An unsubsidised solar revolution has begun

solar energy llight bulb  An unsubsidised solar revolution has begunUntil now the idea that unsubsidised solar power could make enough financial sense to be competitive with conventional forms of electricity generation has been largely confined to the realms of environmental campaigners and renewable energy advocates. www.cocoon.gi

However, as solar panels become more efficient and vastly cheaper and household utility bills continue to rise, analysts at some of the world’s largest financial institutions say such a prospect is indeed possible, and likely to cause profound disruption in the energy industry.

When the solar panels that convert sunlight into electricity first came onto the market back in the 1970s they cost around US$70 per watt in today’s prices. Currently, they cost around US 80 cents per watt, with prices plummeting by 80% in the last five years alone.

Part of this price fall has been driven by a glut in supply that grew as solar manufacturers increased production to meet the demand created by EU subsidies. More recently a flood of low cost Chinese panels to the EU, backed by their Government’s financial support, has continued to drive prices down.

Globally, solar power accounts for less than one percent of electricity supply. But its growth has been extraordinary, largely because of the renewable energy subsidies that EU countries began introducing in the 1990s.

Only ten years ago, the generating capacity of the entire worlds solar photovoltaic systems totalled just 2.8 gigawatts, about the same as that of six average-sized coal fired power stations.

Today there is more than102 gigawatts being produced and solar PV power has been the biggest source of new electricity generation for two years in a row in Europe. The industry predicts global capacity will double to 200 gigawatts by 2020.

The life time cost of solar PV power fell below industrial power prices in Germany last year making it cheaper for businesses to install and use their own solar power instead of buying it from a utility. That some firms have done exactly that explains why even those worst hit by the industry’s woes remain optimistic.

Spain is now the third largest solar market in the EU after Germany and Italy.  An outcry recently broke out when the Government proposed to impose new charges (6% levy) on rooftop photovoltaic installations in July this year. One resident when asked replied “this is complete and utter madness, this is an outrage they are expecting me to pay them for the energy I have produced at my expense and that I will consume myself”.

The Madrid government argues the levy is fairer and also it will help it to keep tabs on the growth of solar power at a time when Spain’s overall electricity capacity is far higher than peak demand (about 60%). Iberdrola, Spain’s largest power utility by sales, said it did not push for the new levy but believes Spain’s once generous solar subsidies have created a bubble of uncontrollable growth in solar installations. This meant that people with solar panels in their homes were not contributing equitably to maintenance of the grid which everyone uses.

Regulators still have to decide if the utilities companies will get their way. What appears to be certain however is that the surge in solar power is changing energy markets around the world in ways we are only just beginning to understand.

Solar power promises to provide regular electricity to the 1.2bn people who have no access to regular power supplies today. Low cost solar panels could help thee communities leapfrog traditional power grids in the same way parts of the developing world side stepped fixed-line telecommunications networks and went straight to advanced mobile phone networks.

An overriding consideration when deciding on how our power is produced is to determine what role fossil fuel power stations will have in the future and it can be combined with renewable energies into the overall plan.

What we do not need is the opposite scenario: a power station that nobody needs and everyone has to subsidise because we are generating power from renewable resources.

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