PV reaches critical mass towards mainstream power
Recent indicators show PV reaching a critical mass that might enable it to be considered a mainstream power generation source in many parts of the world. Solar may have accounted for just 0.6% of global electricity generation in 2012, but there are signs that PV could soon be entering into the mainstream. Read More
PV reaches critical mass towards mainstream power
By Jason Deign in PV Insider on 18 March 2014
Recent indicators show PV reaching a critical mass that might enable it to be considered a mainstream power generation source in many parts of the world.
Solar may have accounted for just 0.6% of global electricity generation in 2012, but there are signs that PV could soon be entering into the mainstream. Analysts and observers are predicting a solar explosion as PV hits grid parity in many markets around the world.
The global market for PV grew by around 30GW a year in 2011 and 2012, leading to a total installed base of about 100GW by the beginning of 2013. According to Bloomberg New Energy Finance, last year saw the addition of another 39GW, led by China with 12GW.
That is just the start. Deutsche Bank expects 46GW to be installed this year and 56GW in 2015, adding up to around 250GW worldwide by the start of 2016. The main reason for this is that PV is now at grid parity in at least 19 global markets, according to reports.
In Germany, for example, The Fraunhofer Institute last November claimed rooftop solar was already competitive with combined-cycle gas generation. The Institute expects utility-scale PV to beat all fossil fuels, including coal, in Southern Germany by 2030.
And in Spain, where PV accounted for 3.2% of total electricity production in 2013, a developer called Enerpro has started selling solar energy directly to the grid without any form of financial support.
This year the developer is aiming to install 12MW of PV for sale direct to the Spanish power market and has plans to scale up to around 300MW next year, believing it can deliver electricity more cheaply than other production sources in the country.
Solar panel costs
“Today a solar panel costs in the order of 80% less than just five years ago,” notes José Luis García Ortega of Greenpeace Spain, in a blog posting for the pressure group published this February. “And it is envisaged that costs will fall another 50% up until 2020.”
At the same time, banks expect solar financing to open up throughout this year. The investment bank Goldman Sachs, which has a USD$40bn war chest for renewable energy investment, has already put cash into SolarCity, First Solar and SunEdison.
Meanwhile Mercom Capital Group, a clean energy consulting firm, says total corporate funding into the solar sector, including venture capital (VC), debt and public market financing, was up 25% in 2013, to almost $10n from $8bn in 2012.
“While venture funding levels were down, overall fundraising was up and public market financings were really strong in 2013,” observed Raj Prabhu, Mercom’s chief executive.
“Higher valuations among public solar companies have opened up the capital markets again as an avenue for fundraising at attractive terms.”
The top five VC-funded companies in 2013 were the Chinese solar project developer Heifei Golden Sun Technology, distributed PV financier Clean Power Finance, crystalline-silicon (c-Si) module maker Solexel, installer Sungevity and residential system specialist OneRoof Energy.
This combination of lower cost and improved financing is setting the stage for steady growth in PV penetration.
MJ Shiao, director of solar research at GTM Research, says: “We expect there to be more than 146MW of cumulative megawatt-scale PV installations by 2017, representing more than triple what it is today.”
Thereafter, PV is expected to start becoming competitive in some of the biggest power markets in the world.
In India, for example, solar should be able to “genuinely compete with conventional power generation” by around 2020, according to Jasmeet Khurana, head of market intelligence at the analyst firm Bridge to India. “Solar has already become attractive to large power consumers.”
He adds that PV will hit the mainstream in India “when all power consumers, including those below 1MW, can start using their rooftops to generate power which helps them save on their bills.
“The first steps towards net metering and a favourable regulatory regime are already being taken by some states. However, it will still take at least three to four years for this mainstream market to take off.”
Finally, Lux Research estimates that by 2025 PV will be competitive with natural gas in 10 major regions. For Lux Research associate Ed Cahill, the point at which a generation source can compete without subsidies is a key attribute of mainstream adoption.
As to what proportion of total generation PV could achieve, he says: “It can’t ever be 50%. You need some base load. In a mature grid, 10% to 20% maximum solar is sensible, in addition to wind. Even so, solar is a success at 10%.”
And the good news is that while this forecast growth will mainly be tapped by c-Si, there should be opportunities for all PV technologies.
Indeed, as recent headlines have shown, CPV is already bouncing back with eye-popping cost reductions, while thin film is making strong headway in new markets such as South Africa. The best, as they say, is yet to come.