WASHINGTON – Solar panels producing photovoltaic electricity are finally going mainstream, according to an interesting WSJ story, (Home Builders Tap the Sun, December 2, 2014). Until now the installation of still expensive solar panels has been mostly about retrofits: placing panels on existing buildings.
Solar panel comes with the house
But now we have a new trend. As the WSJ explains, Lennar Corporation, America’s second largest home builder, now offers installed solar panels on its new homes as a standard feature. This is big. And this approach may soon be adopted by other builders.
Of course, for the time being at least, this added feature works well only in specific markets. You need a lot of sunshine, (think California, Arizona or Nevada), and a favorable tax regime that gives credits for renewable energy installations.
California, Colorado and Nevada
For these reasons, for the moment Lennar offers this package –house and installed solar panels– only in California, Colorado and Nevada. And this is because these states meet the basic criteria: plenty of sunshine that translates into lots of electricity, and a favorable tax regime that make the investment cost-effective.
This is how it works. Lennar gives home buyers a choice: either buy the panels and pay more for the house, (about $ 10,000 extra), or lease them from Lennar, with an upfront guarantee of a 20% saving on future utility bills.
My sense is that this “house and solar panel package” is a real breakthrough. Granted, this is only a beginning. However, we know that solar panels are getting better and cheaper. Right now it makes sense to offer the house and panels package only in regions with a lot of sunshine. In those markets the solar panels are more cost-effective. But, in the future, assuming lower panels and installation costs, it will make sense to place them on roofs even in regions with less sunshine.
As a result of this transformation, years from now most consumers will be either totally independent from the grid (California) or at least less reliant on it, (Michigan).
No more power plants?
This will be a dramatic change. Assuming more and more installations, over time electric utilities will be less relevant. In fact some may disappear altogether.
Imagine that. No more large coal-fired or gas-fired plants. No more transformers, no more power distribution networks. No more need to regulate rates, no more need to create a special tax regime for utilities, and so on.
Disconnected from the grid
If you and millions of other people will be able to generate in your own home all the electricity you need, you will not need to be connected to the grid. In the regions in which consumers will be able to “make” at home only some of the power they need, this will still mean lower demand, and therefore the scaling down of any plans to build new power plants.
This means huge cascading consequences on the coal and natural gas generation industries, all the way to hydro-power and nuclear power plants equipment manufacturers. Not to mention the vast industrial sectors that make turbines and other machinery necessary for power generation and distribution. I guess there will be a point in which we shall look at out of commission, old transmission lines as relics of a bygone era.
A new world?
So, a brave new world? Well, we are not quite there, yet. Still, if other major US builders follow Lennar’s example, at the very least we can anticipate that in the South West there will be very few new power plants built, because many consumers will make their own electricity, right at home. This is a big change.