M-RCBG Associate Working Paper No. 28
The Business of Energy Policy: Analyzing the impacts of policies and businesses on solar electricity rates in Massachusetts
The solar energy industry in the United States currently leads the renewable energy market in annual growth. In 2013, newly installed solar capacity surpassed that of wind. However, cost competitiveness with conventional fuels must be achieved in order for solar energy to be used in the mainstream. Government support and market growth have minimized capital cost, but the ultimate price of solar remains unnecessarily high. This thesis explores these costs and the policies that are currently used to reduce them outside of the United States. The recent history of solar energy policy in the United States is compared to that of Germany and Spain to determine the most successful financial instruments in advancing solar development. From this foundation, the discussion shifts to the Solar Power Purchase Agreement Model (SPPA), which has found immense opportunity in solar energy’s high cost barrier. Projections are estimated for the trajectory of solar electricity prices in Massachusetts based on various business and policy factors, using calculations of data from the National Renewable Energy Laboratory’s (NREL) System Advisory Model (SAM). Based on these calculations and policy precedent in the U.S. and abroad, recommendations are made to facilitate solar industry growth in the future.