March 08, 2018

Why the boom in solar installations?

Whole image filled with solar panels

By Christy Howley, Solar Program Manager

Don’t look now, but solar energy might be having its moment in the sun (I couldn’t help myself). Recently, President Donald Trump imposed 30 percent tax on imported solar panels, but we have yet to see how that ruling will affect the industry. People are turning to solar at such a rate that Forbes, citing a report from Lloyd’s Register 2018 Technology radar, writes that the United States could see parity between renewable and non-renewable energy sources by 2025 while Green Tech Media is even more aggressive with its projections, putting the year at 2022.

Regardless of the projection, the underlying current is that Americans have truly bought in to the concept of solar energy in a way that reminds me of the smartphone boom. Thanks to research by the Solar Energy Industry Association and Green Tech Media, we’re able to see the growth of the solar industry back to 2001.

Growth of yearly solar installations

But, why do we, all of a sudden, feel comfortable with trusting our residential and commercial energy needs to the sun? The first answer might be that the government financially incentivized the use of solar energy. But if that were the case, we would have expected to see a tangible impact immediately following one of the four times the Investment Tax Credit (ITC) was created, expanded and extended by the federal government. It wasn’t until 2016, however, that there was a significant spike in solar installations.

A second theory is that the price of panels has dropped and new financing structures have entered the market as new options, making the implementation of solar systems more affordable. Though this is definitely true, the SEIA chart below, again from their research with Green Tech Media, shows that the decline in price has been relatively steady and does not directly account for the boom in installation projects.

Growth of solar installations compared to price of panels

While working with our insureds on how to best capitalize on trends and grow their businesses, a common theme is almost always cited – something much less tangible and far less economic. The growth in the solar industry might be attributed to its ubiquity in our everyday life.

A decade ago, if you asked someone to put solar panels atop their house, they might scoff at the idea and wonder about the condition of your sanity. It would elicit a similar reaction if, around the same time, you asked someone “what is the 43rd element on the periodic table?”.

However, because of the prevalence and widespread adoption of technological solutions, neither one of those questions sound crazy today. Mobile phones – and their near-global adoption – have ushered in a world where people are expected to know how to find the answer to almost any question (“Hey Google, what is element number 43 on the periodic table?” “Technetium”). Similarly, solar technology has been implemented in so many aspects of normal life that the logical leap our minds have to take isn’t as long as it was a decade ago.

The solar calculator was a standard piece of equipment in the lives of many people with the most purchasing power. One visit to a beach and you’re bound to hear music that is jumping from a portable speaker powered by the sun. Outdoor lights on houses harness the sun’s power to provide lighted walkways in the evening. Road signs that use radar to judge your speed and plead with you to slow down are likely powered by the sun. To bridge the gap even more, solar power is used to provide hot water and electricity to people in need.

Given how commonplace solar technology is in our daily lives, it is no wonder people are more comfortable with trusting important things like your house’s heating and cooling system to solar panels. It’s no longer unfathomable to make the leap from traditional energy sources to renewable ones. In fact, in about 10 years, the idea of burning oil for energy might be as laughable as calling 4-1-1 today.

Whatever is causing the spike in solar installations, ProSight Specialty Insurance has coverages that to cover all lines, all phases and all projects this boom might put on your table. Find out what you can do to ensure your insurance policy is positioned to keep pace with the projected growth of the solar industry by contacting ProSight Brokerage today.