The Adoption of Residential Solar Energy in Texas
Policy Analysis
Christopher M. Howard
The University of Oklahoma
Abstract
The research in this paper offers insight into residential solar energy in the state of Texas. Its purpose is to analyze the current state of residential solar energy in Texas, evaluate whether or not it is effective, and offer recommendations. This paper reviews current technologies and development, barriers to adoption, regulators and legislative action, incentives, and the landscape of the solar industry in Texas and participating advocates. Texas has been a leader of energy, both conventional and renewable. Despite large potential for solar to flourish in Texas the lack of supportive policies, inadequate financing options, and poor perception from the majority of the public have held solar back.
TABLE OF CONTENTS
TITLE PAGE & ABSTRACT
INTRODUCTION…………………………………………………………………………2
CONTEXT…………………………………………………………………………………3
RECOMMENDATIONS & CONCLUSION……………………………………………22
REFERENCES……………………………………………………………………………25
Introduction
Texas has the highest energy demand in the nation which is unlikely to change. Texas has been a leader of global energy for over a century, however to maintain that productivity today Texas must effectively expand its energy sector. Texas has a growing population, large energy demand, and the capability to innovate. Therefore, Texas should use its expertise in energy research, innovation, and manufacturing to begin the development of renewable energies. Texas is already the national leader in wind energy and is also the largest untapped solar resource in the United States. Texas solar power is being driven forward by local utility rebates and incentives that rank favorably throughout the nation but Texas is one of the most complex states to summarize as far as making the choice to go solar for your home. This is because they have drastic variations from city to city in terms of upfront utility rebates and net metering.
There are currently more than 460 solar companies in Texas, employing 9,369 people, which ranks third in the nation [2]. Residential solar energy in Texas has the potential to grow into a large market that can compete with conventional energy methods. This year Texas ranked 6th in the nation for the amount of solar technology capacity currently installed. This paper is a policy analysis that will examine the current situation of residential solar energy in Texas, evaluate whether or not it is effective, and give alternatives and recommendations. This paper will analyze the barriers to adoption of residential solar energy in Texas and give advice for how to overcome them. Stimulating demand in Texas, which has a large consumer market, could drive down the costs of manufacturing and installation.
Why are residential solar energy systems not being utilized? That question is too complex to answer only looking at the policies in Texas, so this paper will begin by explaining the current technology and developments that are being tested by the solar industry to help draw a bigger picture. Then we will look at other barriers that residential solar energy must hurdle in order to place itself in the position to compete with conventional energy methods. After we will look at legislative regulations and begin analyzing what can be done in order to help Texas’s solar market grow before we dive into what incentives are offered in the state of Texas and how they can improve upon their current situation. Lastly, I will look at the largest residential solar energy players in Texas to see what they have been doing to advocate and push solar energy in their state. To conclude I will draw upon all that was discussed to offer alternatives and recommendations based on what other successful states/countries have done to shine a light on solar energy.
CONTEXT
Here I review topical literature concerning residential solar energy in Texas. First, I begin with an overview of current technology and development in the residential solar industry to help explain solar utilities and understanding of basic solar technology. Next I analyze the key barriers to adoption that the solar industry faces in the residential sector. Then I will identify the regulators and give examples of recent legislative action in the state of Texas. The next theme will describe the setting of the solar energy industry in Texas and the local advocates who help push solar energy. Lastly I will list recommendations for new incentives for residential solar energy that would help solar energy become more viable in the lone star state.
1. Technology and developments
Solar energy is defined as energy obtained from the sun in the form of solar radiation. Solar energy can be categorized as either photovoltaic (PV) or concentrated solar power (CSP). PV solar systems directly convert the sun’s rays into electricity. CSP uses mirrors or lenses to concentrate the sunlight, converting it to heat. From there the solar thermal energy technology uses that solar heat for applications such as heating, cooling or electricity generation. Solar energy is the largest source of renewable energy, beating out both wind and hydro around the globe.
1.1 Solar photovoltaics
PV technology uses the sun’s rays to produce electricity without conversion, so these devices are very easy and efficiently designed. This allows PV technology to produce larger outputs with smaller inputs. The basic building block of a PV system is the solar cell. When sunlight strikes PV cells, electrons are released and then gathered to create an electrical current. One PV cell does not produce much power, but when PV cells are assembled together into modules or large arrays to form a solar collector system they produce much more. Therefore, this type of solar technology is used in various applications worldwide which will be expanded on later in the paper [3]. That being said, this system still needs to be improved for better outputs if it is going to substantially contribute to our nation’s energy needs. The solar market for PV is mainly models that use crystalline silicon based PV cells. This trend could be so high because of developing countries with large rural populations implementing a method that gives emphasis to PV to accomplish demands for electricity that the grid cannot. What this means is that for solar energy to be viable in the U.S. it will need to start being implemented not only by large scale plants but must be small scale and contribute to powering all homes to make a significant difference. PV solar parts have no moving parts and do not produce any waste. PV technologies are already being used in varied ways in Texas such as water pumps, road signs, satellites, water purifiers, and streetlights. If PV is integrated into residential settings in Texas, PV could satisfy a large share of energy needs. PV panels can be built to any preferred size so you can use small panels for a variety of purposes, install modules on your home, or a large number of arrays can be connected to stretch across acres. This makes PV a promising technology in Texas where there is a lot of customers willing to use PV to power their farm houses, barns, or build solar farms [2]. PV can be installed on existing homes or structures already used for other purposes, which means there is no need to find land to dedicate to these purposes.
Figure 1: Compares PV sizes.
1.2 Concentrated solar power
Concentrated solar power (CSP) technology produces power by concentrating solar irradiance to heat a gas, liquid, or solid that is then used in a process for electricity generation (most commonly a steam turbine). CSP plants produce solar energy by using mirrors or lenses to concentrate huge areas of sunlight using concentrators such as a parabolic trough, enclosed trough, solar power tower, fresnel reflectors, and dish engine systems [3]. The big CSP systems mostly use mirrors to concentrate sunlight by reflection, instead of the other method of refraction with lenses. The CSP market has shown global growth every year by nearly doubling. The majority of the operating capacity for the United States is in the south-west in states such as California, Arizona, and New Mexico and could just as easily be utilized in Texas.
1.3 Concentrated solar thermal
Solar thermal technology harnesses energy from the sun and turns it into low-cost environmentally friendly thermal energy. Once it is made into thermal energy it can heat water or power cooling systems. Water and air heating have become widespread tactics practiced for greater results in production. Solar thermal technology can provide residential, commercial, and industrial industries the means of water and air heating systems in an environmentally friendly way [4]. The largest concentrated solar thermal plants are located in the Mojave Desert in the United States. Solar thermal technologies fall in the scale of low, medium, or high. Low temperature collectors are generally only used to heat small bodies of water such as a swimming pool. Medium temperature collectors are for residential and commercial use and mainly heat both water and air. High temperature collectors are only used for industries that would require heat temperatures of 572 degrees Fahrenheit.
1.4 Current research to improve solar industry and applications
Photovoltaic thermal hybrid solar collectors (PVT) are systems that convert sunlight into both electric and thermal energy. By producing both thermal and electric energy they are used to increase the productivity of energy captured from sunlight. Efficiency of PVT is great related to concentrated solar thermal because thermal collectors gather energy that goes uncaptured by PV, therefore utilizing both technologies absorption of the sun’s rays and combining the technologies together [5]. PVT can still improve its design and configuration to produce better results, which is promising. These hybrid PVT systems are being fused to make an energy supply system that is much more consistent. Research on PVT technology started in the 1970’s and today it has the highest efficiency among all of the non-concentrating solar energy collectors. If investments are made to this research the efficiency could nearly double. This would certainly be an incredible accomplishment in the PVT sector that is rapidly growing.
Thermal energy storage (TES) allows for excess thermal energy to be stored and used at a later time. This technology is great because it can be used on an individual building, town, or regional level depending upon the scope of the technology [4]. The energy industry thrives off of high peak loads; thermal energy storage can combat this by storing energy for later use whether it is hours, days, or months. By using TES on existing solar products the technologies value increases significantly because it allows shifts in solar energy to periods of high peak loads, provides firms the capacity to use, and lowers integration hurdles. CSP has an advantage over PV because of the ability of CSP to utilize TES [6]. This in turn makes CSP a moderately dispatchable resource. Complimentarily use of these two technologies can allow greater overall levels of solar energy penetration in two ways. First, it allows solar generated electricity even on days with cloudy weather and during nighttime which would otherwise prove impossible. Second and also important is the capability to offer grid flexibility, allowing superior penetration of PV than if deployed without CSP.
2. Barriers to adoption
In this section I will review the most frequently identified barriers to the adoption of solar energy. These barriers apply to residential solar energy in Texas as well as other renewable technologies around the world. Existing literature identifies and describes a multitude of barriers that weaken the distribution of solar energy, and the classification of these barriers can vary. In this paper I will organize these barriers in terms of economic, technical, and institutional. The impact these different barriers have vary widely therefore the more prominent barriers will be discussed to a higher degree.
2.1 Economic barriers
The economic barriers to residential solar energy are easy to see and mainly relate to high initial costs compared to conventional energy technologies that have built a strong market and have established industry experience. Therefore, the solar industry faces lopsided odds right out of the gate and the perks that draw customers in such as energy security and environmental benefits do not help during cost calculations [10]. Financing stands out as another key barrier due to solar technologies being deemed high risks when evaluating their creditworthiness. This causes higher interest rates for residential solar energy projects that are already expensive. Market failures and distortions are perhaps the most obvious barrier to residential solar energy adoption in Texas [15]. The energy sector is monopolized by the government which leads to control over energy suppliers and distributors. This makes it difficult for solar technologies to force their way into the market [8]. There is a lack of information dissemination and consumer awareness covering the technologies, costs, and benefits of solar energy resources as well as insufficient agencies prepared to provide this material. There is a lack of competition due to regulations prohibiting entry into the energy sector such as bulky requirements and barriers created by current suppliers. The solar energy market still being new and underdeveloped causes insufficient supply chain channels and logistic problems.
2.2 Technical Barriers
Technical barriers vary from each solar technology. Photovoltaics three technical barriers severely hindering their efficiency include the inability to make high-efficiency PV cells with low quality material and an insufficient supply of raw materials to make them. Second, PV modules have a low conversion efficiency rate that could be improved (4–12% for thin film and under 22% for crystalline in the current market) [8]. And lastly, performance limitations to components such as batteries are holding back solar from being a huge success. If batteries can start to store energy converted from solar panels at better rates we could see a boom in the solar market. Additionally, the responsible disposal of batteries becomes challenging in the absence of an organized recycling process. Other barriers for PV systems are a lack of infrastructure to interconnect to the grid so net metering and billing becomes easier.
In the case of solar thermal applications two key technical barriers apply. First, there are limits to the heat carrying capacity of the heat transfer fluids which causes designs and integration of these systems to become more difficult. Second, thermal losses from storage systems are too high and inefficient. These two issues cause further constraints for system optimization. For example it is difficult to integrate with common building materials, construct the system around the different buildings designs, and also pass the codes and standards enforced by the state. What is more, solar energy technologies have to participate in an energy infrastructure designed around the conventional energy technologies that came first.
2.3 Institutional barriers
Lastly, all solar energy technologies face the same institutional barriers. First is the lack of government policy supporting, which would help solar technologies become more viable for the average citizen looking to buy. For the state of Texas, there are not enough incentives for customers to buy solar. To counteract that the state could increase their requirements on solar in their next renewable portfolio standard to drive the state to offer more incentives. Existing literature expresses a common barrier that there is an inadequate workforce with insufficient skill and training to install, maintain, and upkeep solar technologies [12]. Since there is not an institutionalized process of training it makes the distribution of new technologies limited. More often than not existing laws and regulations constrain solar energy. A perfect example, solar PV systems have to deal with burdensome and inappropriate interconnection requirements such as billing, insurance, and net-metering issues [8]. Furthermore, there is a lack of understanding between supplier and customer because the general public doesn’t know enough about solar energy to be able to make an educated decision on the matter [15].
3. Regulators, policies and legislative action
The electric service industries in Texas are regulated and governed by independent, state, and federal agencies. Each separate entity is given their own tasks and responsibilities in order to properly serve the public. First, is a list of these agencies and brief descriptions of their duties. Second, we will look at the most important policies that these agencies oversee in Texas and what they have done to help. Third, I will give examples of legislation created in Texas to push solar energy.
3.1 Regulators
Public Utility Commission of Texas
The Public Utility Commission (PUC) is the state agency that regulates electric utilities for the state of Texas. In other words, the PUC writes up and enforces the laws by which utilities follow.
Electric Reliability Council of Texas
The Electric Reliability Council of Texas (ERCOT) oversees the flow of electric power to over 22 million Texas customers. This represents 85% of the state’s electric load and 75% of the land area. The ERCOT grid connects over 41,000 miles of power lines and about 560 generation units [23]. ERCOT also serves as the independent system operator (ISO) for the state. The main objective of an ISO is to maintain power on an electric grid and guarantee the grid can handle the different types of power available at any given time. Yet another key duty for ERCOT is maintaining the reliability of the power grid, this means ensuring that electricity is always available no matter what the demand may be. ERCOT also manages financial settlement for the competitive power market and manages consumer switching for Texans in competitive areas. When a consumer chooses a retail electric provider, or wants to go solar, ERCOT ensures the details of that purchase, such as pricing, and communicates it between the different companies.
Texas Reliability Entity
In 2010, Texas Reliability Entity (TRE) took over all responsibilities of the Texas Regional Entity (predecessor). TRE is headquartered in Austin, TX. TRE performs the regional entity functions such as to develop, monitor, assess, and enforce compliance with North American Electric Reliability Corporation (NERC) Standards within the geographic boundaries of the ERCOT region. Additionally, TRE is authorized by PUC and is permitted by NERC to investigate compliance with the ERCOT Protocols and Operating Guides, working with PUC to catch potential violations. TRE is independent of all users, owners, and operators of the bulk-power system.
Federal Energy Regulatory Commission
The Federal Energy Regulatory Commission (FERC) is an independent agency that regulates the interstate transmission of electricity, natural gas, and oil.
North American Electric Reliability Corporation
The North American Electric Reliability Corporation (NERC) is an independent, non-government organization which regulates bulk power system users, owners, and operators through the adoption and enforcement of standards for fair, ethical, and efficient practices.
3.2 Policies
In this section I will give a detailed look at the current state of Texas policies that heavily influence solar energy. These policies need to change in order to bring more incentives to Texans. Recommendations will be saved for the conclusion of the analysis.
3.2.1 Renewable Portfolio Standard
A renewable portfolio standard (RPS) is a regulation that requires the increased production of energy from renewable energy sources, such as wind, solar, biomass, and geothermal. This means that utilities are motivated to offer perks to homeowners to meet these goals. The RPS is also used to decide the amount and type of incentives obtainable for solar customers. Normally an RPS sets targets for a certain percentage of the total energy generation to be from renewables but in the state of Texas the target is set to amount of electricity produced in megawatts (MW). The last time the RPS was updated in Texas was 2005 and the requirement they intended on meeting by 2015 was 5,880 MW with a voluntary goal of 10,000 MW by 2025. However, in Texas this means very little because wind energy is such a huge, profitable commodity there that they met their 2025 goal with just win energy alone back in 2009 but has yet to increase their target goal. For a state like Texas, which consumes large amounts of energy, this goal is simply unacceptable when compared to other states like California that set a goal of 33% of total energy generation by 2022. Texas’s RPS is crucial aspect as to why there have been no statewide incentives. If utilities don’t hit their RPS numbers they have to pay large fees to the state, but if these lofty goals are easily met without even adding solar to the equation there will never be progress. The only way utilities will aid a transition to lower bills and offer incentives for solar is if the state forces them to, and that could be a long time for Texas.
3.2.2 Net Metering
Net metering refers to a system in which solar panels are connected to a public-utility power grid and surplus power is transferred into the grid, allowing customers to offset the cost of power drawn from the utility. There is no statewide net metering in Texas. At the legislative level Texas is doing little to nothing to incentivize solar power. A small amount of localities do offer their own net metering with more arising. In the cities of Austin, El Paso, and San Antonio net metering is available for residential solar systems. Reasons for opposition to net metering stem from opponents dislike of buyback rate, which is essential to create fair policy. Other complications stem from a large amount of private retail electric providers, private investments from companies outside of ERCOT. Changing net metering would also require the state to determine new laws pertaining to interconnection, which is deemed complicated and perhaps not worth the trouble.
3.2.3 Interconnection
Interconnection rules deem how owners of residential solar energy systems can plug in to the grid and send power to utility companies. States with good interconnection policy allow any capacity, ban utilities from creating overburdened rules or applying excessive insurance, and have simple processes with clear rules in place. You first need interconnection before you can have net metering, but although Texas doesn’t offer net meting Texas does still have regulations designed to help connect you to the grid. Texas provides typical interconnection procedures for all systems up to 10 megawatts that forbid the utilities from requiring pre-interconnection studies. Texas also set 4-6 week time limits on utilities to consider your application for interconnection because of problems with slow replies. Texas also offers fast-track pre-certification processes to speed up the interconnection process. Interconnection will play a larger role when net metering is changed.
3.3 Legislative action
As you can see from above, not much legislation has been passed statewide as of recent that could considerably help residential solar in Texas flourish. The most legislators have been able to pass statewide are bills that can stop Home Owner Associations from prohibiting the installation of solar panels.
• In 2011, Texas legislature created House Bill 362 specifically to forbid HOAs from prohibiting solar energy installations except in very specific circumstances.
• In 2015, Texas legislature created Senate Bill 1626 in order to close a loophole that allowed HOA’s and developers to keep solar power out of communities currently in “development period”. The law says developers of expanding neighborhoods larger than 50 homes may not ban solar devices.
• In 2009, Texas House Bill 1937 passed enabling cities to establish solar panel financing programs. Cities can now fund the installation of solar panels on residential properties and allow the homeowners to pay over several decades via a small line item on their property-tax bills. Austin was the first city to implement this legislation.
4. Incentives
As I mentioned previously, many solar energy technologies cannot compete with the price of conventional energy commodities. This means any noteworthy deployment of solar energy will not be possible unless major policy incentives are introduced. In this section I list current incentives offered in the state of Texas, but will withhold recommendations until later.
4.1 Tax Credits
Texas doesn’t have any income tax therefore there are not any solar tax credits to redeem. However, Texans can still benefit from the 30% federal solar tax credit. In other circumstances tax credits can provide a very powerful incentive for going solar.
4.2 Rebates
Solar rebates are the same as those you get for buying appliances. They are offered from utility companies who want to avoid paying fees for not meeting their requirements of renewable energy generation, but as we know that is not that case in the state of Texas. Therefore, Texas offers no statewide rebate program due to most citizens outside of large cities having their own choice of electric company. Although Texas lacks in state wide incentives they do offer rebates on the local level. In cities such as El Paso the rebate program was fully subscribed. Below is a list of rebates offered at the local level.
1) $8,400 Austin Energy Solar PV Rebate Program
– $.70 per watt-DC
– roughly $700 for every 4 solar panels
– cannot exceed 50% of total invoice
2) $25,000 CPS Energy Solar PV Rebate Program
– $.80 per watt-AC
– cannot exceed 50% of total invoice
3) $4,000 Guadalupe Valley Electric Cooperative Solar PV Rebate
– $1 per watt installed
4) $8,500 Oncor Solar PV Rebate
– $.85 per watt
5) $3,000 Bluebonnet Electric Cooperative Territory Solar PV Rebate
– $.30 per watt installed
6) $3,000 Pedernales Electric Company Territory Solar PV Rebate
– $.30 per watt installed
7) $30,000 City of Denton
– $1,500 per kilowatt
– cannot exceed 50% of total cost
8) $5,000 City of San Marcos
– $2,000 per kilowatt
4.3 Performance Payments
Performance payments refer to rewards homeowners earn for the electricity their solar panels produce. They can directly lower your electricity bill through per-kWh bonuses or as solar renewable energy certificates (SREC) which are earned and then sold. Texas does not have any form of performance payments in place. Whereas local utilities picked up the slack before with rebate programs that is not the case here, not even individual utilities offer any. This goes back to having a weak RPS. If the target goal was raised it would directly influence those utilities and maybe even the state to offer more incentives for solar energy.
4.4Property Tax Exemption
Property tax exemption status is a meaningful issue when considering an investment. Experts claim that solar power adds approximately 20 times your annual electricity bill savings if you own the system. For many average-sized solar power systems on a house, that can mean $20,000 to your home value. Texas legislation finally did something right, lucky for Texans when you install this new solar system it will result in a direct increase to your home.
4.5 Sales Tax Exemption
Texas however does not have a matching sales tax exemption. Sales tax ranges from 6.25% to 8.25% here, depending on the local tax rate. Although it may not be noticeable in small purchases that sales tax can be a big number when applied to expensive items. A sales tax exemption would be a simple and beneficial to save Texans $2,000 on those solar panels, discounted for them right off the top of the bill. Perhaps this is where Texas legislation should look next since they do not want to change their net metering. The image below illustrates how Texas compared to leading solar-policy states.
Fig.2 shows Texas compared to states leading solar-related policies (Clean Edge – Solar PV Market Report)
5. Solar energy industry and advocates
Due to abundant sunshine and growing research institutions Texas is well positioned to grow their solar energy market. Texas is ranked number one in the nation for solar potential as shown in figure 4. There are currently more than 460 solar companies in Texas that employ over 9,300 people which ranks third in the nation. Figure 3 shows you the locations of manufacturers, installers, and other companies related to solar energy. Texas boasts three large solar farms in areas with better incentives. The largest solar farm in Texas is located in Bexar County, Texas with 41 MW. The Alamo 1 Solar Farm was built by CPS Energy in 2013. It is only the first phase for the solar project that plans on gradually building up to 400 MW. The City of San Antonio’s CPS Energy is the largest municipally owned utility in the United States. The second largest solar farm in Texas is Webberville Solar Farm (35MW) in Webberville, Texas. The project started in 2011 and cost $100 million. The third largest solar farm is the Barilla Solar Project (22MW) in Pecos County, Texas. It was announced in 2014 and was built by Solar First which is one of the world’s largest solar developers.
Fig.3 Cities have majority of the companies.
Over the past decade solar energy has been second compared to wind energy in majority of the nation but even more so in Texas. Texas is also has a large amoun of solar equipmet manufacturing companies in the state as shown in figure 3. Texas is a leader in the semiconductor technology industry as well, a fundamental part to creating PV cells. Five Texas universities participate in research and development for solar energy through the Department of Energy (DOE) and National Renewable Energy Laboratory’s (NREL) to conduct long-term solar radiation measurements, which is more than any other state in the nation. Other Texas universities conduct solar vehicle racing experiment that allows students to get hands on and work with solar technology. Large grants have been awarded to select universities to conduct other R&D. Texas State University was granted $4.5 million in 2013 with the aim to increase the efficiency of PV cells in the lab and manufacturing process. Also in 2013, Texas A&M University – Central Texas announced a partnership with PPA Partners (California-based leading solar energy firm) to launch the Center for Solar Energy. This center will serve as the largest research and development facility in the world. The site is built on 800 acres in Central Texas and cost $600 million to build.
Fig.4 Shows Texas’ solar radiation. Texas has the largest solar potential in the nation.
Fig. 5 Texas is a top 10 solar state based on those statistics.
The Texas Emerging Technology Fund (TETF) and the Texas Enterprise Fund (TEF) have invested $10.5 million dollars combined in solar-related projects. Many Texas communities and utilities have adopted innovative financing mechanisms aimed at encouraging residential and commercial solar installations. Oncor, Entergy, AEP Texas, Southwestern Electric Power Company, El Paso Electric, and Austin Energy are among the Texas utilities that offer incentives, to help consumers deal with the high upfront cost and long payback periods associated with solar PV systems. These installation incentives are frequently combined with a 30% federal tax credit to greatly reduce the cost of installing solar panels. A number of Texas utilities such as CPS Energy and Texas New Mexico Power Company offer solar PV system rebates as was stated earlier. The amount of residential installations in 2016 have more than doubled what was installed in 2015 and future estimates predict that number to keep increasing over the next few years as shown in figure 5.
Fig. 5 shows 2016 and future estimates of residential solar.
RECOMMENDATIONS & CONCLUSION
As was stated at the beginning, the state of Texas has large energy demand, a large consumer market, and the capability to innovate. Texas also has expertise in energy research, innovation, and manufacturing. Texas is a leader in wind energy and should begin to push for the adoption of residential solar energy, but it will never happen with the current policy and incentives available. In this section I will give recommendations for what Texas ought to change in order to stimulate the solar market. Recommendations will be restrained to policy and regulations and I will point out major barriers that solar energy technologies must overcome for residential installation to succeed.
First, Texas needs to strengthen their Renewable Portfolio Standard to a percentage of the states total energy consumption. The target the have now of 5,880 MW is far too low and is not currently stimulating any demand for the state to offer incentives. If Texas set a more serious but achievable goal to have perhaps 20% of the state be generated from renewable energy then it would push for more solar and inevitably more wind. The RPS is crucial to bring change because if Texas does not meet their goals they will have to pay back large fees, so it forces their hand to offer better policy and incentives to Texans. The best move Texas legislation could make to help grow solar demand would be to add a solar carve out to the RPS. A solar carve out means that a certain percentage of the goal must be met by specifically solar energy, not other renewable energies. This is important for the state of Texas because they have invested and developed so much wind energy (10% of the state) that future goals would be met without solar. Therefore, a solar carve out is the best way to create more incentives for solar otherwise Texas would only invest in more wind.
Next Texas should change net metering. Net metering is only offered from local utilities, but in order for solar to become more popular in the state they need to create statewide net metering. It would allow customers to receive full-price credit for energy generated from their solar panels or they should be given a feed-in-tariff if net metering is not possible. Interconnection rules allowing customers to plug into the grid are decent but prohibition on the requirement of redundant external disconnect switches and separate liability insurance can bolster Texas laws. Sales tax exemption is another easy way to cut a chunk of the price right off the top of an expensive residential solar system and would be an easy piece of legislation to pass considering nobody likes taxes and because Texas would have a lot of trouble making some of these other changes like net metering. Texas also needs Solar Renewable Energy Credit (SREC) programs. Not even individual local utilities are offering them and these credits could save residential solar customers large amounts of money for their investment.
To conclude, Texas has all the intangibles to be a leader in residential solar energy installations, but requires key changes in policy and regulation in order to stimulate the large available market. Solar energy is right on the edge of success and only requires a small push to blow up. As solar energy prices continue to drop and the conversion rates of PV cells rise it will begin to compete with conventional energy to a greater extent without incentives, but until then policy and incentives will be crucial to help the solar market grow and develop into a market that could one day support a large amount of Texans homes. Stimulating demand in Texas, which has a large consumer market, could drive down the costs of manufacturing and installation. To do that policy, incentives, and regulations will need to improve. Although the state has seen impressive gains over the past decade in installed solar capacity Texas has no statewide rebates, no performance payments, no sales tax exemption, no statewide net metering, and a minimal Renewables Portfolio Standard (RPS). The cards are in Texas’s hands; hopefully they don’t just hold them.
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[25] https://www.ercot.com
[26] https://www.dsireuse.org
[27] http://www.legis.state.tx.us
[28] http://www.eia.gov/state.com