The cluster model of economic development posits that like-minded industries and associations foster innovation and lead to higher and more sustainable economic growth. Clusters serve as the chicken and the egg – a growing pool of talent and resources attract investment and create jobs, thereby strengthening the cluster, attracting more investment and jobs, and so on. Washington has a number of emerging clusters that offer economic promise. This is the first post in a blog series that will focus on solar - a subset of Washington’s clean technology and renewable energy industry cluster.

This subsector was selected for analysis as the solar industry in Washington creates manufacturing and service provider jobs. In fact, the service jobs are relatively well-paid, are located across the state, and residential/small commercial solar careers are accessible through apprenticeships and certifications (read: not four-year postgraduate degrees). Second, though consumer choices of late have been driven by policy, Washington’s culture of environmentalism underpins solar’s distributed growth. Over the 2013-2014 time period, more than 3400 residential PV systems were installed in Washington state, 1.2 times more than all systems installed in the eight years prior. Using an estimated 5.5 kW per system, this represents over 19 MW of new solar generating capacity.

Third, solar is the only renewable technology that has true scalability. Solar technologies have the ability to be woven into the built environment, reducing demand for grid-based electricity. Other energy technologies, such as wind turbines and hydropower, are standalone technologies and require investment of land and/or public resources. Those technologies are therefore primarily sold to and used by utilities, governments, and large commercial buyers. In contrast, solar technologies are able to power the smallest of devices as well as scale to massive applications. This scalability gives solar an exponentially larger market cap. To that same point, there is a tremendous value appeal to consumers who wish to generate some or all of their own electricity, called “behind the meter” activity.

Fourth and last, the market potential for the solar industry is more global than it is local. Countries such as India and China are in the midst of their own solar market explosion, providing Washington’s solar manufactured goods and services (panels, inverters, software, storage, etc.) tremendous sales opportunities. Solar offers considerable allure as a tool for long-term, sustainable economic growth. This report aims to see if that promise holds up.

Definitions and Commonly-Used Terminology

Before diving into the details, a review of some solar terminology.

This blog series will primarily focus on the production of, applications for, and economic value of semiconducting materials that transform sunlight directly into electricity. Photovoltaic (PV) solar modules, also known as panels, are by far the most prevalent technology in this category. Since they are equivalent, “solar” and “PV” will be used interchangeably. A collection of solar panels creates an array. End consumers (residential, industrial, and commercial) as well as solar applications (rooftop, commercial, and utility-scale solar) will be specified when necessary in this report. Otherwise the broadest base of consumers and applications should be inferred.

Though both are often used to analyze the solar market, the terms energy and electricity are not synonymous. Electricity is the analogous energy source to solar, therefore data on electricity are used wherever possible. It’s also important to distinguish between the terms used to compare and measure energy sources.

Terms like kW (kilowatt), MW (Megawatt), and MMBtu (one million British thermal units) refer to energy source’s capacity to provide electricity. Actual usage is measured in kWh (kilowatt hours). kWh measures total energy consumed over a one hour time period. It’s important to remember that kW and kWh are not equal. Losses  when converting from source to use is a result of a myriad of factors: the blend of energy sources feeding into the grid, consumer habits, age of energy technology, end appliance efficiency, and so on.

Production meters are necessary for grid-tied systems. This equipment measures the electricity produced by solar panels. Washington’s production incentives require utilities to use readings from these meters.

Net Meters are also necessary for grid-tied systems. This equipment measures the difference between production and consumption of solar system electricity, the “net” electricity. Under current Washington statute, solar system owners are paid retail rates for the balance of annual energy that is not consumed but pushed out to the grid, a process called “net metering.” This makes consumers energy generators as well. As explained by Washington’s Utilities and Transportation Commission (UTC): “Want to be your own power company - at least in part? ‘Net-metering’ allows you to get billing credit from your utility company for power you generate. If your usage exceeds what you generate, you are billed on the ‘net’ - i.e. the difference between what you use and what generate.”

An inverter is a piece of equipment required by all solar systems. Inverters convert the DC current created by the solar panels into AC current, the electricity charge used by the majority of U.S. consumers. Note that grid-tied inverters do not provide off-grid capabilities. In other words, in the event of a grid power outage, a grid-tied inverter will act like a circuit breaker and stop electrical current from moving past the solar system and onto the grid.

In this report, it should be assumed that all data and references refer to grid-tied, battery-less solar systems. Grid-tied, battery-less solar systems differentiate from independent solar systems or systems with energy storage capacity. As stated above, a grid-tied solar system will shut off production of electricity when power outages occur. Independent or “off grid” solar systems do not interact with the utility grid, matching onsite supply with onsite demand.

At very high capacity levels, distributed solar (such as home rooftop and community projects) contributes to grid decentralization – consumer generators selling solar energy onto the grid, rather than only purchasing from the grid. Geographically dispersed, grid-tied PV systems are currently the primary technology creating challenges for utilities. Washington’s installed PV capacity is not near a sufficiently high penetration point to be viewed as a competitive threat to utilities. However, at very high capacity levels, distributed renewables do pose significant challenges to the traditional utility business model.

Now that we’ve covered some of the basic solar concepts and vocabulary, let’s dive into the meat and potatoes!

This is a blog series with five sections.
  • Introduction to Washington’s Solar Industry (YOU ARE HERE)
  1. What is the Market Potential for Solar?
  2. The State of Solar in Washington
  3. Hydropower and Solar: Not an Either/Or Relationship
  4. Consumer Appeal, Risks and Choices
  5. Washington Policy Impact and Gaps