Solar is among the fastest growing renewable energy sectors but recently the solar utility sector (size greater than 1 MW) has started facing a lot of hurdles. But the same issues which are problems for utility space, have created a great opportunity in a closely related field. Solar energy is still a long-term growth story. The global market for solar power technologies is estimated to increase from $182.5 billion in 2022 to $371.7 billion by 2027, at a compound annual growth rate (CAGR) of 15.3% during 2022-2027, according to a BCC research report.
Problems faced by solar utility sector:
- Land availability is already a critical hurdle: Achieving the goal of net-zero carbon emissions by 2050 will require staggering amount of electricity from renewable sources. It is estimated that global renewable electricity capacity will almost triple between 2021 and 2030 to more than 8,800 gigawatts (McKinsey). Most of it will come from onshore wind and solar. The problem is that additional solar panels and onshore wind turbines will need land—and a lot of it. Utility-scale solar and wind farms require at least ten times as much space per unit of power as coal- or natural gas–fired power plants. Suitable, economically desirable land is now difficult to find. Most of the best suitable locations are already taken.
- Regulatory and sustainability limits: Regulatory, environmental, and technical constraints are reducing the available land in almost all countries. In the United States, solar projects face increasingly contentious land-use protests. In 2021, 10 percent of planned solar capacity was canceled during the permitting stage, largely due to well-organized public opposition. Reasons include concerns about the aesthetics of solar farms, the loss of arable land, effects on wildlife habitats, concerns about harm to property values, and fears about health and safety. In China, provincial officials in Hebei also recently banned solar panels on arable land.
- Rising land prices: Many players, including renewable energy development companies, large power companies, power producers, oil and gas companies, and financial players, are eyeing areas suitable for wind and solar installations. In addition, other players such as commercial and residential developers, agribusiness may be eyeing the same land. This widespread interest has had the predictable effect of steadily rising land prices over the past decade. Most wind and solar projects are leases rather than land sales, but these deals are ultimately driven by land prices.
- Long, unpredictable development timelines: Gaining the required permits, is usually a slow and decentralized process involving multiple governmental authorities and frequently changing regulations. This time can span up to ten years, from project start to permits granted.
- Increased grid congestion and transmission costs: Utility-scale solar or wind installations need more than land. They also need a large-scale grid infrastructure that will transport clean energy to end users. In many countries, the land most available and suitable for wind and solar development is far from the dense population, commercial, and industrial centers that need the most electricity. Building new transmission lines to connect rural areas to cities can be a time consuming and expensive process.
- Ecological concerns: Large solar farms often require a lot of water to keep the panels well-maintained. In places where water is a precious commodity, this is a serious concern. Ground-mounted solar panels can also cause loss of existing vegetation and endangering of local wildlife.
So where are the growth opportunities – on roof!
Rooftop PV systems, also called local distributed energy resource (DER) systems, are a great solution to most of the problems associated with utility scale projects –
- No land issues
- No regulations issues
- Very short development time
- No grid congestion
- No transmission and distribution infrastructure needed
- No ecological concerns
The only drawback is higher energy cost. But that is still competitive with traditional energy cost in most places.
Onsite or rooftop PV systems are generally only a few kW. The installed equipment costs are around $3 per watt. As part of a local DER system and because of the proximity to the loads it serves, an onsite PV system, once coupled with smart inverters, demand response, and a battery storage system, can enhance grid reliability and resilience. The benefits of a DER system include providing ancillary services (frequency and voltage regulation) and improved reliability during grid failures, natural disasters, and wildfires.
Further, the distributed nature of small generation systems reduces the grid’s overall vulnerability to cyberattacks. Onsite efficiency and PV systems allow building occupants to save each month on their utility bills, making home ownership more affordable.
Excellent growth potential
Though rooftop solar is still at a very nascent stage in countries like India, the sector has very huge potential, and multiple innovations can further enhance this. These include microinverters that enable more power generation even under conditions of shade (where traditional rooftop solar is not as effective) and new applications that enable fixing solar panels on the facades of buildings and balconies of apartments.
Here are some key growth drivers for the rooftop solar sector:
- Falling Costs: The cost of solar panels has decreased dramatically over the past decade, making rooftop solar increasingly affordable for residential, commercial, and industrial customers.
- Government Incentives: Many governments offer financial incentives and subsidies to promote the adoption of rooftop solar. These incentives can include tax credits, grants, feed-in tariffs, and net metering policies. Governments also set RE targets or implement regulations requiring a certain percentage of energy generation to come from renewable sources. This forces additional opportunities for rooftop solar growth.
- Energy Independence and Resilience: Rooftop solar enables individuals and businesses to generate their own electricity. This reduces dependence on the grid and provides energy security during power disruptions. As people value energy independence and resilience, rooftop solar installations are likely to increase.
- Environmental Awareness and Sustainability: Growing concerns about climate change and greenhouse gas emissions have fueled interest in renewable energy sources
- Technological Advancements: Improvements in efficiency, storage capabilities, and integration with smart grid systems, opens new possibilities for rooftop solar.
- Business and Economic Benefits: Rooftop solar can benefit businesses by reducing their electricity bills and providing long-term cost savings. Additionally, installing solar panels on commercial and industrial rooftops can make use of otherwise unused space. It will provide an additional revenue stream for building owners.
- Energy Transition and Corporate Commitments: Many corporations and institutions are setting ambitious sustainability goals and committing to renewable energy targets.
- Emerging Markets: Emerging economies with rapidly growing energy demand, limited grid infrastructure. And abundant sunlight present significant potential for rooftop solar expansion.