u.S. Solar Industry
• Database of State Incentives for
Renewables and Efficiency: dsireusa.org
• U.S. Department of Energy’s Solar Energy
Technologies Program: www1.eere.
• Research the solar marketplace:
com, PV-Tech.org, greentechmedia.com,
• “What’s the Difference Between Solar
Energy and Solar Power?” by Scott Sklar:
community colleges and nonprofit organizations. (See “Get Training” on page 37.)
Growth in the U.S. grid-tied PV industry
was greatly accelerated as a result of California’s rolling power blackouts in 2000 and 2001,
caused by energy gaming. The technology has
a long history, but because the industry is so
new, it is straightforward to understand how
the business works.
First, understand the product. The solar
PV industry’s product is electricity, otherwise
being sold to your grid-tied customer by a utility. The product is measured in units of kilowatt-hours (k Wh) for electricity. Customer
motives for buying solar k Wh range from solely
environmental concerns to economic returns.
Second, understand the size and scope of
the industry. I mentioned earlier that global
PV system revenue grew to $37 billion in 2008,
which seems impressive until you read that the
U.S. energy industry revenue was $268 billion
in 2004, according to Edison Electric Institute. Energy Information Administration figures find that solar still provides less than 2
percent of the grid-tied electricity capacity in
California and even less of the national energy
mix. California has approximately 50,000 grid-tied PV systems. Summary data from CaliforniaSolarStatistics (californiasolarstatistics.
ca.gov) show that 91 percent of projects are
residential, yet commercial projects generate 75 percent of megawatts (and therefore
For more information about the size and
scope of the PV industry, I recommend the
free annual summary reports available from the
Solar Energy Industries Association ( seia.org)
and Solarbuzz ( solarbuzz.com).
Third, know how solar businesses make
money. The product “value chain” refers to the
relationship of businesses from materials supply
through manufacturing, to equipment sales and
on down to system installation and customer
support. (See value chain figure below.)
The customer segments usually reflect their
utility rate classes — most broadly, residential,
commercial, agricultural and industrial. Each
customer segment has its own set
of goals and challenges. The unifying factor among solar customers
thus far is that they are all still “early
adopters.” This means they are in the
first 10–15 percent of customers to
adopt a new technology. Solar companies must adapt their marketing
message to different customer segments. One source for such market
research is Smart Power (
smartpow-er.org), a Connecticut nonprofit that
studies consumer perceptions about
renewable energy technologies.
Government policy and the energy and
building industries are tightly connected.
Without strong government leadership, it is
difficult to fundamentally change the infrastructure. Thus, it is important to understand
the policy changes that support or hinder solar
in order to understand a solar employer’s business strategy.
find Solar Policy Resources
Solar energy solutions compete with energy
sources that don’t yet reflect the societal costs
of carbon emissions. In order to define a level
playing field, the Solar Alliance (solaralliance.
org) has described four policy “pillars” needed
to build a sustainable solar industry:
• Standards and incentives. Until utility rates
reflect the true environmental cost of production and use, new clean energy technologies
will need financial incentives to establish a sustainable market.
• Energy tariffs and utility revenues that support distributed generation. Energy needs to
cost more the more you use, generation during peak hours needs to be rewarded and solar
investors should be able to sell their energy to
the utility directly through feed-in laws.
• Net-metering standards. These standards
provide retail credit for solar power sent back
through the meter for use by the utility.
• Interconnection rules. These ensure the
utility has clear, easy-to-manage standards for
interconnecting the solar system to the grid.
I would add a fifth required policy: solar
access laws that protect the system owner’s
right to install the equipment and harvest their
Policies vary considerably from state to
state, and solar markets bloom where policies
are supportive. Likewise, the long-term federal
investment tax credit ( 30 percent) is a strong
incentive. The Database of State Incentives for
Renewables and Efficiency ( dsireusa.org) is a
great resource for information on solar incentives and policies by location.
Recognize Regulatory barriers
Regulations are the various standards and
practices needed to implement pro-solar policies. The policy points in a direction, but the
regulations are the path to get there.
Utilities and construction are mature industries. They have conducted business the same
way for a long time, and they have a vested
interest in continuing their existing patterns.
This makes solar energy’s entrance into new
markets a real challenge. A million solar roofs
will significantly alter the traditional utility