Best and Worst Moments for Solar Power in 2022
With groundbreaking legislation and new milestones, 2022 was a historic year for solar power.
And, after tallying the year’s triumphs and setbacks, one thing is clear: We’ve only seen the tip of the iceberg.
To celebrate the progress made this year – and to foreshadow what’s ahead – we’ve compiled a list of the best and worst moments for solar power in 2022.
Best moments for solar power in 2022
Despite substantial challenges, 2022 was an epic year for solar power in several ways. Here are some of the year’s most notable achievements.
Inflation Reduction Act turbocharges solar
On August 16, 2022, President Joe Biden signed the Inflation Reduction Act (IRA) into law which set the federal solar tax to 30% until 2032.
The tax credit was previously set at 26% for 2022 and was scheduled to step down to 22% in 2023 before going away entirely for residential solar 2024.
For homeowners, the 30% tax credit is worth $7,500 on a $25,000 solar project – effectively reducing the cost and payback period of the project and increasing the overall energy cost savings. The tax credit also applies to battery storage which, beginning in 2023, does not have to be connected to a solar system.
While the enhanced tax credit is something to cheer about, it’s the long-term effects of the Inflation Reduction Act that promise to turbocharge the solar power industry.
The IRA also includes incentives for:
- Commercial solar, and other renewable energy
- Domestic manufacturing
- A host of other home electrification improvements like heat pump water heaters, electric panel upgrades, and new windows
In all, the IRA is a major investment in a clean energy future led by solar power.
Solar and battery save the day during natural disasters
Residential solar and battery aren’t only a solution for slowing climate change, they’re also crucial for responding to it.
In 2022, we saw solar and battery rise to the occasion during extreme weather events on both the east and west coasts.
In California, residential batteries charged by rooftop solar provided around 340 MW of power to support the local grid and avoid blackouts during a record heat wave. The 340 MW provided by solar and battery owners is more capacity than a mid-sized power plant and represents a fraction of the total storage held in garages around the state.
“A new analysis by the California Solar and Storage Association (CALSSA) shows that California had more than 80,000 customer-sited batteries connected to the electric grid capable of providing 900 MW of solar power.”
Less than a month later, in Florida, a solar-powered community near Fort Myers survived Hurricane Ian nearly unscathed, and provided power and shelter to displaced victims in the aftermath.
Renewables set to surpass coal
Thanks to rapid growth in wind and solar, power generation from renewable energy is expected to surpass coal and nuclear in 2022, according to the US Energy Information Agency.
Renewables (mainly solar, wind, and hydro) are on track to provide 22% of the US’s energy mix this year, up from 20% last year. Meanwhile, coal is on track to generate 20% of the overall mix, down from 23% in 2021.
|Energy source||Share of 2021 US generation||Share of 2022 US generation||Projected share of 2023 generation|
And renewables – especially wind and solar – are just getting started. The US is on track to nearly double its total solar capacity over the next three years.
The US currently has around 77 GW of solar capacity and has nearly 72 GW of “high probability additions” lined up for October 2022 through September 2025 – by far the most of any energy source. The next closest is wind with 18 GW of “high probability additions.”
It’s also worth noting that solar is the only energy source with zero planned retirements over the next three years.
Record number of residential solar additions in Q3
Homeowners added a record 1.57 GW of solar capacity in the third quarter of 2022 alone, according to the Solar Energies Industry Association (SEIA). That makes up over 34% of the total 4.6 GW of solar capacity added in Q3.
According to the SEIA: “California made up 36% of this total as installers continue to push to sell residential solar before changes to current net metering rates.”
Surging electricity prices increase solar savings potential
The average price for grid electricity jumped 16% year-over-year in October 2022 – the largest one-year increase in over 40 years.
The rapid rate increases in 2022 highlight and increase the savings potential of residential solar. Going solar leads to lower and more predictable electricity payments, adding up to tens of thousands of dollars in energy cost savings over the 25-year life of the system.
Related reading: The Pros and Cons of Solar Energy in 2023
Worst moments for solar power in 2022
The road to a clean energy future is lined with speed bumps and setbacks. Here are some of the biggest hurdles for solar power in 2022.
California all but guts net metering
In December, the California Public Utilities Commission (CPUC) approved a new version of net metering – known as NEM 3.0 – for customers of California’s three major investor-owned utilities (PG&E, SCE, and SDG&E).
Solar owners under NEM 3.0 will earn ~75% less for the excess electricity they push onto the grid. This will substantially increase the payback period and decrease the overall energy cost savings of going solar.
NEM 3.0 was approved despite strong public opposition, including a three-hour marathon of over 100 anti-NEM 3.0 public comments leading up to the vote.
Rate hikes make solar loans more expensive
In an effort to tamp down inflation, the Federal Reserve has been raising interest rates throughout 2022. This is designed to discourage borrowing and spending in order to slow an overheating economy.
While mortgage rates get most of the media attention, interest rates for solar loans have also been affected. Higher interest rates add to the overall cost of solar and lengthen the payback period.
While going solar is still much cheaper than paying for grid electricity, higher interest rates eat away at the lifetime energy cost savings.
Supply chain tangles delaying and adding costs to solar power
From lumber to meat, the pandemic wreaked havoc on supply chains in all industries, including solar.
The mangled supply chain for panels, racking, inverters, and raw materials caused the price of solar power to increase for the first time in at least a decade – although it remains the cheapest source of energy.
Supply chains are expected to improve in 2023 leading to reduced prices and more installations.
The bottom line: 2022 was a good year for solar power
While 2022 contained several speed bumps for the solar industry, it also featured major victories and milestones.
In an era of inflation and uncertainty, more homeowners are recognizing solar as a means to lower and more predictable energy costs.