In this podcast. Brian Sadler, Vice President of Solaris, and Spencer Killette from Maxeon Solar Technologies talk about the state of solar right now. They discuss challenges in the industry, and then, they explain why solar is growing in popularity so quickly. Finally, they share their thoughts about the future of solar.
John Maher: Hi, I’m John Maher. I’m here today with Brian Sadler, Vice President at Solaris Renewables, a solar company designing, installing, and servicing solar systems in Massachusetts, Southern New Hampshire, and Maine. Welcome, Brian.
Brian Sadler: Thanks, John. Good to see you.
John: You too. And our special guest today is Spencer Killette, North American Director of Sales for Maxeon Solar Technologies. Welcome, Spencer.
Spencer Killette: Hey guys, glad to be here.
Stats About Solar in the United States
John: Yeah. So today we’re talking about the landscape of solar energy in the US. And Brian, the solar industry has experienced a lot of growth over the last decade or so. Could you share some statistics or insights regarding the expansion of solar energy capacity in the United States?
Brian: Yeah, absolutely. I think there’s been tremendous growth and support. I think it’s becoming more widespread. It’s becoming more accessible through finance mechanisms that have allowed more folks to be able to have access to solar. And then there’s been a lot of legislation nationally and in individual states to really help drive the growth, and again, access for individuals and businesses to access solar.
So in the United States right now, I think actually this is potentially as of 2021, there was 149 gigawatts of solar capacity installed nationwide, which is the equivalent of enough electricity to power 26 million homes. So significant. And if we look at in the last decade, there was 625,000 megawatts, and then now it’s over, I mean, it’s a number that, I think it’s 95, I mean, it’s exponential.
I won’t even try to get the numbers correct here. And this is all data from SEIA who is also pulled from Wood Mackenzie, who they’re the kind of leader researchers in the space.
And then I think what’s also exciting is we’re based in Massachusetts, and being a super friendly solar state, we don’t have any fossil fuels or other energy fuels here. So one of the ways that we can have some energy independence and some security is by investing in renewables. And the state has been very aggressively supporting solar over the past couple decades.
At this point, we have enough solar to power about 740,000 homes, and the state gets about just over 20% of their electricity from solar. It’s created over 10,000 jobs, which I think is another major piece that we’re keeping a lot of that benefit here in-state and nationwide as well. In terms of business opportunities, there’s over 500 businesses that are in the space or touch the space, and the investment is approaching 10 billion for solar.
So another, I think, key piece for folks out there and the listeners is that it’s showing that the prices have fallen over 54% in the last decade. So as there’s more investment, there’s more adoption of solar, it becomes more widespread. And then larger businesses react to that, like Maxeon, right? They’ve been a long term solar only company, but they’re able to reinvest in themselves and provide more opportunity for those who go solar. So I think there’s certainly been exponential growth across the board, US and here more regionally as well.
Exponential Growth Over the Last 10 Years
Spencer: Absolutely. Just a couple of notes at a macro level. And don’t quote me on this, I may be off by a year, but I’ve been doing this for a long time just like Brian. And so in, I think, 2013 when in residential and small commercial here in the US, more solar was brought online that year than in the previous 20 years combined. I thought that was, I don’t know, I couldn’t conceive how we could get a whole lot bigger, fast. I mean, I knew the industry was going to continue to grow.
But if you’d shown me the trajectory to 2023 in 2013, when we’d accomplished that feat, my mouth would have hung open for sure. So in 2013 or ’14 in the US, we installed about 800 megawatts, which again, at that time felt like a just massive number. And last year we did about 5,500 megawatts as an industry. So it’s been on a rocketship ever since, and I don’t expect it to slow down.
Challenges and Opportunities in the Solar Industry
John: What are some of the challenges or opportunities, Spencer, in regard to expanding solar power in the US, especially in today’s environment?
Spencer: Sure. Well, from a policy standpoint, at the federal level, we’ve got a really great foundation. So the Inflation Reduction Act actually just increased the Investment Tax Credit, which is a tax credit that all solar customers, commercial or residential, are eligible for. It’s been in existence for a long time, but it was tapering off. So it had come down from 30% of the system cost to 26, and then down to 22.
It was set to drop to, I believe, 12 and then sunset entirely here in the next few years, which would’ve been quite a blow to the industry. The Inflation Reduction Act has actually brought it back up to the original 30% number and extended it at that level for the foreseeable future here. So that’s big.
In terms of challenges at the state level, some states are, broadly speaking, solar friendly, others are sort of neutral, and others are relatively solar unfriendly. So an example of that could be net metering policy. So that’s the policy that in solar friendly states is really set by the state that says, “Hey, when a customer exports some power to your grid and one of their neighbors or business neighbors gets to use that power, you have to pay them at the retail rate.” So whatever they would pay you for power, you paid them. So that’s a solar friendly policy.
And in many states, the state does not mandate that utilities actually participate in that kind of program. And if the state doesn’t mandate it, and the utility isn’t super solar friendly, they might buy power back from excess power that the homeowner or business owner doesn’t use on their own premises. They might buy that power back at what’s called the production rate. And so that’s what the utility says it costs them to actually produce the energy, and it’s a fraction of the retail rate.
So policy at the state level is a challenge. I would extend that to permitting as well. There’s an awful lot of red tape that exists in some states in this country that does not exist internationally. That slows down installations and to a point can actually cause installation rate to actually drop significantly. So there’s that.
Utility policy as well. Some utilities are very solar friendly. They actually incentivize customers to go solar by way of paying them a rebate or set amount at the beginning of their install. Some utilities structure their solar rates such that they’re not super favorable to the customer. So really, it’s a kind of a crapshoot in this country. It’s challenging in some areas. In other areas, we’re seeing exciting policy pushed through that is actually making a lot of the challenges that I just mentioned better, easier, faster. It’s just a very, very fragmented market.
Challenges and Opportunities for Solar Power in Massachusetts
Brian: Yeah, I’d say here in Massachusetts and in the Northeast, generally the states are solar friendly. But the state might have great policy and dictating that to the utilities, and the utilities are having a strong net metering program, which yields energy savings to the investor in solar.
But there’s also, like Spencer pointed out, the regulations are kind of the red tape where in particular Massachusetts has the highest quality of living in the country. Well, that’s a lot because there’s a lot of regulations in place to protect the general public.
And so permitting and getting the project installed can be a challenge. And then the particular code that we need to follow can be a challenge. So at the same time, very solar friendly in terms of promoting it, having it incentivized, and making an enticing investment. It’s also can be a challenge as a business to provide that in a timely fashion. So I know a lot of our projects can take three to four months to install.
I know some companies in Europe, for instance, I believe Australia, you kind of go down the street and tell them you’ve already did solar and how much you put on the house, and you just let them know and you maybe don’t have to pay anything. So it could be very different, and different in different locations as well.
Tax Credits and Financing to Offset Cost of Solar
John: Right. Brian, can you talk a little bit more about the federal policies, like the Inflation Reduction Act and the Solar Investment Tax Credit, or ITC, and how they help to reduce the cost of installing solar panels for consumers and also grow the industry?
Brian: Yeah, I think Spencer touched on that a fair amount just a moment ago, but it certainly makes it more accessible. Since everyone does qualify, it’s just a matter of how it works for you on that individual tax year. But in all cases, we’re all paying taxes, we’re all feeling that, and there’s an opportunity to get a substantial reward for investing in solar back to you.
And then a lot of these new finance opportunities to go solar, again, making it more accessible for folks to access their own power plant on their home that produces clean renewable power. There’s treatments for a tax credit. So in a lot of cases, essentially that financiers is fronting the homeowner that tax credit.
So they’re paying someone like us, the installer, for the full cost of the solar system, but allowing the homeowner to get that tax credit and realize that benefit before having to come out of pocket for that portion of the project, which again, it’s 30%, which it’s huge. It’s very significant.
And then if there’s other incentives or rebates that can be paired along with that. In Massachusetts, we have a thousand dollars state tax credit. New Hampshire has a rebate, which is kind of first come, first serve. It’s funded at $1,500. Those things can be wrapped into financing. But no, there’s a lot of opportunity for that.
Now on a commercial level, there’s other pieces. There’s some domestic content adders that you can accelerate that tax credit. There’s prevailing wage. There are some other pieces that can accelerate the investments and the reward for investing in solar.
How Solar Helps Reduce Carbon Emissions
John: And Spencer, can you talk a little bit about how transitioning to solar power contributes to mitigating climate change and reducing carbon emissions and achieving sustainability goals in the US? And maybe specifically how Maxeon solar panels are helping with that?
Spencer: Sure. Yeah. Look, like I said, any solar install, Maxeon or otherwise, is good and positive in the fight against climate change, in the effort to reduce our carbon emissions and get away from dirty fuels like coal. So solar, it’s a renewable energy and it’s the most deployed renewable energy right now globally as well in the US.
In terms of what Maxeon is doing above and beyond our competitors to reduce our carbon footprint and to be good stewards of the environment as we produce our panels and ship them around the world. We’ve gone to great efforts to localize production. So we have factories in Malaysia, in France, in Mexico, and the Philippines such that we’re avoiding, for the most part, shipping containers across the ocean that were produced far away.
We actually also just recently announced that we’ll be building a US factory to take advantage of and to allow our customers to take advantage of, as Brian mentioned, some of the other adders, like the domestic content adder that exists in the Inflation Reduction Act.
So we make every effort that a manufacturer can to reduce carbon emissions. We also have reduced our usage of water significantly at our Mexico facilities, which feed the US product. That’s where everything that’s installed here comes from. And we also, again, are the first factory that was certified net zero in Mexico. First factory of any kind. And that comes from a combination of efforts to draw down the energy that we actually use in production as well as produce much of that energy from renewable resources.
Batteries and Solar Power
John: So Brian, the integration of solar energy with battery storage is also gaining traction. Can you elaborate a little bit on the synergies between batteries and solar power and how you combine those technologies?
Brian: Yeah, absolutely. I think, again, solar gave us some energy independence, as potentially regions and individuals and businesses or individual homeowners and families as well. So storage and batteries take that to the next level. Right now, some folks don’t always understand that and it’s some of the things that we guide them through.
We assume we have a solar system in our house, we should always have power. But for safety reasons, when the grid goes down, there’s a signal that is not seen by the inverter and therefore it shuts the solar off. So then we’re not backfeeding the grid with electricity and injuring the people that are trying to get the grid back up and running.
So batteries serve as an electric solar power generator, and in conjunction with a transfer switch that’s automatic. When that signal is dropped from the grid and your solar system’s not seeing that anymore, instead of shutting off the automatic transfer switch for the battery system, what we call ESS, energy storage system, is engaged. It drops the house off of the grid and now it engages the battery and your solar system and your battery are working in conjunction together to power the home.
So again, as time goes on, it gives more energy resilience. The technology is maturing. There’s a lot more batteries, battery companies and manufacturers coming to market and then always trying to work on that technology. And more and more folks are adopting it. Here in Massachusetts, there’s also additional incentives for investing in solar, especially if you’re willing to allow the utility to have access to that power during demand response, or through demand response and peak events.
So for instance, some of the days we’ve been having here in the Northeast regionally, hot and humid. So everyone’s got their AC on, the pool pumps are running, everyone’s trying to stay cool. And that’s a massive demand on the grid. And for those that have energy storage systems that will opt into these programs, they’re allowing the utility to pull that power. And so similar to net metering with solar, you’re pushing power back onto the grid, or in this case, the utility pulling power and it’s going to power your neighbors homes and then they’re going to compensate you for that electricity.
So I think again, the industry and the markets continue to mature. The technology continues to mature and batteries are making a lot of sense as well. And also through the recent Inflation Reduction Act, there was really a detail noted that batteries do indeed qualify for the 30% federal tax credit. And that is another just clarifying piece. It was a little bit of a gray area. They had to put out some special notice memos in the past, and it just really clarifies that. So it gave, yet again, some confidence in investing in batteries.
Future of Solar in the United States
John: Absolutely. Yeah. And Spencer, finally, what are some of the key opportunities and challenges for the future of solar energy in the US. And in terms of emerging technologies or innovations, where do you see the industry going from here? Yeah,
Spencer: Yeah. Good question. So in terms of opportunities, we’ve talked about the Inflation Reduction Act, but it can’t be said enough how big an impact that is having and will have for the future of the industry, particularly as it pertains to US manufacturing investment in solar here in this country. So that’s quite exciting.
In terms of challenges, we’ve gotten pretty big as mentioned earlier in the podcast, right? Solar has gone from sort of a fringe industry for folks who could afford to be ecologically minded to very much a mainstream industry who serves folks who are looking to save money, folks who are ecologically minded but need better financials to actually get to the table and actually put pen to paper.
Unfavorable Utility Policies
So we’ve gotten big, and that means utilities have started to take notice in ways that we really haven’t seen them take notice before. So for example, in California, there was a decision made earlier this year to move to a new net metering policy. They call it NEM 3, and it takes the payback time for customers. So the time that it takes for your system to pay for itself and then start generating free flow, cashflow for you from about five years to roughly 11. It’s a policy that the industry was full sail against.
It really isn’t favorable for solar customers, but California has been the largest market in the US for at least the last decade for residential solar. It may continue that way, but certainly the utilities have slowed us down there. And similar policies are being discussed or actually voted upon in Florida and North Carolina as well. So there’s that, right?
But the other thing to mention sort of in conjunction with solar being made slightly less valuable at the utility level, is we’re also seeing along with inflation for everything else, utility prices rise nationally and in many places at levels that are well above the national average of about two and a half percent per year. So I think sort of the utility obstacles that are being presented right now are, they’re real, but I think they’ll be short term.
Lower Prices on Solar Equipment and Installation
And also, because we’ve gone so fast and gotten so big in this industry, I think we have a certain level of amnesia where folks see an unfavorable utility policy change and say, Oh, it’s going to be super hard to grow in this market or to maintain our level of sales and installs in this market.” What they forget is that really the utility just set us back a couple of years to economics that were great in 2018 or 2017.
But again, because we’ve scaled so significantly over the past decade or so, and because the industry is very competitive, prices have come way down on equipment and therefore installations in general. So folks are kind of in the mindset of, “Oh, it’s going to get less and less expensive in a straight line.” And I think what we’re seeing in some markets is that the unfavorable utility policy is essentially flipped.
Integration With Smart Homes and Automation
And then in terms of emerging technologies. Look, I think virtually all solar manufacturers are looking at smart homes, and that means home automation, a better understanding and more granular understanding of how and when and why and where you actually use energy, which will allow homeowners to be a bit more interactive with their systems, and more sort of mindful of their own usage.
It will allow them to, especially along with storage, potentially game savings a little bit better depending on when they use power. When do you run your fuel pump? Can you run it during the day when your solar array is producing optimally, or should you get a battery so you can run it at night? Whatever the case may be, it allows a greater level of interaction with the system.
Better Batteries at Lower Prices
Beyond that, there are a lot of new storage products coming to market. So batteries are becoming significantly less expensive as their production scales as well. We’ve seen attach rates for batteries with solar go from low single digits to what should be something in the 15% range this year in places like California with less favorable utility policy.
Now we’re expecting to see something in the mid-twenties, because batteries, though there is an additional cost, again, help mitigate the utility’s influence on your savings and how you use your solar energy. So those are really the technological sort of next generation products that I think the industry is focused on.
Maxeon — 100% Dedicated to Solar
For us at Maxeon, we’ve been 100% dedicated to solar since the inception of the company. And really what’s been in our core is high efficiency technology. We have always been the high efficiency leader in the space. We recently released a press release showing that our next generation modules, which are essentially in pilot and development at this time, were certified at 20.7% efficiency, which is a world record by the National Renewable Energy Labs. So we’re continuing to innovate on driving costs down and driving efficiency up.
Maxeon — More Power With the Same Footprint
John: That’s huge. Well, Brian, any final thoughts on where things are going here in the US with solar and what you’re seeing on the ground as an installer?
Brian: I think Spencer covered a lot of that. I think we’re seeing, for most companies, marginal increases. A lot of times the other companies, aside from Maxeon, are just making the panel bigger and adding a row of cells to gain higher voltages. I think Maxeon’s continued to work within their same form factor and driving technology with higher efficiencies and a better performance to give the same footprint and more production per square foot.
And then I certainly think that the smart home piece and having all this technology talk to each other is something that we’re seeing a lot more of. We do install a lot of smart panels and there’s kind of different versions of that and different benefits there too. But really it’s able to leverage your solar and storage system more effectively.
And we’re seeing a lot of customers really gravitate towards that, because there’s a ton of value, even though there’s more upfront investment or it’s maybe a larger cost to your overall system. But being able to have more “life” on a day-to-day to your solar and your storage and leverage that energy how you really see fit.
And then I think it’s understanding, right? Able to understand what the habits are of you and your families and the timing of all that. And then how you can really focus on maximizing your solar storage, your energy system as a whole is massive.
Contact Solaris to Talk About Maxeon Solar Panels
John: All right, well, that’s really great information. Again, Spencer Killette from Maxeon Solar Technologies. Thanks again for joining us today.
Spencer: Thank you much.
John: And Brian Sadler, as always, from Solaris Renewables. Thanks for speaking with me today, Brian.
Brian: Thanks, John, and thanks, Spencer, as well.
Spencer: Absolutely. Thanks guys.
John: And for more information about Maxeon solar panels and Solaris Renewables, you can visit the website at solarisrenewables.com or call 781-270-6555.