The Solar Industry: Booming or Busting? 0

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The decline in global investments in renewable energy isn’t as worrisome as it may seem, according to the2014 Global Trends in Renewable Energy Investment report, released in early April. The report, produced by the Frankfurt School – United Nations Energy Program Collaborating Center, reveals that the falling cost of producing renewable energy technologies is a major part of the equation. 

In fact, the reductions in technology costs and uncertainty about future policy support for renewable energy were the two main reasons why investments have dropped in the past two years. Global investment in renewable energy in 2012 fell 11% from 2011 investment levels and a further 14% in 2013. The United States followed this trend by decreasing investment by 10%, down to $36 billion.

The solar industry followed this global trend. After a peak of $157 billion of new investment in 2011, that number fell in both proceeding years to $113.7 billion in 2013. This drop should not be interpreted as a sign of a failing market, but rather one that is evolving.

A shift in the type of photovoltaic system installed was observed in 2013. Residential solar projects tend to have a higher installation cost compared to utility-scale projects. Last year, most installations were the larger-scale, lower-cost variety. This factor also helps to explain why photovoltaic installations increased from 31GW in 2012 to 39GW in 2013, despite a drop in investment.

The Solar Energy Industries Association published its annual Year in Review report for 2013 this March with extremely positive news regarding the growth of the solar industry in the United States. According to this report, solar photovoltaic installations increased in the United States by 41% in 2013. This represents an increase of 4,751 MW installed since 2012. Furthermore, the report states that the weighted average of solar photovoltaic systems decreased by 15% in 2013, obtaining a new low of $2.59/Watt.

The business case for solar power is still stronger than ever. With technology and installation costs continually falling, energy costs from non-renewable sources rising in most countries with the exception of the United States, and the current presence of federal and local incentives all make the return on investment of solar energy increasingly attractive. Furthermore, researchers in the public and private sectors around the world are perpetually discovering new technologies and manufacturing techniques to increase the energy-conversion efficiency or decrease manufacturing costs of solar technologies.

The global solar industry’s growth isn’t directly proportional to investment levels and this reduced reliance on influxes of capital will allow the market to grow, even during periods of reduced investment.

Original Article on CleanEdison Blog

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