Solential’s Top 5 Commercial Solar Predictions for 2021

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Solential’s Top 5 Commercial Solar Predictions for 2021

Looking back over 2020, I’m kind of in awe. First, who could have predicted that a global pandemic would literally rock our world and bring so many changes to the way we live and work. If you had told me back in January that I’d be working out of my home with my pup Zoey except for when I was out in the field on solar installations, I would have laughed. Never! But here we are, wrapping up a year of the “new normal.”

Thankfully, Solential Energy continued to work enabled by a few factors. First, we had a number of large commercial solar projects on the books to build. In terms of social distancing and the need to protect our team, this was a non-issue. Solar installs are done with small teams that work across large jobsites so there’s minimal, if any, close contact. Plus, we all masked up.

Likewise, taking care of our solar system maintenance customers was simple as they are all part of our Solview remote monitoring and management platform. Enabled by the cloud and proprietary software, we knew exactly how each Solential-installed solar system was performing 24/7 so there was no need to go onsite unless there was an issue. I tell you what, our customers loved Solview in 2020 as it kept their solar systems and their people safe.

Finally, being in sales, I thought I’d be twiddling my thumbs, but the opposite has been true. Schools, wastewater treatment facilities, farms, rural electric cooperatives, and others saw the downtime as an opportunity to start the process of moving to solar power. I’ve done a ton of bids this year, won some good projects, and take it as a sign of a bright future.

Which leads me to my predictions for 2021. Here goes…

Prediction 1: The Federal Investment Tax Credit for Solar Will Likely Be Extended.

Thanks to President Trump signing the COVID-19 Relief Bill on December 28, the federal Investment Tax Credit for solar projects will retain the current 26% credit for projects that begin construction through the end of 2022, rather than dropping to just 10% at the end of 2022 as they would have under existing law. This means that solar projects in all market segments—commercial, industrial, utility-scale, and residential—that begin construction in 2021 and 2022 will still be able to receive a tax credit at 26%. All markets will drop to a 22% tax credit in 2023—another win. Starting in 202, the commercial and utility markets will sit at a permanent 10% credit while residential solar will lose the Investment Tax Credit.

So, if you’re one of those I’ve submitted a proposal to, here’s a bit of advice. Let’s plan to get started in 2021 or 2022 to maximize your solar Investment Tax Credit! Every dollar saved counts!

Prediction 2: Demand for Solar Energy Will Continue to Grow Across All Sectors.

The International Energy Agency forecasts a 43% increase in the capacity for renewable electricity before 2022. The prediction shows that there will be a growth of more than 920 gigawatts of renewables, including solar. Solar power production and deployment have been on a significant rise for the last few years as costs for systems have declined and cities, states, utilities, and businesses continued to announce or pursue decarbonization plans, despite the global pandemic and economic recession.

Clean energy demand in the United States has proved surprisingly resilient in the face of these challenges, which we hope will want in 2020 as coronavirus vaccines become universally available.

As life gets back to normal in the new year, I predict energy demand will also rebound. According to the U.S. Energy Information Administration (EIA), electricity consumption will likely fall by 3.9% year over year in 2020 and increase 1.3% in 2021.

Driving demand for renewable energy will come from traditional electricity needs such as powering businesses and homes as well as the electrification of the transportation and industrial sectors and oil and gas companies’ plans to increase participation in the electricity value chain. All of this is good news for the clean energy economy.

Prediction 3: Utility Companies, including Rural Electric Cooperatives, Will Continue to Add Solar to Their Generating Portfolios.

I don’t know if you noticed, but Duke Energy was on a solar tear in 2020. In Florida alone, the publicly traded electric power corporation plans to invest an estimated $1 billion in new solar power plants across Florida over the next three years. The first plants will go online in 2022 and more will follow through 2024.

According to the National Rural Electric Cooperatives Association (NRECA), the solar generating capacity among electric cooperatives is skyrocketing. Total solar capacity at electric cooperatives is more than four times what it was in 2015. As of 2019, America’s electric cooperatives were generating nearly 1,100 megawatts of electricity annually. Here in the Midwest, Solential has partnered with the Wabash Valley Power Alliance (WVPA), installing community solar projects in Indiana, Illinois and Missouri. WVPA’s community solar program has been extremely popular in the communities it serves as these projects allow any busines, farm or family take advantage of solar without the upfront costs. Learn more here.

Solential has our largest utility solar project coming up in 2021 and I suspect this won’t be the last as utilities and electric coops continue to diversify their energy portfolios.

Prediction 4: Solar Investors and Power Purchasing Agreements Will Remove Barriers to Solar Adoption Across the Board.

Upfront costs of solar arrays kept many from adopting this popular renewable energy source in the past. That is no longer the case thanks to state programs, grants and the rise of solar investors. Now, with the extension of the federal Investment Tax Credits, I expect more investors will take a hard look  at solar, which in turn opens the door for many small to medium-sized businesses, schools, farms, utilities, and others to go solar without the upfront costs.

At the core of solar investments are power purchasing agreements (PPA) in which the energy consumer, a school or business for example, signs a long term contract to purchase their electricity from the solar investor. The buyer gets lower electricity costs guaranteed over a set period, virtually eliminating spikes in their power bills. Investors get guaranteed income plus all tax incentives and credits. So definitely a win-win.

PPAs will continue to be a driver in 2021 as it was in 2010 when Google signed its first PPA for electricity from an Iowa wind farm. This popularized a tool that has since become a mainstay for companies that purchase renewable energy. To stop large electricity consumers like Google from gobbling up all available solar energy, new transactional approaches are emerging such as moving from single-source PPAs to multi-source and multi-technology blended PPAs, creating utility programs to enable broader access to affordable clean energy, and models where multiple users can share clean energy assets. In whatever form, expect for solar investors and PPAs to flourish in 2021 and beyond. 

Prediction 5: Public Entities like Cities, School Districts, Water Treatment Facilities and Yes, Even Prisons, Will Go Solar.

 As a result of COVID-related economic shutdowns, many public entities are feeling a significant financial pinch due to lower tax revenues. In October 2020, New York Governor Andrew Cuomo was predicting a $59 billion budget shortfall over the next two years, with $13.5 billion of that in New York City alone. Suffice it to say, services will be cut, never a good thing!

Thankfully, circumstances are not that extreme for all cities and states, but most are looking for ways to reduce costs. As a result, solar energy could be a budget savior. Moving to solar-generated electricity can save an organization as much as 40% a year on energy costs, a huge savings for large energy consumers like wastewater treatment facilities that are challenged to keep rates  low for customers and schools that need new funding for keeping schools open in a COVID world.

 Yes, there are upfront costs but there are a number of avenues for reducing or eliminating upfront costs of solar. There are grants, solar investors, power purchasing agreements, and not to mention historically low interest rates. It is definitely worth talking with solar solutions companies like Solential that know what funding mechanisms are available and how to tap into them.

Another strong motivator for public entities to go solar in 2021 is the growing commitment to adopting green energy, reducing carbon emissions and setting an example for their communities. 

While no one knows exactly what 2021 will bring, I believe  clean, renewable solar energy will continue to grow in popularity. If you’d like to discuss my 2021 solar trends or simply learn more about commercial solar, let’s connect. Here’s how to reach me: cmiller@solential.com or 317-627-4530.