From large solar farm installations to self-contained autonomous grids, electrical contracting in the solar industry is evolving rapidly. We’ve already seen a lot of change so far this year, and here we highlight a few electrical contracting trends in the solar energy industry for 2020.
1) Federal Solar Tax Credit Decreased
In 2019, the federal solar Investment Tax Credit (ITC) was at 30%. This is a full tax credit, not a deduction, meaning you could reduce 30% of your total solar costs dollar-for-dollar. This was not renewed by the end of 2019, and starting this year the tax credit is reduced to 26%. These savings are still substantial, but in 2021 it’s set to drop again to 22%. It will continue decreasing annually until it hits 10%.
Although new legislation may be introduced to increase these incentives, right now it’s best to plan around the current tax credits and advise your clients accordingly. You may want to get projects rolling earlier, to ensure that you incur your costs within the 2020 calendar year and take full advantage of the credit.
With the COVID-19 pandemic, some people in the industry are making noise about the tax credit decrease. Company profits are going to fall, and with them investments in solar will fall. Tax credits like the ITC are important to keeping investment in infrastructure alive and growing, even in times of economic hardship.
2) Battery Energy Storage: Prices Falling as Demand Rises
A challenge in the early days of solar energy was that it is an intermittent energy source. If the sun isn’t shining, no juice. Traditionally, these gaps in energy supply were filled by natural gas power plants. Batteries that store surplus solar energy to fill these gaps have been improving over the years, with lithium-ion batteries being some of the most advanced available. But until recently batteries were cost-prohibitively expensive for many projects.
The average price of lithium-ion batteries for solar storage has fallen 35% since 2018 alone. This trend shows no signs of slowing down, and it’s great news for the solar power industry. As prices fall and battery banks become more common, solar energy will become more competitive against natural gas, and the trend of decreasing costs should amplify itself. In light of the COVID crisis, the idea of a totally self-contained power source could be even more attractive to both commercial and residential electrical contracting projects.
3) Microgrids: Grids Going Off the Grid
With the decrease in storage battery costs, the solar energy industry is seeing another trend emerge: microgrids. Microgrids are localized systems of electricity sources, loads, and storage. Microgrids can be connected to and work with national electrical grid systems or they can be totally self-contained and disconnected from the national grid.
In addition to the rapidly improving performance and costs of battery storage, something else is driving the trend towards microgrids: smart grids. The integration of smart devices and the IoT into electrical systems is already common and still growing. Smart devices provide two main advantages to microgrids.
i) Power consumption and distribution is handled better due to user self-regulation. Smart devices tend to activate and react based on user interactions. Rather than having power supplied to all devices at all times, a smart microgrid can better turn power on and off in real-time.
ii) Total grid management is possible, rather than relying on a national grid system. When every component in your microgrid is a connected smart device, you have full control over every part of the system. Smart devices are constantly improving and simplifying their user interfaces as well, meaning the skill barrier for managing grid systems is breaking down.
4) Bundled Cable to Meet Advancing Needs
These electrical contracting trends in solar energy will mean two things for commercial clients, each with their own unique challenge. Bunded cable is a growing trend in electrical engineering that allows for faster, more precise, and more cost-effective work to meet the industry’s evolving demands.
Clients are going to need more complex and bespoke solutions. Rather than connecting a building to the national grid, you’re going to be creating entire microgrid systems. The lengths, gauges, and bundles of different wires are going to have precise and varying requirements. Going with a bundled cable solution allows you to plan out your project specs, order exactly what you need, and ensure your project is exact and efficient.
In addition, the solar industry is only going to keep growing, and solar energy farms will continue to grow in size and popularity. As these jobs grow in scope, better methods for planning and pulling wire will be needed. Bundled cable allows you to balance handling massive square footage and delicate precision simultaneously, while saving time on installation.
To learn more about the application of bundled cable on solar farms, have a look at our solar farm case study that examines how electrical contractor IB Abel saved on costs through using bundled PV wire.