Commercial Solar in 2016—Opportunity for a Better, Stronger Industry
In December, leaders from across the globe met at the Conference of Parties 21 (COP21), coming to agreement that the world needs to collectively limit global warming to 2 degrees Celsius – an ambitious objective, but not an impossible one.
It’s up to individual nations to determine their own goals for contributing to the international mandate. Once those goals are set, the next logical question is how they will be met.
Part of the answer will lie in renewable energy. The U.S., according to the Solar Market Insight 2015 Q3 report from the Solar Energy Industries Association, has installed 24.1 GW of solar capacity; enough to power 5 million homes. And for the eighth consecutive quarter, more than 1 GW of solar has been added to the grid.
That momentum is expected to continue with the extension of the Investment Tax Credit (ITC) for solar energy. While historically the solar market has been concentrated on the residential and utility sectors, the ITC extension offers unique opportunities for the commercial sector. In order to ensure that the U.S. continues to see traction and improvement, here’s what it needs to do in 2016 to maintain current momentum among residential and utility markets while invigorating the commercial market.
Maximize the ITC, Expand the Market
With the five-year extension of the ITC, it will be appealing for investors and developers to continue with “business as usual,” funding projects that can be easily vetted, assessed and completed. Namely, that means standardized residential projects with high utility rates, and large publicly traded commercial and utility projects that take advantage of economies of scale. It’s important to note that both of those off takers have readily available ratings to weigh risk and reward (for large commercial entities, it’s a public debt rating; for homeowners, it’s typically a FICO score) making the assessment process streamlined and accessible.
The fact that the ITC is extended for another five years means the industry has the opportunity to tackle more complex projects. Unrated commercial businesses are prime examples of untapped potential due to highly varied installations, less competitive utility rates, and their lack of public debt rating. Technological advances and creative financing have opened the door for these projects but the 28 million small businesses in the U.S. have largely been ignored.
RenewableEnergyWorld.com 2016 | By Megan Birney
| Director of Strategic Affairs