NREL Seeks to Determine Equation for Solar Market Success

December 15, 2014 By Karen Henry

NREL Solar PV Energy ManageWhile no standard formula exists to determine why solar market policies in certain states are more successful than others, a combination of foundational policies and localized strategies can increase solar PV installations in any state, according to a new report from the DOE’s National Renewable Energy Laboratory (NREL).

The report, The Effect of State Policy Suites on the Development of Solar Markets, examines a variety of policy- and non-policy-based factors that influenced state and local solar markets.

On the policy side, two factors strengthen a state’s solar market in all contexts: interconnection, or policies that define the procedural requirements for connecting a PV system to the electricity grid; and net metering, or policies that enable the utility to compensate individual PV system owners though a simple billing mechanism.

Non-policy issues that have implications for a solar market, such as the amount of sunlight available for potential solar generation, community interest in renewable energy and the cost of competing grid electricity, were examined in the context of different states and local communities.

The report details the following conclusions:

  • States that have matched best-practice policies to their unique context have excelled.
  • The number of solar policies and the length of time the policies have been in place are important indicators of market success.
  • Support for solar leasing and other popular third-party ownership models seem to be distinguishing factors in the success of solar markets in some states, but usually economic factors must also be favorable.

The findings indicate that while the age and composition of policy suites are important market foundations, solar policies are more effective when tailored to the economic and demographic background of the state. The report also includes case studies to better understand states that experience lagging solar markets despite having similar best practice policies as states with thriving solar markets.

The report is supported by the DOE’s SunShot Initiative.

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