Published: January 2024
Understanding and adapting to regulatory changes is crucial for residential solar installers. Federal, state, and local policies significantly influence the market dynamics of doing business for solar energy in residential, commercial, and industrial sectors. State-level policies and net metering laws change over time and vary by location, affecting the economics of solar installations across different regions as policies change.
For businesses in the solar sector, staying informed and flexible in the face of regulatory changes is a matter of compliance and a strategic imperative for growth and business sustainability. As the industry grows, navigating these regulatory “storms” becomes even more pronounced, underscoring the need for solar businesses to remain vigilant and proactive in their policy engagement. It’s important to look at other similar industries and take note of the strategies used to weather regulatory storms.
Q1 2023 Policy Changes on Net Metering, Rate Design and Solar Ownership
Source: Solar Power World
The Rise of Utility-Scale Solar
The rise of utility-scale solar energy has been reshaping the dynamics of electricity generation and distribution. This transition has also highlighted a conflict between the growth of rooftop solar installations and the traditional utility business model. According to an article by Dan Gearino from Inside Climate News, shared by Mother Jones, this conflict was starkly illustrated in a regulatory hearing in Arizona involving the state’s largest utility, Arizona Public Service (APS).
During the hearing, a testimony by an expert witness for APS acknowledged a long-suspected reality: utilities often oppose rooftop solar because it threatens their profits. This admission is significant as it reflects the inherent tension between the growth of decentralized, customer-owned power generation (like rooftop solar) and the economic interests of traditional utilities. Utilities have historically profited from large-scale infrastructure projects and selling electricity directly to consumers. Rooftop solar allows consumers to generate their own electricity, reducing the demand for grid energy and affecting utilities’ revenue streams.
This situation poses a key question: how can the regulatory system be reformed to align the economic interests of utilities with the broader societal goal of expanding renewable energy sources like rooftop solar? One approach is to restructure utility incentives, aligning them more closely with the expansion of renewable energy. This could involve tying utilities’ income to performance standards that support the adoption of rooftop solar and other customer-owned generation sources.
The issue also highlights the need for a diversified approach to transition to clean energy. This transition should ideally include a mix of utility-scale renewable energy sources, which utilities generally favor, and customer-owned sources like rooftop solar, which face opposition from utilities. Achieving this balance requires regulatory reforms that encourage utilities to support the growth of rooftop solar, possibly through incentives or mandates that prioritize renewable energy adoption. Being actively involved in policy is imperative for residential and rooftop solar installers as the landscape has drastically changed in the last couple of years.
Building Codes and the Solar Generation Landscape
The evolving landscape of building codes and standards, particularly those concerning solar installations, poses challenges and opportunities for solar businesses, especially those focused on rooftop solar systems. The amendments to building codes, like the Building Energy Efficiency Standards implemented in California, mandating solar panels for new single-family homes and low-rise apartment buildings, represent a significant shift. This change influences the market demand for solar panels and alters the operational dynamics for solar installers and manufacturers.
This scale-up must be managed efficiently to maintain quality and compliance with the new standards. There is the challenge of adapting to a changing market where solar installations are becoming a standard feature in new constructions rather than an optional upgrade. This shift may alter the customer base and demand patterns, requiring solar businesses to adjust their marketing and sales strategies accordingly.
These challenges also bring forth opportunities. The growing requirement for solar installations in new buildings opens up a vast new market. Solar businesses can capitalize on this by developing partnerships with construction companies and real estate developers to become preferred solar solutions providers. Additionally, the increasing focus on renewable energy and efficiency in building codes aligns with broader environmental goals.
Proactive Measures for Residential Solar Installers
Staying informed and adaptable is critical for residential solar installers. Keeping abreast of the dynamic solar policies and incentives at both federal and state levels is crucial for adapting business strategies and maintaining competitiveness. It will be highly beneficial for installers to regularly access industry news from reputable sources such as SEIA, Greentech Media, Solar Power World, and Solar Insure. Attending webinars hosted by industry experts and participating in solar energy forums, like those on Renewable Energy World or the Solar Power International conference, provides valuable insights into the latest policy developments. Joining professional networks or associations in the solar industry can facilitate knowledge sharing and keep installers connected to the latest trends and strategies for adapting to the ‘solar coaster.’ Engaging in these resources ensures installers are well-informed and ready to adjust their business practices in response to the evolving solar landscape.
Active Policy Engagement
Solar businesses can adopt several proactive strategies to stay ahead of these challenges. One critical approach is active involvement in lobbying groups like SEIA, Solar Rights Alliance, or Solar United Neighbors, advocating for policies supporting rooftop solar. Solar businesses can have a collective voice in shaping solar-friendly policies and regulations by being a part of such organizations.
Educating Homeowners and Policymakers
Another important strategy is to create educational content for homeowners, and C&I customers, highlighting the benefits of solar energy and the urgency of taking advantage of current incentives while seeing the benefits beyond those incentives. By educating potential customers on solar installations’ long-term economic and environmental benefits, businesses can encourage potential adopters to act quickly before incentives decrease further. This education can also encourage homeowners to vote for pro-solar initiatives and policies, fostering a more supportive regulatory environment for solar energy.
Educating homeowners and policymakers plays a crucial role in strengthening policies for residential solar. Installers should inform homeowners about the benefits and incentives of solar energy and emphasize its long-term advantages, such as potential savings, environmental impact, and energy independence. Creating engaging and informative content, like infographics and videos, and conducting interactive workshops or webinars can effectively communicate these benefits.
Actively engaging with policymakers is essential. Solar installers and businesses can collaborate with solar advocacy groups to provide data-driven insights and real-world examples of the impact of solar energy. This helps policymakers understand the broader benefits of residential solar energy, including job creation, community resilience, and environmental sustainability. Solar professionals can advocate for favorable solar policies and incentives by participating in policy discussions and public forums, directly influencing the legislative environment. This dual approach of educating homeowners and policymakers drives residential solar investments and fosters a supportive policy framework, accelerating the transition to rooftop solar.
Diversifying Solar Business Operations
Diversifying services beyond solar panel installation can mitigate the risks associated with fluctuating solar policies. Offering battery storage, energy efficiency audits, and other related services can open up new revenue streams and reduce reliance on any single aspect of the solar market.
Preparing for Utility-Scale Growth
Understanding the dynamics between utility-scale solar projects and residential installations is important. Installers should know how utility-scale growth might impact their business and explore ways to collaborate or complement these larger projects, ensuring their business model remains relevant and profitable.
Adapting and Leveraging Building Code Changes
New building codes, like California’s Title 24, requiring solar installations on new construction, present growth opportunities. Installers may need to adjust their business models to these changes, potentially partnering with construction companies and developers to meet the new demand. Understanding these code changes helps in planning and executing projects more effectively.
Advocating for Consistent Regulations
Consistent and streamlined regulations can significantly benefit the solar industry. Installers should engage in advocacy efforts to push for more uniform rules and standards, which can lead to a more efficient and cost-effective solar project development and implementation process.
Ultimately, staying informed, actively participating in policy advocacy, educating the market, and diversifying business strategies are critical for solar businesses to successfully navigate the changing landscape of regulations and incentives. Here are some challenges that have created the storm and solutions for weathering it.
To further enhance your competitive edge and credibility in the market, consider becoming a Solar Insure Certified Installer. This certification can offer additional assurance to your clients about the quality and reliability of your services. Take the proactive step to solidify your position in the growing solar industry.
