Update on the Global Solar Market 0

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In the global energy game, the solar industry is rapidly transitioning from the minor leagues to the majors, and there are big plays and upsets on a daily basis. Here’s the score on what’s been happening around the world, and where it’s all heading.

The Winner

Solar continued it’s exponential growth with 31 gigawatts of solar photovoltaics installed around the world last year, pushing global PV capacity above the 100 gigawatts mark – the equivalent of 100 large nuclear power plants. Germany is still the world leader with nearly one third (32 gigawatts) of the world’s total capacity installed. (An in-depth look at Germany’s phenomenal transition from nukes and fossils to renewables coming soon.)

Runners Up

Italy is next with 16 gigawatts installed, providing 5.6% of Italy’s electricity in 2012. Then it’s America and China in a close race. Despite being drenched in sunshine, America had been lagging. But in 2011 solar installations doubled, and then doubled again (3.3 gigawatts) in 2012, bringing the US total up to 10 gigawatts.

Trends

The meteoric rise of solar in the US is largely due to the success of solar leasing that allows any homeowner to go solar, because a third party company (like Sunrun) pays for the panels and installation, and only charges for the electricity that the panels produce. This growth trend looks to continue with SEIA (Solar Energy Industry Association) projecting 4.4 gigawatts of PV to be installed by the end of 2013, growing to nearly 9.2 gigawatts by 2016.

China had 8 gigawatts of solar installed by July 2013, but more impressive is the government’s recent announcement to generate 35 gigawatts by 2015. This attempt to boost domestic demand is not only to ease their enormous pollutions problems, but also help Chinese PV panel manufacturers who have become victims of their own success by producing so much capacity the world hasn’t kept up. However the outlook is brightening considerably with China and Europe settling their trade dispute over solar panel prices.  Prices are projected to stabilize, and major Chinese players like Foxconn are now considering getting into the manufacturing market bringing in even bigger economies of scale. This trend, combined with increasing automation should see PV prices becoming ever more competitive with fossil fuels.

Another expected boost to global demand is Japan’s new emphasis on solar in the wake of the Fukushima disaster. The Japanese government encouraged huge investment in utility-scale PV capacity by introducing generous solar incentives, and it worked. According to Bloomberg, developers in Japan are on track to install 6.9 gigawatts to 9.4 gigawatts of solar in 2013 taking over from Germany as the largest solar market in the world.

Solar In The Developing World

Perhaps even more interesting, is the solar investment happening in less developed countries. It’s long been hoped the developing world could leap frog dirty fossil fuel infrastructure and go straight to renewables, and there are now good examples of this happening. India for example only had 1.7 gigawatts installed as of May 2013, but Bridge to India estimates that to be 4 gigawatts by the end of 2014, bringing renewable energy to millions.

But more impressive are the efforts of Peru and Bangladesh. The Peruvian government recently announced that it will spend $200 Million to install solar panels for 500,000 extremely poor households that can’t access to the power grid, and by 2016, 95% of peruvians will have access to electricity. While Bangladesh just installed it’s 2 millionth solar installation as part of the World Bank’s rural electrification program. This reduces the amount of harmful kerosene is burnt in the home, increases study time for children and helps with mobility and security for women.

The Future

Given all these developments, and exponential growths curves, the future for solar looks bright enough to need shades. However, the downside of becoming a major player of course, is that all the other major players suddenly take notice, and try to take you down.

Utility companies, for example, are used to being giant monopolies because they own the power plants and wires that deliver the electricity. So they’re understandably worried by competition from a technology that generates and delivers electricity on the spot. Unfortunately, their response has been to fight solar by trying to eliminate Net Metering (NEM) the cornerstone policy that gives homeowners credit for the solar power that their panels feed into the grid, kind of like rollover minutes on a cell phone plan.

We can expect this fight to increase significantly in the coming years. More places will use net metering and solar rebates to create a solar market because it works. Followed closely by utilities complaining that they work too well. Utilities have deep pockets and powerful lobbyists, so they’re a daunting opponent, but even if they fight home solar tooth and nail, it’s worth noting that solar is increasingly competitive even without the rebates. For example in California, solar installations have continued despite the state’s rebate program running out.

Solar Finance

The other challenge that could impede the solar industry’s growth is financing. SEIA (the Solar Energy Industries Association) estimates that by 2017, the home solar market will need nearly $50 billion of investment, far more than it’s received so far. There’s a lot of action raising capital right now, and experimenting with securitization, crowdfunding, community solar, and adapting financing models from other industries. Still, SEIA warns that “project finance could serve as a significant bottleneck to growth over the next four years. In the absence of these limiting factors, residential and commercial PV could grow exponentially through 2016.”

Considering the size and scope of the global energy industry, that’s a whole lot of growing. So watch this space. Solar’s moving into the big leagues and we can be sure there’ll be plenty of major plays, and fumbles, to come.

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