This Week in Solar

By Travis Hoium Markets Fool.com

The end of the year is usually quiet for most businesses, but for the solar industry it can be a time of big changes. Legislation and regulatory changes are often pushed through just before the end of the year, which has had a huge impact on the solar industry in years past.

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2016 is no different, and there are some significant policy changes taking place right now. But this time solar energy may be coming out on top. Here's a look at those policy changes and some other notable items from the week in solar energy.

Image source: Getty Images.

A record year for U.S. solar

Despite solar stocks' performance on the market, the industry had a record year in 2016. The U.S. Energy Information Administration (EIA) says that 9.5 GW of utility-scale solar will be installed in the U.S. this year, enough to power 1.5 million homes. That tops 8.0 GW of new natural gas plants and 6.8 GW of new wind power.

If you add in distributed solar generation, which the EIA doesn't account for, the figure jumps to 11.2 GW or 14 GW of DC power generation, according to GTM Research. The future is bright for solar energy, and as the biggest source of new power generation in the country, it's finally a power player in electricity generation.

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States can't figure out what to do with solar

The rooftop solar industry is very dependent on state and regulator policies driving the economics of solar systems. Under net metering, customers only pay for their net energy usage, meaning they're effectively "paid" the retail rate for energy they export to the grid. Not surprisingly, utilities have tried to undercut that economic model in a variety of ways over the last few years.

This week, Arizona undercut net metering by lowering the rate customers are paid for electricity sent to the grid, and cutting down the amount of time rates are guaranteed. This reduces the known payback of a solar system and could make it difficult to justify rooftop solar.

In Nevada, the state that eliminated net metering a year ago in a very punitive way to the solar industry, the Public Utilities Commission unanimously approved utility Sierra Pacific Power's bid to restore net metering in the northern part of the state. This is a big reversal in Nevada, and may show that regulators went too far in their ruling last year.

Utilities in the southwestern U.S. are finding themselves in a difficult position as the cost of rooftop solar falls and energy storage becomes more viable. They're trying to undercut the economics of solar, but by doing so they're making solar plus storage a viable option for self-consumption. It's no coincidence that this is the year Tesla (NASDAQ: TSLA) and Sunrun (NASDAQ: RUN) introduced new or improved energy-storage products. Utilities are having a hard time finding a balance between fighting rooftop solar and fighting so hard they push customers toward solar plus storage. And that conflict is playing out in plain sight in Arizona and Nevada right now.

News and notes

Here are a few notable items from around the solar industry.

Trina Solar (NYSE: TSL) said this week that it hit a new efficiency record of 22.61% for a monocrystalline silicon PERC cell. Mono-PERC, as it's more commonly known, is an up-and-coming technology that will likely gain market share in the next few years, so being in a leadership position is good for the company.

SunPower (NASDAQ: SPWR) said it completed a 20 MW power plant for the Sulphur Springs Valley Electric Cooperative this week. The project completion itself isn't surprising, but buried in the release is that 0.5 MW of the installation was the company's Oasis 3.0 platform that was launched in September. Putting the system in the ground will both give SunPower the chance to test installing it, and allow data to be collected from the project. Since it is probably the company's most important product over the next five years, this is an important test site for the company.

Private company 8minutenergy Renewables also completed a 155 MW project that it says beats fossil-fuel prices and is the lowest-cost solar power to date. The $58 per MWh it is charging the Los Angeles Department of Water and Power for electricity over a 30-year power purchase agreement is impressive, and it's just one example of low-cost solar in the U.S. New contracts are going for less than $50 per MWh, and 2017 could see prices below $40 per MWh, which would make solar energy lower-cost than fossil fuels in most of the country.

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Travis Hoium owns shares of SunPower. The Motley Fool owns shares of and recommends Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.