in the United States. That’s 80 times higher than it was just a decade ago, but there’s still significant room for growth.

The Department of Energy (DOE) estimates that 22,000 square miles of solar panels (about the size of Lake Michigan) could generate enough electricity to power the entire country year-round. That potential is part of the reason behind the Biden Administration’s goal of transitioning the nation’s grid to at least 40% solar by 2035.

To get from 4% today to 40% by 2035, the administration has taken a variety of steps to encourage faster solar adoption. One of the strongest incentives for homeowners is the federal residential solar energy credit allowing taxpayers to claim between 22% and 26% of the cost of installation as a tax credit, with no maximum limit.

The federal tax credit would be in addition to any state-level rebates or tax credits the homeowner might qualify for. Those state-level incentives are ramping up, too. The Database of State Incentives for Renewables & Efficiency (DSIRE), which provides regularly updated information on the incentives offered by every state, reported that 46 states took action on renewable incentive programs in 2021. 

Among the most popular state-level programs are electricity buyback programs where the local utilities pay homeowners for the excess power they generate whenever they produce more power than they consume. With these programs, homeowners see their monthly utility reduced by switching to solar and have months where their accounts are credited to help offset the cost of electricity use in peak seasons like winter or summer. 

Declining Costs And Improving Service Are Reportedly Making Solar More Accessible

While tax credits, rebates and buyback programs are motivating more homeowners to consider going solar, innovations and changes in the industry are also making it easier and more affordable to actually do it. 

Since 2010, the average cost to install a solar system on your home has decreased by over 50%, dropping from $40,000 a decade ago to $20,000 today — and that’s the price before factoring in tax credits and other incentives.

That shrinking price tag may be, in large part, the result of the scaling of the industry: Bigger factories and more automation have created economies of scale that reduce labor costs and minimize material waste, making it possible to produce the same solar panel for a fraction of the previous price.

Now that solar systems are more affordable, many parts of the industry are switching gears from the earlier focus on cost reduction toward making panels more powerful so homeowners can generate more energy with fewer panels.

Even companies from other industries are getting into solar. Tesla Inc. TSLA, for example, is developing a solar roof that would allow homeowners to install what looks like regular roof shingles, but are actually small solar panels on their homes, to get solar power without having noticeable panels.

Meanwhile, Starbucks Corp. SBUX is starting to install electric vehicle charging stations at some of its locations so customers can charge their electric cars while they grab a coffee.

SinglePoint Inc. SING, on the other side of the production equation, is working to make the solar industry more customer-friendly. The renewable energy solutions company has been developing a growing portfolio of services, including a recent acquisition of The Boston Solar Company, LLC, a leading solar installer based in Massachusetts. This aligns with SinglePoint’s strategy of building a nationwide network of solar panel installers to help transform the complicated landscape of the solar industry into one that’s easier to navigate.

From platforms that allow customers to complete the entire process online to services that work with the customer every step of the way to design the right system, find the right installers and obtain the permits, SinglePoint reports that it is becoming a one-stop hub for all things solar. This vertically integrated approach helps customers and the company by both parties benefiting from the economies of scale under one roof.

This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investing advice.