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What does the Green New Deal mean for home solar?

Alexandria Ocasio Cortez launches the Green New Deal

In short: The Green New Deal is an ambitious, big-picture attempt to bring existing state-level goals and incentives designed to help us all use more renewable energy to the whole nation. But without a guarantee it will get passed, people who want solar for their homes should go solar sooner rather than later to take advantage of incentives set to expire soon.

You’ve probably heard a lot of shouting from every end of the political spectrum — from passionate support and rallies all the way to outright laughter and trolling — about the Green New Deal (GND), a non-binding resolution introduced February 7, 2019 by Sen. Ed Markey (D-MA) and Rep. Alexandria Ocasio-Cortez (D-NY).

The GND is pretty short for a political document, clocking in at “only” 14 pages. But the two major topics addressed are monumental in scope: how to fight climate change, and how to simultaneously address growing socioeconomic inequality.

Whew! It’s politically controversial and rebellious, to say the least, and we’re not going to attempt to address any controversies. We just want to look at what this whole thing might end up meaning for homeowners around the country.

In short, the Green New Deal resolution outlines a set of national climate goals to achieve by 2030, such as:

  • Achieving zero carbon emissions
  • Increasing access to clean air and water
  • Restoring ecosystems
  • Upgrading buildings to meet cleaner standards
  • Creating more jobs, especially in the energy and environmental sectors

….and much more. But we’ll digress, zoom in a bit, and examine how the GND affects home solar installations around the country.

Does the Green New Deal consider home solar?

The GND does consider home solar indirectly. A direct quote from the official document calls for us to meet “100 percent of our power through clean, renewable, and zero-emission energy sources” by “dramatically expanding renewable power sources.” So yes, that includes solar. And you can argue that increases in solar energy correlate with several of the bullet points above.

What the GND doesn’t give us, however, are specific, metrics-based goals. The document is largely broad in scope (for now), and doesn’t address states and regions specifically. Fortunately, some states have already taken action…

Does my state already have future-driven solar energy goals?

Depending on where you live, there may be specific renewable energy goals in place already; the objectives usually call for a certain percentage of energy coming from renewable sources by a certain date. One thing to note is no single state has adopted goals as ambitious as those outlined in the Green New Deal resolution.

We know that because we spend lots of time each year ranking the states’ renewable laws for their friendliness to home solar.

Overarching renewable energy laws that set specific goals are called Renewable Portfolio Standards, or “RPS laws” for short, and most of the rest of a state’s renewable policy follows from its RPS.

2019 Ranking of State Renewable Portfolio Standards

The best state RPS laws

For example, the District of Columbia, Hawaii, and California have what we consider the best RPS laws in the country: 100% power generation from renewable energy sources by 2032 (D.C.), and 2045 (HI and CA). Going even further, some areas will set additional goals specifically related to solar power. Washington D.C., for example, will require 10 percent of all energy to be sourced from solar power by 2041.

…and the worst

On the other hand are states without RPS laws, like Wyoming and West Virginia. Others, like Indiana and Kansas, have voluntary renewable standards which might as well be nothing at all.

Finally there are places like Michigan and Iowa, which have let their RPS goal dates pass without new, higher targets.

Where we go from here

The object of the Green New Deal is to meet or exceed what the most ambitious states are doing, applying those states’ best practices across the whole nation to bring the laggards off the sidelines and into the fight against climate change.

States can continue their incremental, piecemeal approaches to increasing renewable energy (some of which have been very successful), but without a unified national plan, we’ll see slower-than-necessary response to the existential threat of carbon pollution, and a deeper widening of technological and economic disparities between states.

Has there been any past legislation work to increase solar energy use nationally?

Cue up the greatest environmental policy hits!

Richard Nixon and Jimmy Carter for conservation

We won’t go back to the ’60s here, but lets talk about the most impactful recent legislation—The Energy Policy Act of 2005—which, as the genesis of today’s 30% federal tax credit for home solar installations, is the single most-important piece of solar power-related legislation in the country.

In the most basic terms, the federal solar tax credit allows a taxpayer to claim up to 30% of total solar project costs as a credit toward taxes owed during the year the solar installation was completed. It’s a tiny bit more complicated than that, so check out our more in-depth coverage of the federal solar tax credit if you’re curious.

Did we say impactful? The 30% tax credit—formally called the Solar Investment Tax Credit, or ITC—has been hugely effective in making solar installation cheaper for homeowners and businesses alike, increasing the overall number of installations and acting as a sort of stimulus package for the entire solar industry.

We have a long way to go before we reach zero carbon emissions, but the ITC has sparked an average 54% increase in installations since its inception, and the cost of solar panels has fallen by over 65% since 2010!

Because of the ITC and state solar policy, the U.S. just topped two million total solar installations, and nearly 250,000 people work in the solar industry. Maybe those GND goals are in reach after all.

Can the Green New Deal and the federal tax credit combine forces to increase solar installations?

Or in other words: If the GND becomes tangible law, what would a marriage with the federal tax credit look like?

It’s tricky.

For starters, unless Congress extends the ITC, the credit for residential installations drops to 26 percent in 2020, 22 percent in 2021, and to zero starting on January 1st, 2022. With the GND’s goals set for 2030, what we have here is a good old-fashioned conundrum.

If the GND becomes reality, we’d say the first priority should be to extend the ITC, or even improve it. This ensures that homeowners can better afford to install solar, it encourages drops in solar panel prices, and it sends a message that the U.S. is getting real on fighting climate change.

You can help with this! Get politically engaged. Contact your elected officials, talk with your neighbors, help send the message that solar energy is here to stay.

Will home solar installations become cheaper, with or without the Green New Deal?

Regardless of the GND’s fate, home solar will continue to decrease in price, according to multiple studies.

One program in particular, the U.S. Department of Energy’s SunShot Initiative, happens to align with the GND’s 2030 “deadline.” SunShot’s goal is to “reduce the total costs of solar energy by 75 percent by the end of the decade.” That was in 2011, which implied 2020. After a successful campaign, SunShot was extended in 2017 — three years ahead of schedule — to 2030 with goals to increase affordability of solar installations.

According to SunShot, the levelized cost of electricity (LCOE) for a home solar system in 2010 was $0.52/kWh. In 2017, the price decreased to $0.16/kwh. In 2030, the (quite realistic) SunShot goal price is just $0.05/kWh!

A chart showing LCOE goals from NREL's SunShot Initiative

What’s that mean in practical terms?

The average price per watt of solar panels is $3.50 for a home solar system in 2019. That amount includes the cost of the panels, inverter, module, and hardware; the price also includes “soft costs” such as labor, customer service, and marketing.

The average home solar system size is around 6 kilowatts. A kilowatt is equivalent to a thousand watts, so multiply $3.50 by 6,000 and you get $21,000. With the 30% federal tax credit, that drops down to $14,700.

Now let’s use that same logic for projected prices in 2030!

According to the National Renewable Energy Laboratory (NREL), the projected price per watt of solar power (including hardware and soft costs) will be $1.62 in 2030 (PDF link). That’s a reduction of $2.16/w over the next 11 years! If we assume the average size of a home solar system will remain the same at 6 kilowatts, the projected total price of a home solar system will be $9,720.

Long story short, on the current trajectory, a home solar system that costs $21,000 in 2019 will cost $9,720 in 2030, a whopping 54 percent decrease. Wow!

And that’s regardless of the Green New Deal’s future, and without the federal tax credit. As you can see, this cost reduction will make home solar power systems way more affordable to way more people, and that’s a really good thing.

Side note: You might ask: Should I get solar now, or wait?

Because of a little thing called Net Present Value, you’re actually better off installing solar now rather than waiting. If you can afford it (and with solar loans, almost anyone can afford home solar), saving money starting now is better than waiting and hoping for future incentives to show up.

You’ll start to pay off the system with electricity bill savings starting now, and you can use the 30% ITC before it “steps down” or even expires.

Our final take on the Green New Deal and home solar

Okay, so we took a hard turn there. Let’s bring it back to the Green New Deal.

Our conclusion is that the Green New Deal is an extension, and attempt to equalize, already existing policy in a thriving industry. Some states’ policies are designed to encourage home solar installation. In other states, the lack of policy is implicitly meant to discourage installation. But we at Solar Power Rocks and the thought leaders behind the GND believe that people in West Virginia should have the same access to affordable solar energy as people in California.

Think of the Green New Deal as a giant, nationwide RPS policy that doesn’t discriminate based upon where you live. No matter your neck of the woods, the policy transcends political and state lines and establishes a future where everyone is powering their homes with renewable energy, and where powerful financial incentives exist to help you go solar.

Last modified: June 4, 2019

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Neal

I can’t believe you would even dignify the existence of this proposal! Solar is happening at a sustainable rate, now. Speed it up and you screw up costs and supply chain. Jobs? You can’t get enough good workers now, for many jobs. Rally everybody to get everything powered by solar, then most of the jobs go away, solar manufacturing could not be supported. Just leave it alone and let it happen at its own pace.

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