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Saddling Up For 2017

posted Jan 4, 2017, 9:53 AM by Nate Shanklin

The solar energy business ramps up for a busy year

By Nate Shanklin

Managing Director, Wolcott Energy Group

If we are going to call a year the one where renewables really broke through, it looks to be 2017. As it stands, per the United State Energy Information Administration (EIA) data (http://www.eia.gov/outlooks/aeo/), we have just entered the busiest year in the history of the renewables. Bloomberg has recently reported that in 2016 renewables and specifically solar became the cheapest form of energy on earth, beating out all fossil fuels in some cases by nearly 50%.

Link to the Bloomberg article: http://tinyurl.com/jp8gsjk

All of this momentum is in spite of an United States presidential election that went for a candidate who is decidedly uninspired by renewable energy.  The election and the roaring nature of the renewable industry illuminates an important aspect about the domestic renewables market as a whole; states control most of the energy related decisions.  Outside of the Federal Investment Tax Credit, which is not to be underestimated, state legislatures are the bodies that determine the vast majority of energy policy.  It is at the state level that renewable energy portfolio standards are determined, and Renewable Energy Certificate policy and pricing is set. It is these two factors that drive the utility consumption of renewable power. Additionally, state legislatures are in charge of net metering policy which determines the feasibility of the vast majority of commercial and aggregated residential renewable projects. While some states such as Arizona are shying away from renewables, the vast majority of states are warming to the idea.

This is going to be a busy year, but one fraught with challenges. While the volume will be high, the price of power sold will be relatively albeit uncomfortably low.  The incredibly low price of systems will likely be a one two punch for unprepared companies.  We can expect to see a thinning of small or inefficient groups as low margins on a high volume basis, favor efficient companies.

Despite the challenges ahead, all signs point to 2017 being the year of solar, it should be quite a ride.

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