• 03.07.16

Regulation, Not Technology, Will Determine The Future Of Rooftop Solar

By 2020, solar could either be as cheap as grid electricity in nearly all 50 states–or in almost none at all.

Regulation, Not Technology, Will Determine The Future Of Rooftop Solar
Your state lawmakers could decide whether you want to buy solar panels.

With the cost of solar panels falling all the time and grid electricity prices climbing gradually, you would expect people to turn to solar power. The price of self-generated power is the same or better than utility prices in 20 states–a state of so-called “grid parity–and up to 42 states could be at that level by 2020, according to new analysis from GTM Research.


But here’s the issue: regulation. If regulators decide to change the rules around net metering–the money utilities pay to buy excess power from privately owned solar panels–and add in new service charges, the economics could change dramatically. GTM says just two states could be at grid parity by 2020 under certain scenarios.

This reality is brought home by the situation in Nevada, where regulators recently changed net-metering rules to make solar much less attractive. Installers such as SolarCity and SunRun have decided to exit the state, citing unfavorable conditions.

California, Massachusetts, and Hawaii are currently the most attractive states to get rooftop solar. They offer 20% to 40% price benefits compared to grid electricity. North Dakota, Oklahoma, and Washington are worst places to get solar panels today.

Utilities argue that solar households should help pay monthly charges to defray the cost of maintaining the electricity grid. GTM finds a $50 charge would mean only Hawaii and California enjoy grid parity–though it’s possible such charges could also hasten grid defection as well. If households have to pay to be part of the grid, they may choose to invest in battery storage instead, like Tesla’s new Powerwall. That way, they can save power for their personal use when it’s abundant (like in the middle of the day) for nighttime, when they’d normally call upon the grid.

In the long run, it may be impossible for utilities to hold back the tide of technology, whatever the regulatory structure looks like.

About the author

Ben Schiller is a New York staff writer for Fast Company. Previously, he edited a European management magazine and was a reporter in San Francisco, Prague, and Brussels.