Solar Power » Market

Market Outlook and Opportunities

There are many factors that are driving this market, namely concerns about energy security, energy prices, climate change and cost of carbon as well as increased demand for electricity and need for replacing huge amounts of existing electricity generating capacity. However, in 2009, solar electricity can not compete on price with conventional technologies. This makes regulatory frameworks a necessity whilst solar technologies are being further developed. Feed-in tariffs have proved to be the most effective way of encouraging demand. Unfortunately, though, this also means that the market is dependent on public policy, which has proved to be fickle at times, introducing risk. However, given public pressure, we believe that stable support frameworks will stay in place.

In the absence of public policy, the market is very much tied to the oil price, as cheap oil (and gas) reduces the pressure to seek alternative sources for electricity generation.

New Markets?

The return on solar power assets depends not only on the costs required to build the plant, but also on the yearly solar irradiation at the location of the plant and the prevailing electricity prices in the local market.

Electricity price versus irradiation

 


Places in the diagram should be compared against the "levelized cost of energy" - curve, that shows the cost per kWh of produced electricity. Only locations above the line are attractive for photovoltaics without feed-in tariffs or other subsidies. Interestingly, most of the world's PV installations are in countries that are not naturally attractive.

What happens when the cost curve comes down? Decreasing costs will undoubtedly cause feed-in tariffs to fall, but will also open up opportunities in other regions of the world even without subsidies, such as Chile. On the other hand, despite high levels of sunshine, South Africa will remain unattractive for some time to come because of very low electricity prices.


Long-term Outlook for Solar Electricity


Long-term outlook for solar electricityThe German Advisory Council on Global Change (WBGU) published a study with a long-term view of the global energy mix.

According to this report, solar electricity will really take off in 2030, and by the end of this century be the all-dominant energy source with over 50% share of the global energy mix.

This is followed only by biomass, gas, hydro and coal.

In any case, there is a huge potential for solar electricity.

There is probably no doubt that long-term, solar has to be the dominating source of energy. For solar technologies to be ready to take on that role, it has to be supported and developed today.

Links: German Advisory Counci: World in Transition - Towards sustainable energy systems
Solar irradiation data from sealite.com and the National Renewable Energy Laboratory
Electricity prices from EIA

 

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