The future of DG solar and batteries
I recently spoke on a panel about scaling DG solar and battery storage in MISO. Amid several policy discussions, I framed my comments around a simple question: What are the growth drivers for DG solar and batteries, and how do these resources compete with centralized generation? Here’s what I shared…
The Near-Term Outlook
Recent policy shifts—think OBBB, FEOC, and the latest changes to “start construction” rules—have put some headwinds in front of solar and storage, particularly solar. As a result, 2025 and 2026 look like strong years for deployment, but by 2027 and 2028 I’m expecting a dip.
That said, I also believe this is temporary. By the end of the decade, the fundamentals will reassert themselves, and DG solar and batteries will begin to bounce back.
Why the Fundamentals Still Win
When you zoom out, DG solar and batteries remain one of the most attractive energy resources for three reasons: value, speed to market, and location.
1. Value
This is the deepest point. Solar and storage projects continue to offer compelling economics:
Build costs: While costs have ticked up recently, I expect them to decline 15–20% over the next five to six years. That’s thanks to equipment efficiencies, better engineering, and construction practices.
Financing: The industry is moving toward structures that require less reliance on tax equity—the most expensive piece of the capital stack. With simpler, more efficient financing, more investors will enter the market, bringing both liquidity and stability.
Efficient operations: Assets are becoming more efficient, both in generation and in how storage extracts value from the market.
Relative value: As utility rates continue to rise, fueled by massive transmission buildouts, solar and storage become more attractive alternatives for customers and investors alike. This value will only expand over time.
2. Speed to Market
Few resources can be developed and brought online as quickly as solar and storage. From permitting to interconnection to construction, DG resources have a timeline advantage over centralized generation.
3. Location
Solar and batteries can be sited close to load, making them strategically valuable and able to deliver benefits where they’re needed most.
From Subsidy-Driven to Value-Driven Growth
For most of the last decade, DG growth has been subsidy-driven. And that was necessary. It helped us scale the industry and prove the model.
But looking forward, the next ten years will be about value-driven growth. As solar costs decline, financing becomes more efficient, and utility rates rise, DG resources won’t just be supported by policy. They’ll stand on their own economic legs.
That’s a powerful shift.
This framing seemed to resonate with the room during the panel. I saw plenty of nodding heads. And I think it’s a helpful way to think about the medium- and long-term trajectory of DG resources in MISO and beyond.