DOE Study Lays Groundwork for Solar Energy Development

DOE Study Lays Groundwork for Solar Energy Development

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A new study by the U.S. Department of Energy supports a dramatic expansion in solar energy development, finding that solar energy could comprise as much as 40 percent of U.S. electricity supply within the next 15 years. The study identifies several state and federal clean energy policies that DOE proposes to achieve substantial solar deployment and decarbonization. In this alert, we highlight the study’s key findings, analyze the potential policy changes it envisions, and consider how expansion of solar could advance the federal environmental justice agenda.

Findings of the Solar Futures Study

The Solar Futures Study was launched by the U.S. Department of Energy’s Solar Energy Technologies Office, which supports R&D in photovoltaics (PVs) and other solar technologies, and is led by the National Renewable Energy Laboratory, which is a national laboratory focused on energy transition.

Key findings of the study are as follows:

  • To achieve significant decarbonization, domestic solar deployment must rapidly expand beyond its current rate.
  • Technological progress—such as improvements in photovoltaic efficiency and improved energy storage resources—is needed to accomplish cost-effective decarbonization.
  • In concert with electrification, technological improvements, and widespread battery use, solar power also can aid decarbonization of the transportation, buildings, and industrial sectors.
  • Because solar power is diurnal—it varies based on daily and seasonal patterns—other clean energy capacity will be needed to transition to full grid decarbonization.
  • Demand flexibility likely will play a critical role in reducing the cost of decarbonization by temporally shifting demand to better harness solar power.

The Biden Administration appears poised to use these findings to advance its clean energy priorities. In announcing the study, Secretary of Energy Jennifer Granholm said that it “illuminates the fact that solar, our cheapest and fastest-growing source of clean energy, could produce enough electricity to power all of the homes in the U.S. by 2035 and employ as many as 1.5 million people in the process,” and “[a]chieving this bright future requires a massive and equitable deployment of renewable energy and strong decarbonization polices – exactly what is laid out in the bipartisan Infrastructure Investment and Jobs Act and President Biden’s Build Back Better agenda.” DOE’s role in informing federal solar energy policy will likely extend far beyond the findings presented in this study. Less than a week after publishing the study, the agency issued two requests for information seeking input from industry and researchers on opportunities to use solar energy to decarbonize the industrial sector and how to minimize the effects of large-scale solar facilities on wildlife and ecosystems.

Policies to Spur Solar Deployment

The study contemplates various policies aimed at increasing solar energy adoption and reducing emissions, while securing acceptable prices and electricity reliability. Though the study largely focuses on modeling solar deployment and emissions curtailment scenarios, it also addresses broader policy implications.

  • National Emissions Cap/Decarbonization Targets. Decarbonization scenarios envisioned by the study contemplate a national emissions cap. Democrats in Congress appear poised to propose such a reduction through a clean energy standard in budget reconciliation legislation. Such efforts, if successful, would provide a long-awaited federal overlay to the numerous state-level renewable portfolio standards that already are in place. As the study puts it, “Decarbonization targets set by policy are critical to decarbonizing more quickly than would occur owing to market conditions alone.”
  • R&D Investments. The study notes that “[p]olicy also accelerates cost reductions and technological innovations through R&D investments.” DOE recently announced $45 million in funding for: a public-private consortium on grid integration technology, two projects to provide utilities with better data about rooftop solar power generation, and several other projects aimed at advancing the commercialization of American-made solar innovations.
  • Adaptation in Energy Regulation. The study indicates that wholesale electricity markets—those regulated by the Federal Energy Regulatory Commission (FERC)—“must adapt to the increasingly dominant roles of zero-marginal-cost renewable energy” and evolve to incorporate demand response and distributed energy resources (DERs). At the state level, retail electricity markets “must adapt with rates that reflect the changing grid and an increased role for DERs.” In particular, “greater load flexibility is possible with greater deployment of time-varying (including real-time) price tariffs.” The study also envisions a role for FERC in promoting energy storage deployment that could catalyze solar adoption, as demonstrated by recent FERC orders aimed at reducing regulatory barriers in market rules related to energy storage.
  • Transmission Development. The study acknowledges that achieving grid decarbonization along with high electrification would require “substantial expansion” of interregional transmission, estimating that increase at approximately 90 percent from current levels by 2050. While the study notes that siting this transmission build out is “technically possible,” it acknowledges the “political challenges” it implicates. From federal regulations addressing cost allocation, to state and local siting requirements (and potential opposition), developers must be prepared for the policy challenges—and opportunities—that lie ahead if an extensive transmission expansion is to be achieved.
  • Electrification. To attain the highest degree of emissions reductions, the study envisions electrification across a broad array of sectors. The “electrify everything” approach likely would require a broad array of initiatives, from federal funding for building electrification promoted by the Biden Administration to reforming local permitting requirements. The Administration’s American Jobs Plan also calls for grant and incentive programs to build a national network of 500,000 electric vehicle chargers.
  • Solar Cost Reduction. The study identifies a bevy of policies that could reduce the soft costs of solar (i.e., non-hardware costs):
    • Entrepreneurial training and workforce development;
    • “[E]nable economies of scope by incentivizing PV installation in tandem with other activities,” such as “building codes that require new buildings to be solar ready or installed with rooftop solar”;
    • Reform state licensing to incentivize contractors in related industries to explore solar installation as a side business, such as permitting licensed electricians to install PV;
    • Demand-pull policies, such as upfront incentives and tax credits, aimed at specific customer segments that pose the greatest customer acquisition challenges such as in historically under-served areas like “low-income neighborhoods and communities of color”;
    • Green banks to improve access to solar financing; and
    • Easing the burden of permitting and inspection.

Solar is far from the only clean energy program DOE is seeking to support; it also launched the “Hydrogen Shot” to pursue clean hydrogen deployment. As the Solar Futures Study notes, zero-carbon fuels like hydrogen likely will play a role in the energy mix of the future, even if the bulk of electricity demand is met by solar and wind generation. DOE’s Hydrogen Shot, its first Energy Earthshot program, seeks to reduce the cost of clean hydrogen by 80 percent: to $1 per 1 kilogram in 1 decade. DOE recently held a Hydrogen Shot Summit to solicit feedback on accomplishing that objective.

Environmental Justice Considerations

DOE presents its vision for the future of solar development through a lens of equity. That approach reflects the Biden Administration’s pervasive, whole-of-government effort to advance environmental justice. The study examines how the costs and benefits of the existing energy system have been unevenly distributed: disadvantaged communities disproportionately bear the impacts of climate change, air pollution, and other environmental hazards while often continuing to face energy insecurity. DOE identifies opportunities for solar deployment to more equitably distribute the benefits and costs of the energy system in pursuit of “energy justice.”

The study also highlights how solar development can contribute to President Biden’s Justice40 Initiative, which seeks to ensure that 40 percent of the benefits of clean energy and climate investments flow to disadvantaged communities. For instance, prioritizing rooftop and community solar in disadvantaged communities and increasing community participation in energy planning can promote equity. Further, solar projects contribute to broad benefits like air quality and climate change mitigation that will accrue to communities everywhere.

Conclusion

A rapid increase in solar energy development has the potential to offer substantial economic and environmental benefits and opportunities to promote environmental justice, all of which will require project developers to navigate evolving regulatory frameworks and adapt their efforts to engage with stakeholders including local communities. Climate and equity goals complement each other in many ways, and we expect both legislators and regulators to propose creative approaches to incentivize broader solar deployment and facilitate meaningful public participation through the environmental review processes.

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