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A Luminalt employee installing a rooftop solar panel. Photo: Justin Sullivan via Getty Images

Solar energy has experienced rapid growth in the U.S. — from essentially no share of the nation's generation only 7 years ago to 1.5% of the total by 2016's end.

What to watch: In the medium term, solar energy will face significant headwinds in the form of tariffs, tax code changes and diminishing incentives, which threaten to reduce its cost-competitiveness. Despite these challenges, investors and developers remain bullish on solar’s long-term potential, with installed capacity projected to more than double in less than 5 years.

The challenges:

  1. Import tariffs on solar panels have increased the cost of solar projects, especially large-scale solar farms.
  2. Only weeks before the tariff announcement, changes to the U.S. tax code increased the economic attractiveness of other generation technologies like natural gas power, mainly because of newly available depreciation methods.
  3. Perhaps most importantly, the federal investment tax credit for solar projects is scheduled to sunset in 2022.

Yes, but: If past cost trajectories are maintained, none of these elements will have a material effect on solar’s long-term competitiveness. Here’s why:

  • Tariffs notwithstanding, solar panel costs have decreased tenfold in the past decade and continue to fall.
  • Entire system costs are also on the decline because of advances in other components and overall facility design.
  • Upgrades to the electricity grid and management systems are paving the way for greater solar diffusion by accommodating solar’s inherent intermittency.
  • Stationary storage facilities are increasing solar’s value by enabling its use after sunset, when electricity demand is high.

The bottom line: In some parts of the country, solar farms have already become the lowest-cost electricity source. Given cost-competitiveness, state-level renewable-energy mandates and complementary technology advances, solar power is likely to become even more commonplace.

Stephen Comello is director of the Sustainable Energy Initiative at Stanford Graduate School of Business and a fellow at the Steyer-Taylor Center for Energy Policy and Finance at Stanford University.

Go deeper

Scoop: Kaine, Collins pitch Senate colleagues on censuring Trump

Sen. Tim Kaine speaks with Sen. Susan Collins. Photo: Andrew Harnik/AP via Getty Images

Sens. Tim Kaine and Susan Collins are privately pitching their colleagues on a bipartisan resolution censuring former President Trump, three sources familiar with the discussions tell Axios.

Why it matters: Senators are looking for a way to condemn Trump on the record as it becomes increasingly unlikely Democrats will obtain the 17 Republican votes needed to gain a conviction in his second impeachment.

2 hours ago - Politics & Policy

Scoop: Anthony Coley to lead Justice Department public affairs

Photo: Xinhua/Ting Shen via Getty Images

Judge Merrick Garland, President Biden’s nominee for attorney general, has tapped Anthony Coley, an Obama-era Treasury Department official, to serve as a senior adviser and to lead public affairs at the Department of Justice, according to people familiar with the matter.

Why it matters: As the public face of the DOJ, Coley will help explain — and defend — the department's actions, from sensitive cases to prosecutorial decisions, including the investigation into Hunter Biden.

AP: Justice Dept. rescinds "zero tolerance" policy

A young girl waves to onlookers through the fence at the U.S.-Mexico border wall in San Ysidro, California, in Nov. 2018. Photo: Sandy Huffaker/AFP via Getty Images

President Biden's acting Attorney General Monty Wilkinson issued a memo on Tuesday to revoke the Trump administration's "zero tolerance" immigration policy, which separated thousands of migrant children from their families at the U.S.-Mexico border, AP first reported.

Driving the news: A recent report by Justice Department Inspector General Michael Horowitz emphasized the internal chaos at the agency over the implementation of the policy, which resulted in 545 parents separated from their children as of October 2020.