K I Woo
Apr 20, 2015
Solar power is expanding faster than any other power source.
In a recent Foreign Affairs, article, Solar power comes of age – how harnessing the sun got cheap and practical, authors Dickson Pinner and Matt Rogers said solar power has expanded at 50 per cent in the past six years.
“Annual installations of photovoltaic panels increased from 0.3 gigawatts in 2000 to 45 gigawatts in 2014, enough to power more than 7.4 million US homes.”
They predicted that electricity prices would inevitably fall and utility company worldwide would have to adapt.
Thailand
In Thailand where we have abundant year-round sunshine, the government is supporting numerous private sector solar and alternative energy initiatives.
The Thai government’s Alternative Energy Development Plan has increased its renewable energy target to 25 per cent of total electricity generation by 2021.
Global momentum
In several markets, solar power no longer needs public subsidies to compete with conventional power sources such as coal, natural gas and nuclear power
The International Energy Agency projects by 2050, in a best case scenario, solar energy will be the biggest source of power, generating 27 per cent of electricity worldwide.
Public policy support
Four key factors have been behind the sudden rise of solar power.
1. Regulatory support
Many countries, including Thailand have initiated pro-solar policies that deem the country should generate a certain percentage of electricity from renewable sources by a due date.
Other pro-solar policies may include feed-in-tariffs that guarantee consumer and producers a price per kilowatt of solar power that is fed into the existing grid. Other benefits include subsidies to solar panel manufacturers and households users.
2. Industrialization
Rapid industrialization and innovation, especially in China that now accounts for two-thirds of global solar panel production has also contributed immensely to solar industry growth.
Chinese competition squeezed profit margins and drove many suppliers out of business but their efforts led to improved production processes and new economies of scale that have massively reduce production costs.
During the past decade, the authors said raw materials costs fell by 90 per cent, resulting in a 80 per cent reduction in solar-panel costs. These costs they said are falling continuously.
3. Technological innovation
Solar panels are also slowly becoming more efficient.
Although, efficiency rates have seemingly peaked at 20 per cent (generating two watts of electricity for every 10 watts of sunlight) the industry is now rigorously experimenting with new technologies and materials that will improve efficiency.
4. Financing
A major stumbling block has be high up-front costs for home solar systems (about $US15,000 to $US20,000 per home).
In some US states, homeowners can sign contracts with companies that install and maintain solar panels.
“Consumer pay set monthly price or fixed rate per unit of power.”
They require no up-front cash and yet can receive lower electricity bills
Future cost savings
According to the authors, solar energy production costs in Arizona are expected to fall from 63 cents per watt in 2014 to 40 cents in 2017.
Moreover, battery costs that have declined by 70 per cent over past five years could fall by another 70 per cent in next decade.
• South Asia and Africa
Solar power, is easier to access than conventional power in South Asia and Africa because of lower infrastructure costs.
Currently, about 100,000 Indian villages lack electricity and solar power would be less expensive.
“India wants to build 100 gigawatts solar power by 2022, largest in world.”
Coming disruption
If solar power becomes more prevalent as predicted, it will disrupt incumbent electric power sector economics because houses equipped with solar panels don’t buy as much power from grid.
Certain state governments in the US are already asking solar power users to pay for using the electrical grid.
