By Tracy Warren
Five years ago, many people in the electric industry viewed solar energy as a kind of “boutique” resource––more an energy accessory than a real power supply option. But in the last half-decade, as the costs to install solar went down and electric utilities gained experience with this unique energy resource, there has been a dramatic transformation, and solar energy has made the jump to the big leagues.
At local electric cooperatives, consumer-members were asking questions about whether this new technology would be suitable either for their own home or for the cooperative.
Given the high cost to install solar, electric co-ops had questions about the economic feasibility of solar and its effect on the electric system. Even with federal tax incentives, the cost of solar was not competitive with other resources such as wind and natural gas.
Engineers also had questions. What happens to the system when the sun doesn’t shine? Or even more tricky: what happens on those days when multiple clouds sail by, making a strobe light out of the sun?
To answer these questions, co-ops started installing small arrays, analyzing costs and efficiency. Five years ago, compared to other resources, many concluded solar was still simply too expensive.
The cost of panels and equipment was not the only reason solar was expensive. There were also soft costs, like training, business processes and software. There was little standardization among solar projects––every project was unique. Engineers and resource planners, unfamiliar with this technology, needed training and technical assistance. Financial partners still needed convincing when it came to investing in large-scale solar projects.
As the solar industry started growing, thanks in part to tax credits and other policy incentives, the cost of solar panels and other equipment started declining; the economics started changing.
In 2014, 17 electric co-ops joined with their national trade organization, the National Rural Electric Cooperative Association (NRECA), to collaborate on solar installations in 10 states whose combined solar capacity would be 23 megawatts. The goal of the project was to make solar more affordable for electric co-ops by driving down the soft costs.
The project, which received funding from the Department of Energy, aimed to create a network of experts within the cooperative community. By sharing information and expertise, co-op experts could make solar installations easier and less financially risky for other co-ops to follow suit.
Over the course of this project, the cost of solar fell dramatically. For example, one co-op that built a solar installation at the beginning of the project and another one two years later, found the cost was half what it had been two years earlier. In 2013, the cost was $4.50 per watt of installed solar, and in 2016, the cost was $1.74 per watt.
As more electric co-ops gained experience and shared information about what worked and what didn’t, the risks that come with innovation and change also went down. Solar became more doable for cooperatives large and small.
With the decline in costs and the increase in knowledge and understanding, solar has taken off in rural communities. The proof is in the numbers. Today, America’s electric co-ops own or purchase more than nine times as much photovoltaic solar power as they did in 2013. And by the end of 2019, the combined solar capacity of America’s electric cooperatives is expected to surpass a gigawatt.
Tracy Warren writes on consumer and cooperative affairs for the National Rural Electric Cooperative Association, the national trade association representing more than 900 local electric cooperatives. From growing suburbs to remote farming communities, electric co-ops serve as engines of economic development for 42 million Americans across 56 percent of the nation’s landscape.