Solar PV: The sun is rising on the global power scenario
Posted May 23, 2008on:
From a low base (<1% of global energy consumption, 2.5 GW of sales in CY06), solar photovoltaic over green-house emissions, decreasing cost of solar energy, and increasing government support are the major growth drivers.
Demand side perspective: Opportunity for solar power
Solar constitutes a very small fraction (<1%) of the global electricity production, as of now. However,it has been growing rapidly on a low base, driven by cost reductions, favorable government policies and subsidies and also due to its being an environment-friendly source of energy.
The global solar industry is poised to expand from ~USD 11.7 bn in CY06 to >USD 52 bn in CY11E (in terms of solar systems sold).
The cost of solar electricity (at > 25 cents/ Kwh) continues to be significantly higher than those of conventional electricity (<10 cents/ Kwh) and this has limited market growth historically.
Although production from solar systems varies according to the time of the day, peak output coincides with peak electricity demand. As peak electricity tariffs tend to be substantially higher than normal and comparable to solar power costs, PV systems are becoming economically more viable and hence, can be used as sources of peak power.
Supply side perspective
Technology is the key in this industry because it is a necessary component to create cost reductions. Within the supply chain in photovoltaic, the cell step affords a degree of differentiation, which drives cost reduction. The efficiency and production costs of solar cells are crucial for the efficiency of the entire solar module.
As the industry evolves, multiple players are expected to put up capacities in different stages of the solar value chain. As cell and module making stages require fewer investments and are quicker to ramp up, it is not surprising that capacity has built up more rapidly in these stages, which has resulted in raw material (silicon) shortage.
Silicon capacities take a long time to scale up as the manufacturing process is technologically cumbersome and requires huge scale for economic viability.