Beyond Sprawl: A New Vision of The Solar Suburbs of the Future
— In Palm Springs, California, rooftop solar panels are standard in a new community of 42 energy-efficient homes built by Far West Industries of Santa Ana. The homes sold quickly, at prices ranging from $600,000 to $700,000. Scott Lissoy, president of Far West, says: “If we’re building in the Coachella Valley, which is one of the hottest areas in California, we’re building with solar panels. It’s the right thing to do.”
— In Colorado, residents of Adams, Boulder and Denver counties are taking advantage of a group buying program called Solar Benefits Colorado that offers discounts on solar panels from a company called Sunrun and on an electric car, the Leaf, from a local Nissan dealer. It’s one of a series of group procurement projects organized by Vote Solar, an advocacy group.
— In Vermont, Green Mountain Power, the local utility, wants to sell its customers less electricity. Instead, it is selling them energy-saving heat pumps, weatherization, batteries, and solar panels that give them more control over their energy consumption. “Really, what we’re in the business of doing is trying to accelerate a consumer revolution that’s already happening, to transform the energy space,” says Mary Powell, the utility’s CEO.
These examples point to the potential of what some are calling “solar suburbs.” The concept is a sweeping one—solar panels cover roofs, electric vehicles sit in garages, energy-efficient homes are outfitted with batteries to store electricity, and a smart two-way electricity system enables people to drive to work and discharge power from their electric cars at times of peak energy demand. The government of Australia has embraced this idea for a new military housing development being built near Darwin, where each home will come equipped with a 4.5 kW rooftop solar system, charging points for electric cars, and smartphone apps enabling owners to track their energy use and carbon saved.
This vision bears little resemblance to the suburbs of today — with their big, inefficient homes, two or three gasoline-powered cars in the driveway, shopping malls, and vast parking lots. But advocates say that if all goes well, advances in technology, combined with smart policy, could lower the costs of solar power, electric cars, and batteries and drive a clean energy revolution in the suburbs.
One evangelist for this revolution is David Crane, the chief executive of New Jersey-based NRG Energy, which aims to provide a complete clean-energy solution for homeowners, including electric-car charging and batteries. “Our home solar business is going to be about so much more about than just solar panels on the roof,” Crane said on a 2014 earnings call.
Analysts at the Rocky Mountain Institute, led by Amory Lovins, also see an energy revolution coming. “The technical solutions are there,” says Titiaan Palazzi, a mechanical engineer at the institute who formerly worked for smart-thermostat company Nest. “You could eventually get to suburbs or communities that are net-zero energy.”
Meantime, an academic study of the city of Auckland, New Zealand, and its suburbs found that detached suburban homes can generate more than enough electricity than they need and send the surplus to the city in the batteries of electric cars driven by commuters. By email, Hugh Byrd, a professor at the University of Lincoln in the UK, who led the research, says another study found similar results for San Francisco. But, he added, realizing the clean-energy potential of suburbs will require, among other things, cheaper batteries with greater range to increase the market penetration of electric cars.
And there’s the rub. For America’s sprawling suburbs to become environmentally-friendly — let alone generators of excess energy — distributed solar power, electric cars, and battery storage will all have to become mainstream. That could happen — indeed, it probably will happen — but not in the near future.
Across the U.S., distributed solar power — that is, photovoltaic panels installed on homes and businesses — is enjoying explosive growth, expanding by more than 50 percent annually for a decade, according to market researcher Clean Edge. SolarCity, the leading home solar company, says it aims to serve 1 million residential customers — up from 262,000 as of June 30 — by 2018, and it’s got plenty of competition.
But distributed solar remains a niche business in every state except Hawaii, where 13 percent of residential electricity customers have installed solar. (California’s next, with 3 percent.) Nationally, about 734,000 homes — less than 1 in 100 — have on-site solar, according to GTM Research’s U.S. Solar Market Insight report. And a 2015 survey of U.S. homeowners by Clean Edge and SolarCity found that just 6 percent said they plan to install home solar in the next year, fewer than those preparing to buy LED bulbs, smart thermostats, and efficient hot-water heaters.
(Some other countries, it must be said, are making far more progress. Germany, whose population of 80 million is one-quarter that of the U.S., has 1.5 million photovoltaic systems installed, twice as many as the U.S. Germany now generates nearly 7 percent of its electricity from solar power. In Australia, one in five homes now have photovoltaic panels.)
Another key element of the solar suburb ecosystem — electric cars — has proven to be a hard sell. Back in 2011, President Obama called for 1 million electric plug-in cars (as opposed to hybrids like the Toyota Prius) to be on America’s roads by 2015. It’s 2015, and we’re not close: Cumulative sales are less than 375,000, reports the Electric Drive Transportation Association. Of the 16.1 million new cars and trucks sold in 2014, only about 118,000 (or 0.7 percent) were plug-in electrics, and sales this year are down slightly from 2014.
As for batteries to store electricity at home, they are new and unproven. Last spring, Tesla set off a spirited debate among industry analysts with the announcement of its sleek Powerwall battery. Some said it won’t store enough electricity to run power-hungry appliances like air conditioners or clothes dryers, and at an installed price of $7,000, makes little financial sense for most people. Others said that in states with high electricity costs, batteries will enable solar owners to store power for the evening hours in a cost-effective way. Panasonic and Samsung are also developing batteries for the home storage, so Tesla’s Elon Musk isn’t alone in thinking there’s a business there.
One reason why it’s hard to forecast the future of solar, electric cars, and batteries in the U.S. is that all are subsidized, and therefore policy-dependent, and not just at the federal level. Today, electric car buyers can take advantage of a $7,500 federal income tax credit, but the credit will expire once certain sales thresholds are reached. So electric cars could jump in price just as they become popular.
The economics of solar depend in part on federal investment tax credits of up to 30 percent for homeowners or for companies that install solar panels and lease them to homeowners — the most common home-solar arrangement today. But those credits are scheduled to fall to 10 percent in 2017 or disappear altogether. GTM Research expects a deep dip in solar installations in 2017 if the tax credits disappear.
State regulation is key, too. In Florida — the Sunshine State — there is essentially no solar power industry because local utilities retain a monopoly on supplying electricity to homeowners. Some states have capped the amount of residential solar eligible for net metering, which allows homeowners to sell their excess electricity back into the grid and thus reduce their costs.
“There is a lot of uncertainty right now with regard to the policies that have supported solar in the past,” says Laura Wisland, a senior energy analyst with the Union of Concerned Scientists.
Despite the unknowns and unknowables, a growing number of investors and a few utility executives have come to believe that the electricity sector is undergoing dramatic change. “That the world’s energy system has begun a dramatic transformation to a cleaner, more local future is no longer a controversial statement,” says Michael Liebreich of Bloomberg New Energy Finance. Deutsche Bank published an exhaustive 185-page analysis of the global solar market that concluded: “We believe the solar industry is going through fundamental change and the opportunity is bigger than it has ever been before.”
Not surprisingly, economics are the big driver. Solar panel costs have fallen sharply, and the so-called “soft costs” of solar that include marketing, installation, and permitting are declining as well, albeit more slowly. Instead of buying panels, most homeowners now lease them from solar providers like SolarCity, Sunrun and Sungevity or utilities, including Green Mountain Power and NRG Energy. “Leasing has been the game changer,” says Clint Wilder, a senior editor at Clean Edge, whose survey found that 82 percent of homeowners say “saving money” is the number one reason they buy clean energy products and services.
Kelcy Pegler Jr., the president of NRG Home Solar, which now operates in 10 states, says: “The average customer is going to save from day one about 15 percent.” One company — CPS Energy, a municipally-owned utility in San Antonio — has even offered to pay select customers who agree to let a solar development firm install panels on their roof.
Homebuilders, too, are slowly embracing solar. Six of the ten largest homebuilders make solar standard in some developments, according to solar provider SunPower. Lashing panels on a roof when a house is built saves money over installing them later, and the costs of solar can be rolled into a home mortgage.
Cisco DeVries, the chief executive of Renew Financial, a California firm that finances solar and energy-efficiency projects, says the transition to an energy mix that is “decentralized, much cleaner and much more efficient” will come much faster than most people expect. Before the invention of smartphones, he notes, nearly every home in the U.S. had a landline; now fewer than 60 percent do. “The pace of change for distributed energy will start to look a lot like the iPhone revolution pretty quickly,” DeVries says.