Challenges Moving Renewable Energy Into the Residential Sector

Challenges Moving Renewable Energy Into the Residential Sector

In 2017, renewables accounted for 687 billion kilowatt-hours (kWh), or 17 percent, of electricity generation in the U.S., according to the U.S. Energy Information Administration. An additional estimated 24 billion kWh came from small-scale solar photovoltaic (PV) systems, such as those installed on the roofs of homes.

Although the residential renewable energy industry has grown substantially in recent years, it still faces numerous challenges. Some of these challenges are similar to those faced by other young industries. Others are specific to the energy sector.

We'll likely need new energy resources in the coming years, however, as energy demand continues to rise. Global demand for energy increased by 2.1 percent in 2017. Concerns about the environmental impacts associated with fossil fuels are also driving the adoption of renewables. For these reasons, it's crucial that we overcome the barriers to widespread use of renewables in the residential sector.

Below are some of the most notable difficulties facing the renewables sector, along with some ideas about how the industry will address these challenges.

Existing Grid Infrastructure

The electricity grid in the U.S. was designed with large-scale coal, nuclear and natural gas facilities in mind. Renewable energy technologies like solar and wind function differently than more traditional energy sources.

Fossil fuel and nuclear power come from a few large facilities, while renewables can come from a multitude of small systems, such as rooftop solar modules. Fossil fuel plants can also be ramped up and down on demand, but solar and wind produce electricity only when the sun is shining or the wind is blowing. This situation makes it difficult to predict the amount of electricity that will be available at a given time.

Nevertheless, worldwide energy production is now over 13.8 million tons and continues to increase, which means we need an adjustment. To incorporate large amounts of renewables — especially distributed renewables — into the grid will require upgrades that improve the source's flexibility. These updates include improved grid management, energy storage and demand response. According to the U.S. Department of Energy, increasing the use of these technologies could enable 25 percent penetration of solar PV at low costs.

Installation Costs

The costs of solar and wind technologies have been steadily declining over recent years, which has been a major reason for their increased prominence. Solar and wind are also cheap to operate because they don't require the purchase of fuel like coal or natural gas. The maintenance requirements of the systems are also minimal.

The main cost associated with renewable comes from installation, so the up-front costs may be more than for other energy sources. In 2017, the average cost per kilowatt to install a large-scale solar system was $2,000, while the average cost for a residential system was $3,700. The cost per kilowatt for wind was approximately $1,200 to $1,700. Building a new natural gas plant would cost roughly $1,000 per kilowatt.

Energy companies typically pass the cost of building new generation facilities onto customers, but the customer does not have to pay a large up-front fee like they would to install a solar system on their roof. This up-front cost might discourage some customers from purchasing rooftop systems. Over 20 years though, a customer who installs a rooftop system can save $15,000 to $30,000, depending on the state they live in.

Depletion of Early Adopter Customers

The adoption of rooftop solar and other renewable energy technologies has increased dramatically in recent years. The rapid growth rate of the solar industry is now, however, starting to slow down, likely because the sector is beginning to run out of the early-adopter customers who enthusiastically switched to renewables. Solar companies are now finding that it's more expensive to land new sales.

The residential solar industry is young and still changing substantially. As the industry matures, more established business models will likely emerge, and growing pains will become less common.

The residential renewables sector is facing challenges, but it has already overcome many barriers. It will likely continue to make progress on these issues as the industry matures. Its success in doing so could be crucial to our energy grid, our economy and the environment.


Emily is a green tech writer who covers topics in renewable energy and sustainable design. You can read more of her work on her blog, Conservation Folks.

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