Could rooftop solar cost the same, or less, than being on the grid soon? Current trends indicate that this will likely be the case in 48 states by 2020. This is what’s known as ‘grid parity,’ and it could lead to a major shakeup to the energy industry. And because of this, the pushback has already begun.

Solar Savings Across the U.S.

GTM Research recently determined that grid parity already exists in 20 states and the rest could be on the way to joining them over the next few years, if current trajectory is maintained.

“To date, the residential solar market’s growth has primarily come from a handful of states where favorable rate structures and net metering rules have set high, predictable ceilings on savings due to solar,” said GTM Research Solar Analyst Cory Honeyman.

A combination of government incentives, solar-friendly policies, and high energy prices have allowed California, Hawaii, and Massachusetts take the lead in terms of economic benefits from switching to solar. Meanwhile, Pennsylvania, Nevada, and Florida are expected to hit solar parity soon.

Part of what is driving the sudden surge toward solar parity is the falling cost of solar panels. Solar is growing fast: In 2006, roughly 30,000 homes had solar panels in the United States. By 2013, that number had risen to 400,000. The following year, 2014 was another record year, with solar growing by 34 percent over the previous year.

That demand has pushed solar companies to create better technology more efficiently, making solar panels more affordable and reliable. Tax credits and other incentives have helped too. For example, the Solar Investment Tax Credit of 2006 lowered the cost of switching to solar by an average of 75 percent.

The Grid Fights Back

Electricity suppliers have long been sheltered from rigorous competition by regulations designed to ensure a reliable power grid. As solar is able to compete with the grid in more places, there has been some pushback.

Utilities have started re-examining net metering and their rate structures to hit back at solar.

“But with more and more utilities reevaluating net metering rules and rate design, the residential solar economic outlook can no longer depend on a static policy landscape that fueled the nearly 1 million homeowners now with rooftop solar,” said Honeyman. “Looking ahead, it is no longer a question of if, but rather, when and to what extent rate structures and net metering rules are revised.”

Regulators are also stepping in. Nevada and Arizona recently approved new fees for rooftop solar installations. California, meanwhile, has reduced incentives to solar user who send power back to the grid, which can lessen the economic advantage of solar.

Mutually Beneficial

The switch to solar is possible for many because of the option to hop back onto the grid at night or on a cloudy day. But it’s not just solar power that benefits from the grid.

The increase in solar puts less stress on aging grid infrastructure. So, while utilities might see a dip in the amount of electricity that goes out, they are also able to put off costly capital projects and building new substations.

At times when electricity is at the highest demand it’s also the most expensive to meet. One of those peak demand times is the afternoon, when it is typically the warmest and sunniest. By not capping metering, utilities could pull in more energy from solar panels during this time, saving them money and allowing them to provide more reliable service.

If you’d like to find about more about rooftop solar, and whether it would be a good option for your home, contact us today for a consultation.