New BloombergNEF andSchneider Electric report finds rooftop solar market still largely untapped with potential to exceed 2,000 gigawatts of solar and 1,000 gigawatt-hours of energy storage by 2050
The report 'Realizing the Potential of Customer-Sited Solar' finds that rapidly falling costs of solar technology have already made it economical for homes and businesses to generate their own power in some markets. In
These solar installations can generate economic returns for the hosting homes and businesses, as well as wider benefits in terms of carbon emissions reductions, peak load reductions, and employment opportunities.
"Customer-sited solar is a huge opportunity that's often completely overlooked. Thanks to falling costs and policy measures, it's already being rapidly deployed in some markets. Its massive scale up is very likely," said
Kick-starting the market
Experience shows that solar adoption mainly occurs when there is an economic case for the households and businesses investing in the technology, usually in the form of high internal rates of return (IRR) or short payback periods. In regions where the economics have not yet reached such tipping points, policy makers are introducing targeted incentives to create favorable market conditions and bring forward deployment.
One such example is
A key consideration at the early stage of market development is to avoid an unsustainable boom. Policy designs should account for the fact that solar costs will continue to fall over time, and moderate support to reflect these changing dynamics.
Solar for new-build homes and businesses
The economic case for adding solar during construction of new buildings is particularly strong. This is because so-called 'soft costs', such as marketing and sales costs, as well as labor and construction costs, can be reduced, while the benefits remain the same. In
Introducing energy storage and flexibility
As solar markets develop and mature, policy makers and regulators must gradually shift their emphasis toward unlocking flexibility and encouraging the adoption of energy storage. This is because high levels of solar adoption can lead to excess energy production during the day, while also possibly destabilizing the power grid. At this stage, the addition of energy storage becomes valuable, as it allows the renewable electricity to be stored for use during evening hours.
"The evolution of customer-sited solar is to add some form of flexibility, which has the ability to unlock a much higher penetration of solar," said
Tools to encourage energy storage include adjusted export rates (the payments offered to solar owners when they export energy to the grid), time-of-use retail electricity rates (which reflect the lower generation costs of solar during the daytime), enabling payments for storage to provide grid services (sometimes called aggregation payments), and implementation of demand charges (primarily for business customers). These levers are generally meant to make rates more reflective of generation and grid costs but are also likely to encourage energy storage.
In
The report investigates these mechanisms in depth, and provides individual use case analysis for
About BloombergNEF
BloombergNEF (BNEF) is a strategic research provider covering global commodity markets and the disruptive technologies driving the transition to a low-carbon economy. Our expert coverage assesses pathways for the power, transport, industry, buildings and agriculture sectors to adapt to the energy transition. We help commodity trading, corporate strategy, finance and policy professionals navigate change and generate opportunities.
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