By Darien Crimmin
Solar power experienced tremendous growth during the past decade in the United States and globally. The vast majority of solar applications utilize photovoltaic (PV) panels and inverters to create electricity from sunlight that is then fed into buildings or directly wired into the electricity grid. Many consumers, including apartment owners and residents, have benefited from the growth of solar PV, while others have just started exploring the potential benefits of renewable energy. The recent explosion in solar has been driven by many factors, with the two key drivers being incentives and price.
A 2016 midmarket report by the International Energy Agency cites sharp reductions in generation costs with record-low long-term prices, a trend that is expected to drive the demand for solar for years to come. A large apartment community can now install solar on its roof for below $2 per watt, a dramatic reduction from years past. The price drop reflects decreased manufacturing and equipment costs, as well as lower soft costs and improved installation delivery — all indicators of a maturing market.
The major federal incentive for renewable energy remains the federal investment tax credit, currently at 30 percent but scheduled to decrease after 2019 until it reaches 10 percent in 2022. The tax credit was renewed in late 2015, as part of a rare bipartisan agreement, which expanded the tax credit for renewables while simultaneously unlocking exports for domestic oil and gas. Solar power is increasingly popular, with a recent Pew Research study showing 9 out of 10 Americans favor expanding the use of solar power. Because the renewable energy tax credit is already in place and scheduled to be phased out, dismantling it prematurely may prove both unpopular and ineffective.
State incentives and policies work in conjunction with the federal tax credit to further drive growth in the solar industry. State solar incentives are often driven by direct incentives from utilities or through Solar Renewable Energy Credits (SRECs) tied to state-mandated renewable energy portfolio standards, under which utilities must comply or pay a penalty. Solar incentives are available in multiple states and Washington, D.C., and have arguably driven as much growth in solar as the federal tax credits.
Specifically related to apartment communities, certain state policies such as “Community Solar” or “Remote Net Metering” allow for offsite solar projects to produce electricity and then transfer monetary credits from those solar projects to a common area or resident paid electric accounts. Through this important mechanism, apartment communities and residents can directly benefit from community solar, even if the solar is not located on the apartment community itself.
For example, WinnCompanies estimates only 20 percent of its communities are good candidates for roof-mounted solar, due to building orientation, shading, roof age, structural concerns and space limitations from other equipment. Roof-mounted projects on apartment buildings also tend to be smaller and more expensive than larger ground mounted installations. Community solar projects provide apartment communities with the opportunity to overcome these challenges by siting solar in preferable locations and ensuring projects achieve economies of scale.
As the largest manager of affordable housing in the country, WinnCompanies is also a national leader bringing solar power to affordable housing. In the past few years, WinnCompanies developed several solar projects on building rooftops to reduce operating costs at its affordable housing communities. The management company formed a partnership with numerous third-party solar developers to utilize remote net metering from off-site solar fields to benefit affordable housing. Balancing the risk of long-term solar net metering contracts with clean energy benefits for communities and residents.
WinnCompanies’ ongoing work proves that the apartment industry can become active participants in the clean energy economy, in which property owners, management teams and apartment residents engage in policy discussions about solar power and affordable access to clean energy. The incoming administration’s efforts to promote renewable energy, and more broadly address climate change, are not 100 percent clear. Nevertheless, WinnCompanies and other apartment industry leaders in environmental sustainability are confident that the new administration will recognize that solar PV remains more accessible than ever and that the key ingredients for the rapid growth of solar PV have not changed.