With many millions – if not billions – around the world believing today’s U.S. Presidential election could be the dawn of a new age of peace and prosperity and international cooperation – with even this skeptic among them fervently hoping they’re right – where are we with the dawning of the age of solar energy? How much solar power do we harvest from dawn to dusk, the world over?
Having spoken or corresponded with more than a few experts on this topic over the past few days, here is the status of global solar energy right now: The total installed base of photovoltaic capacity in the world as of 12-31-08 is estimated to be about 12.5 gigawatts. This is including both “inside the meter” (decentralized rooftop arrays) and utility scale “grid connected” arrays. Adding solar thermal is tricky, because technically speaking solar thermal also includes water heating for – you guessed it – hot water, but notwithstanding that version of solar thermal, the utility scale, electricity generating solar thermal installations worldwide by the end of 2008 will add not quite another gigawatt of output to solar’s contribution to worldwide energy production. The potential of solar thermal electricity however should be carefully weighed, given it has the potential to meet and even exceed the output of photovoltaic electricity in the coming years.
Much of the data to follow comes from a presentation by Paula Mints, a solar energy expert with Navigant Consulting, delivered late last month at the 3rd Annual “Investing in Solar conference held in Phoenix, Arizona. Her findings, corroborated by other analysts, put the price of large solar panels, sold in wholesale quantities, at $3.50 per watt – or $3.5 million per megawatt. The installed cost of these panels would be, at the utility scale, at most twice that amount, and possibly considerably less.
Photovoltaic electricity production is still primarily driven by crystalline technology, despite promising advances in a variety of thin film technologies. Shipments worldwide of photovoltaic panels totaled 3.1 gigawatts in 2007, and over 2.7 gigawatts of that total, 89%, were crystalline. It is interesting to note the total capacity in place as of 12-31-07 was a whopping 5.4 gigawatts, indicating just how much growth occurred in that year. Similar growth is occurring in 2008, with single plants under construction in several sites around the world capable of each producing 400+ megawatts per year of output.
For example, in a recent report issued by SolarPlaza.com covering solar development in China, there are dozens of heavily funded companies pursuing both thin film and crystalline technologies that are “aiming for growth rates of 100% to 400% per year.” China already has four solar companies listed on the New York Stock Exchange, JA Solar, Suntech, Trina Solar, and Solarfun. China’s solar production capacity will exceed 1.0 gigawatt in 2008 and there is no end in sight.
An interesting note made by Mints in her presentation at the Phoenix Investing in Solar conference was that her findings indicate there is “no demand pull” in the solar industry. That is to say, without robust incentives on the part of nations from Japan to Germany to the United States – and elsewhere – to subsidize solar power, there would not be a natural market demand sufficient to sustain this level of growth. Such a reality should give anyone pause, in an environment of economic retrenchment and falling prices for conventional energy. Until the price of solar electricity falls well below $.10 per kilowatt-hour, which would equate to about $1.00 per watt installed, it will depend on political will instead of market pull to maintain its current rate of growth. Solar thermal energy purveyors already claim they can achieve these prices, as do some vertically integrated photovoltaic manufacturers – the next few years will see if their claims come to fruition.
Current estimates put that achievement, an installed cost of $1.00 per watt or less, still about 5-10 years away, although some of the thin film manufacturers are reporting cell costs already falling close to the $1.00 per watt level. The problem with extrapolating reports like this are twofold – these manufacturers still have to realize some markup to remain in business, and thin film, unlike the more expensive crystalline technologies, still has a lower estimated service life, which negatively skews the relationship between installed cost per watt and lifetime cost per kilowatt-hour.
Ultimately the potential of solar energy rests on two factors – the speed at which the cost for solar panels will drop, and the rate at which conventional forms of energy increase in price. If you believe that the most significant renewable resource in the world is and always will be human innovation, then you will understand that solar power has a real fight on its hands – since innovation leads to more efficient use of energy as well as myriad alternative sources of energy.
Two additional factors work in solar’s favor in the battle royale to become the world’s primary new source of energy. First, solar is simple – it can be deployed at the utility scale, or it can be deployed on the rooftops of the world. It can exist inside or outside the meter, it is solid state and requires almost no maintenance, and within the diversity of crystalline and thin film solar technologies there are solutions that are unlikely to create resource scarcity at scale. Secondly, the percentage of global power currently supplied by solar energy, based on 13.5 gigawatts with a yield of 20%, is hardly worth calculating. It amounts to about 2.5 gigawatt years, which if you rounded up to 3.4 gigawatt-years (the likely total by the end of 2008) would constitute one-tenth of one quadrillion BTUs. Given worldwide energy production in 2008 will total about 500 quadrillion BTUs, solar energy is still providing only 1/5,000th of global energy production. If solar energy can become commercially competitive, it has a huge future.
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