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The policies that could send the global rooftop solar market to 2,000 GW

The global rooftop solar market has the potential to exceed 2,000 GW of generation and 1,000 GWh of energy storage by 2050 through careful policy design, according to a new report.
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The global rooftop solar market has the potential to exceed 2,000 GW of generation and 1,000 GWh of energy storage by 2050 through careful policy design, according to a new report.

The report by BloombergNEF and Schneider Electric, Realizing the Potential of Customer-Sited Solar, found the global rooftop solar+storage market to be largely untapped. Declining installation costs represent a massive opportunity, but policy and tariff design must enable the expansion of rooftop solar, the authors wrote.

In the U.S., solar prices increased quarter-over-quarter and year-over-year for the first time since 2014. Experts say near-term supply chain constraints and trade disputes threaten President Biden's solar goals.

“Customer-sited solar is a huge opportunity that’s often completely overlooked. Thanks to falling costs and policy measures, it’s already being rapidly deployed in some markets. Its massive scale-up is very likely,” said Vincent Petit, Head of the Schneider Electric TM Sustainability Research Institute, and SVP of Global Strategy Prospective & External Affairs at Schneider Electric. “This is vital for decarbonizing the power sector and offers huge additional consumer benefits. It’s time to embrace this transformation.”

The report states that modest and stable compensation leads to higher customer-sited solar PV rates than generous and unstable rates. The authors say, as the market takes off, subsidies must be removed to protect government budgets and cross-subsidizing between customers, and fair-value payments are more likely to support the next growth stage for rooftop solar.

In California, grid market regulators are considering an update to net energy metering policy that could result in a significant drop in credit to residential and commercial rooftop solar PV generators. Utilities in the market argue that non-solar PV customers are unfairly burdened with costs to support solar PV customers.

"Customer-sited solar and storage provide benefits not only to the customer but also to the system. As solar penetrations rise and markets mature, the regulator’s challenge is no longer to stimulate the market, but to move towards incentive structures that distribute the benefits ‘fairly,'" the authors wrote.

Policies that lower export rates to be below retail rates will incentivize customers to consume solar generation on-site and spur the growth of energy storage, the report finds. Both solar-only and solar+storage customers in California would be adversely impacted by a reduction in net metering, though residential rates are almost 3 percentage points higher when adding batteries into the scenario.

Time-of-use and time of production pricing signals, when properly designed, can also encourage the addition of storage to solar PV installations, according to the report.

The authors say utilities and regulators should remove penalties and simplify permitting processes to allow market growth.

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