As everyone knows, a picture is worth a thousand words.
One that is probably worth far more than a thousand words is illustrated below, reproduced from RenewEconomy shows the price of solar PV panels over a 40-year span, from 1975 to present where the cost for a watt of solar PVs dropped from over $100 to around 60 cents. Equally stunning is the exponential growth of solar PVs, from 2 MW in 1975 to nearly 65 GW at the end of 2015, with virtually all of the growth taking place since 2005 – a mere decade.
Navigant Research predicts that by the end of 2016, the cumulative worldwide PV total will reach 321 GW. Many experts believe that the growth trajectory is just warming up – that is to say, by 2030, people will look back to 2016 and say that is when the solar revolution really started.
The top 3 growth markets in 2016 will be China, US and Japan, accounting for about two thirds of the global market, according to Raj Prabhu, CEO of Mercom. India is projected to become the 4th largest overtaking Germany, once the market leader in the field (graph below). Although China is expected to continue leading the global PV market, the U.S. will show the most robust growth in 2016, due to the extension of the Investment Tax Credit (ITC).
What is more surprising is that the growth of renewables, solar included, appears to be disconnected from the price of oil. 2015 saw the highest ever installation of renewable capacity, with 64 GW of wind and 57 GW of solar PV, an increase of nearly 30% over 2014 despite dropping oil prices.
According to a report released by Bloomberg New Energy Finance in mid Jan 2016, global clean energy investment surged in China, Africa, the US, Latin America and India in 2015 to $328.9bn, 4% higher than 2014 and beating the previous record set in 2011 by 3%.
As reported by BNEF, “Over the 18 months to the end of 2015, the price of Brent crude plunged 67% from $112.36 to $37.28 per barrel, international steam coal delivered to the North West Europe hub dropped 35% from $73.70 to $47.60 per tonne. Natural gas in the US fell 48% on the Henry Hub index from $4.42 to $2.31 per million British Thermal Units (BTUs).” Yet renewables, solar in particular, rose unabated.
Michael Liebreich, chairman of BNEF, said:
“These figures are a stunning riposte to all those who expected clean energy investment to stall on falling oil and gas prices. They highlight the improving cost-competitiveness of solar and wind power, driven in part by the move by many countries to reverse-auction new capacity rather than providing advantageous tariffs, a shift that has put producers under continuing price pressure.”
“Wind and solar power are now being adopted in many developing countries as a natural and substantial part of the generation mix: they can be produced more cheaply than often high wholesale power prices; they reduce a country‘s exposure to expected future fossil fuel prices; and above all they can be built very quickly to meet unfulfilled demand for electricity. And it is very hard to see these trends going backwards, in the light of December‘s Paris Climate Agreement.”
As noted by BNEF, renewables are no longer the domain of the rich. All indications point to Chindia as the future growth markets.
China set 2 new world records in 2015 by installing 30.5 GW of wind and 16.5 GW of solar while India is expected to follow suit with ambitious plans of its own starting in 2016.
In the meantime, fossil-fuel centric Australia, has made surprising strides in distributed solar. A country of mere 23 million now boasts over 1.5 million solar roofs – 18% of Australian households now have a PV system (graphs on page 22), a stunning figure for a country where coal still dominates electric power generation and coal exports are among the main sources of the country‘s prosperity. Based on data from Clean Energy Regulator, Australia installed its 1,500,000th PV system in December 2015.
Not surprisingly, solar‘s rise has had other positive benefits. In 2015, for example, US solar industry added jobs 12 times faster than the US economy as a whole. According to the Solar Foundation, for the 3rd year, the US solar workforce grew 20% adding 35,052 jobs, now totalling 208,859.
“It‘s incredible,‖ SolarCity CEO and co-founder Lyndon Rive told ThinkProgress. ―The (US solar) industry employs over 200 thousand people — more than the (US) coal industry.” The figures for coal sector are in the 80,000 and rapidly falling.
According to a report released by GTM Research in mid Feb 2016, 20 states in the US are currently at so-called solar grid parity, with 42 states expected to reach that milestone by 2020 under business-as-usual conditions, which may not prevail much longer (box below).
What about the future? In the US at least, the prospects are looking good in both distributed and utility- scale. The former, however, critically depends on how net energy metering laws may be modified over time.
Perry Sioshansi is president of Menlo Energy Economics, a consultancy based in San Francisco, CA and editor/publisher of EEnergy Informer, a monthly newsletter with international circulation. He can be reached at [email protected]