Solar Energy Pros, Cons, and Outlook

Find Out If Solar Energy Is Right for You

Construction crew installing solar panels on a house
••• heshphoto / Getty Images

Solar energy is radiant energy emitted by the sun that powers the way we live on Earth. Animals use it for heat while plants use it for food via photosynthesis. In recent years, mankind has developed technology to use it for electricity.

In the United States, most solar power is photovoltaic. The other two types are solar heating and cooling, and concentrating solar power. In 2018, solar energy contributed just 1.6% of total U.S. utility-generated electricity.

U.S. Solar Energy Facts

Solar energy is a $17 billion industry. It creates economic development and jobs in manufacturing, installation, and operations. In 2018, it employed 242,000 workers, and at least 155,000 jobs were in installation. Of those, 87,000 were residential, 46,000 were commercial, and 21,000 were for utilities. More than 76,000 jobs were in California, which is up from 44,000 in 2010.

In 2018, the U.S. solar energy industry had a capacity of 67 gigawatts. About 30% was from rooftop or community panels and 69% from utilities.

The top five states with the most solar capacity were:

  1. California: 25.0 GW
  2. North Carolina: 5.5 GW
  3. Arizona: 3.8 GW
  4. Nevada: 3.5 GW
  5. Texas: 3.0 GW

Combined, these five states provide approximately 61% of the total installed solar capacity of 67 GW.

But even the leaders in solar energy have a lot of room to grow. For example, only 15.2% of California's electricity generation is driven by solar. Here is the solar industry's market share in electricity generation for the top five states in production:

  1. California: 15.2%
  2. North Carolina: 4.4%
  3. Arizona: 5.5%
  4. Nevada: 10.7%
  5. Texas: 8.7%

Trends

The solar industry is the fastest-growing electricity-generating technology. In 2018, solar development contributed to 16% of all new electric capacity, according to the U.S. Energy Information Administration. By the end of 2019, the industry will add 4 gigawatts, according to the EIA. In 2020, utilities will add 6 gigawatts. Small-scale solar will contribute an additional 9 gigawatts in that time.

The growth in Solar Energy is due to falling prices. Between 2008 and 2018, installation costs fell by 70%.

An average home solar system fell from $40,000 in 2010 to $18,000 in 2018. Utility-scale prices are between $28/MWh and $45/MWh, competitive with other forms of generation.

According to expert Jeff McMahon, Los Angeles, California, will be the site of the country’s largest and lowest-cost solar plant. It will serve 7% of the city’s electricity demand. It will cost $19/MWh for direct solar and $13/MWh for energy stored in batteries. It’s half the cost of a new natural gas power plant.

Farmers in California's San Joaquin Valley are "planting" solar panels to replace thirsty crops. They may remove half a million acres from production to comply with the Sustainable Groundwater Management Act.

This growth is despite the trade war against China initiated by President Donald Trump. The president imposed tariffs on Chinese exports of solar panels and equipment thinking they help U.S. solar manufacturers. Initially, they delayed and canceled installation projects, hurting the industry. But they may be helping the industry in the U.S. Southeast. In 2019, Georgia experienced a boost in its solar industry. It added the largest solar panel assembly plant in the Western hemisphere. It will supply panels for a new Facebook data center that recently located to Georgia. Facebook’s goal is to use 100% renewable energy by 2020.

Solar Investment Tax Credit

The solar industry received a big push when Congress passed the Solar Investment Tax Credit in 2006, but the impact really kicked in after the 2008 recession. By 2015, it helped spur almost 8 GW of capacity. Fears that it would potentially end drove installation above 14 GW in 2016, and then Congress extended it until 2021. It's tapered off to new installations of around 10 GW annually since then.

The federal Investment Tax Credit awarded a 30% tax credit for solar installation through 2019. It saved homeowners $5,000 per installation on average. That tapers to 26% in 2020 and 22% in 2021. The credit disappears for homeowners in 2022 but becomes a permanent 10% for commercial.

Pros and Cons of Solar Energy

Pros

  • Important source of renewable energy

  • Saves homeowners between $1,000 and $3,000 per year

  • Provides pricing stability

  • No waste

  • No water required

  • No greenhouse gases

  • Fewer negative health impacts

Cons

  • Reliant on the sun's availability

  • Reduced power on cloudy days

  • Expensive

  • Requires large tracts of land

  • Some negative environmental impacts

Pros Explained

There are seven advantages to solar energy. They center around its reliability, its low cost, and its pricing stability. It also has no waste, requires no water, emits no greenhouse gases, and has fewer health costs.

  • Solar is an important source of renewable energy since it doesn't depend on a finite source of fuel. It also has zero-cost of fuel since it doesn't have to be mined or shipped. According to Consumer Affairs, solar energy costs $0.029 per kilowatt-hour. That's about half the cost of fossil fuels that average about $0.05 per kilowatt-hour.
  • On average, solar panels save homeowners between $1,000 and $3,000 a year on their electric bill. Consumer Affairs estimates that those savings pay for the cost of the investment over the 20-year life of the equipment. It's like getting electricity for free. Many solar energy companies also have leasing and solar financing options available.
  • Solar energy has more pricing stability than fossil fuel energy sources. Gas and oil prices change daily since they are sold on the commodities market. As a result, it’s difficult for businesses to plan their energy costs.
  • Solar has no waste. This makes it superior to nuclear power that creates radioactive waste. It also makes it superior to coal or natural gas which create pollution when they are mined and burned.
  • There is no water required to create solar electricity. All other power plants use water to create the steam that turns turbines to create electricity. Solar panels use photovoltaic cells. In addition, nuclear power plants require water to cool the reactors. That makes solar especially useful for drought-prone areas like the Southwest.
  • Solar energy doesn’t add greenhouse gases to the atmosphere, which play a sinister key part in global warming. That makes solar energy superior to fossil fuels such as oil, natural gas, and coal. For that reason, it’s a powerful tool to prevent further climate change.
  • Solar also has fewer negative health impacts than fossil fuel power. Between 2007 and 2015, U.S. solar energy prevented 500 premature deaths by avoiding power plant emissions, as it helped people with respiratory and cardiovascular illnesses avoid hospitalization.

Cons Explained

Solar energy has five disadvantages. They center around reliance on the sun's availability, cost, need for large tracts of land, and environmental impact.

  • Solar power is reliant on the sun's availability. There is no power at night, but many utilities are overcoming this problem with storage systems. These batteries can save the electricity generated during the day and send it back into the grid during the night.
  • Power is reduced on cloudy days. Similarly, areas of the world that are far from the equator won't get as much power. They need many more panels than a location near the equator to get the same amount of energy.
  • Solar farm construction is expensive. It costs around $1 million per megawatt of generating capacity installed.
  • Startup costs for residential solar are also expensive for the average homeowner. According to Consumer Affairs, installing a solar panel can cost $20,000, and at least 100 square feet of roof space is required for each kilowatt produced.
  • Utility-scale solar farms require large tracts of land; between 3.5 and 10 acres is required per megawatt produced.
  • Manufacturing solar panels do have some negative environmental impacts. The materials used for construction can be hazardous. Transportation, installation, and maintenance emit some greenhouse gases. The life-cycle emissions for photovoltaic systems are between 0.07 and 0.18 pounds of carbon dioxide equivalent per kilowatt-hour.

Outlook

The Solar Energy Industries Association wants solar energy to increase to 20% of all U.S. electricity generation by 2030. The industry would have to add 39 GW a year to reach that goal. That's three times what it added in 2018. To achieve that goal, the organization calls for more generous tax credits for battery technology to store solar energy.

These advances in battery storage technology are making solar a more attractive option.

As a result, battery costs are dropping dramatically, and those prices make it economical for utilities to store solar energy and for commercial customers to reduce their peak consumption levels.

Another development that encourages small-scale use of solar energy is net energy metering. It allows excess power to be sold back to the utility at retail rates, which encourages homeowners and businesses to install their own solar units. It also allows utilities to have more power on hand without building new plants.

The National Renewable Energy Lab said the United States has a capacity for almost 200,000 gigawatts of solar power. This includes:

  • Rural utility-scale: 153,000 GW
  • Concentrating solar power: 38,000 GW
  • Urban utility-scale: 1,200 GW
  • Rooftop: 664 GW

As far as politics go, at least 24 states have joined the U.S. Climate Alliance to combat global warming. Many have committed to meet zero-carbon targets, which could drive up to 37 GW of additional solar development.

Utilities have begun to support small-scale solar production, because they realize it’s beneficial for them when the homeowner makes the upfront installation investment; they reap the benefit of purchasing excess solar power without the initial cost. Until recently, utilities saw so-called distributed generation as competition, but improved battery technology allows them to store the excess energy to use during peak times. This saves them the cost of new natural gas plants.

Despite this, utility-scale solar is expected to maintain its market lead until at least 2023, one reason being that installation costs have fallen by at least 60% since 2009.

What You Can Do

On a national level, tell your U.S. Representatives and Senators that you'll be voting on the climate change issue in the next election. Tell them you support carbon emissions trading and carbon taxes to make petroleum products accurately reflect their real-world costs.

Tell them to extend and expand the 30% solar investment tax credit. This is ending for residential users in 2022.

If you live in a state with good potential, ask your utility to install solar. Many give you the option to choose power generated by solar or other renewable sources.

If you own your home, you can install solar panels on your roof. You can either lease them or purchase outright, and if you’re worried about upkeep, just remember that the costs of maintenance are low. 

Your utility will give you credit for any unused electricity you feed back into the grid, and you can also get a battery to store the energy for the night.

If you don't own your home, you can participate in a community solar project.

The Bottom Line

Solar Energy is a growing source of power for the United States. In 2019, it is projected to become the #1 source of renewable energy. Five states provide half of this energy, but the potential is much greater.

Solar power is a critical weapon in the fight against global warming. You can make sure your elected officials to adopt laws that favor solar development, and many utilities also allow you to select solar or other forms of renewable energy, so make sure you do your part.