Solar Panel Installation Flaring in Single-Family Homes

By Pooja Kapoor

The transition from an economy based on fossil fuels to one based on renewable energy has been slowly advancing for many years. Over the past few years, the residential sector has become an essential and growing part of this movement. According to Dodge Data & Analytics, which has tracked the installation/retrofit of solar panels in existing single-family homes since 2013, adoption of this technology has taken off among U.S. homeowners. In fact, the number of single-family homeowners installing solar panels in 2016 was almost double the number in 2013. An estimated 384,000 single-family homeowners installed solar panels in 2013; by 2016, that number had risen above 700,000.

Solar panel installation has been on the rise across all regions of the United States, although the Pacific region stands out prominently in its acceptance of this technology. The Pacific region had the highest percent of homeowners installing solar panels during 2016, followed by New England, the Mountain states, and the Mid-Atlantic region. The state of California, in particular, has spearheaded the nation’s solar revolution. In addition to California, states with sizable activity in solar panel installation included Massachusetts, Maryland, New York, New Jersey, Arizona, Nevada, Utah and New Mexico. Regions that lagged the national average in solar installation included the East North Central, West North Central, and East South Central.

Environmentalists have been calling for the shift towards renewable energy for some time. However, the real impetus behind the residential sector’s adoption of solar panels has come from government policies: the 2009 Stimulus Package and tax rebate programs that were put in place in the early years of the new millennium. The Database of State Incentives for Renewables and Efficiency provides a comprehensive list of incentives and policies that support renewable energy in the United States. California has the largest number of policies and incentives for renewables (266 programs at the federal, state and county levels), so it should not come as a surprise that the state is a forerunner in solar panel installation.

Dodge Data & Analytics research shows that homeowners and construction service providers who install solar panels are also more likely to install other energy-efficient retrofits such as geothermal HVAC systems or tankless water heaters. But this relationship may now be in jeopardy. While federal income tax credits for solar panel installations have been extended to 2022, credits expired in 2016 for other energy efficiency installations. Consequently, while solar panel installations will continue to receive support, installation for other energy efficiency products could languish in the absence of tax rebates.

Another interesting aside derived from the research conducted by Dodge Data & Analytics is that homeowners who expect to stay in their homes longer are more inclined to retrofit solar panels than those who have already been in their homes for 10 or more years. This suggests that recouping the return on investment is one of the key factors in consumers’ decision-making process.

In addition to government efforts to spur solar panel demand, declines in material and installation costs have also been a deciding factor in recent years – one that has resulted in more innovation and competition within the industry. This, combined with rising utility costs, has been as influential in residential solar panel adoption as government tax rebates.

In a nutshell, solar panels have shown tremendous popularity with homeowners over the past few years, causing demand to almost double from 2013 to 2016. However, given that we are still in the nascent stages of the renewable energy movement, the sustainability of this growth could potentially be restrained.  Continued expansion will be heavily dependent both on near-term government policies and the relationship of demand and supply which will determine the future market price of solar panels.