Global solar capacity is forecasted to triple from the 178 GW capacity at the end of 2014 to over 500 GW by 2020, equivalent of one thousand typical coal or nuclear power plants. Solar energy will be 540 GW by 2020 in the high estimate, and 396 in the low, according to the European Photovoltaic Industry Association (EPIA). Reporting from the Intersolar 2015 Conference in San Francisco, I’m betting that the high forecast will be exceeded for a number of reasons:
- Global capacity grew ten fold in only six years.
- Solar cells have dropped in cost by 80 percent in the past seven years.
- In many areas, solar is now less expensive than all alternatives.
- Solar is often installed at the source of electricity use, rather than hundreds of miles away where expensive transmission lines would be required.
- Utilities, industry, and homeowners can lock in rates for 20+ years with solar leases or power purchase agreements (PPA), while costs from nuclear, gas, and coal are unpredictable.
- Many utilities benefit from solar in meeting renewable portfolio standards (RPS) and other regulatory goals.
- Carbon pricing in many countries, regions and states make renewables more attractive; coal and gas less attractive.
- Energy storage is now used to improve solar performance and use electricity when most valuable.
- Information technology and grid technology has improved the performance, integration, and load matching of distributed generation.
- Energy efficiency has lowered the total needs of buildings and homes, allowing smaller and lower cost solar systems to meet energy needs.
Price reduction certainly deserves to be high on this list. Austin Energy for its new 600 MW solar procurement, received bids for less than four cents per kilowatt hour. Stunning.
At the Intersolar 2015 Conference it was clear that the growth of solar is being lead by China, Japan, and the United States. China is leading with in ground-mounted utility-scale solar and in large commercial rooftops. The USA is leading in solar bundled with innovative energy management and financial offerings.
In 2013, China installed more solar in 12 months than the United States installed in 40 years! In 2014, China added a record 10.6 GW of solar capacity. China’s National Energy Administration plans for 17.8 GW in 2015, and expects an installed capacity of 100 GW by 2020. As China solar grows, it reduces its coal plant capacity. In the pipeline, however, are 70 new more efficient coal plants replacing older plants scheduled for decommissioning. China uses over 4 billion tons of coal annually; four times the U.S. More energy efficiency and renewable energy is urgently needed.
China targets 15 percent of its electricity to come from renewables by 2020. China has more hydro power (300GW) and more wind power (100GW) installed than solar power (45 GW by year end), but the wind is strongest in remote areas where grid lines have yet to be installed. In contrast, most solar is being installed close to where the electricity is used.
China is leading the world in volume solar cell and panel production, leading to an 80 percent drop in cell cost since 2010. Module prices can be as low as $.50/kW due to volume manufacturing, improved efficiency, and intense competition. The manufacturing glut, however, is coming to an end. Some at the conference expect short-term price increases for the solar industry.
Most global solar installation is now in Asia. Thirteen of the world’s 15 top solar cell suppliers are now Asian.
China especially leads in ground-mounted utility-scale solar and in large commercial rooftops. China’s western regions lead in ground-mounted large solar farms. In east coast population centers, commercial rooftops are the fastest growing solar segment. A major opportunity in China is 5 million new buildings planned by 2030. China’s buildings currently have an average life of only 11 years.
In the wake of the Fukushima nuclear disaster, Japan has an urgent need for energy efficiency and renewable energy. Japan installed 9.7 GW of PV in 2014, more than any other nation except China.
Japan’s continued growth, however, is challenged by financing difficulties and by the utilities that favor central power plants, not distributed generation. Ten utilities control their own grids. Securing new grid connections will be difficult for solar users until grid transmission and distribution is upgraded. Also challenging in Japan is expensive land and half of existing roofs not being able to support the weight of PV.
Japan, however, will continue to experience strong solar growth. Japan now has one of the most generous solar tariffs in the world and an urgent need to replace its nuclear power.
Solar United States
The United States installed 6.2 GW of PV in 2014, almost as much as all of Europe. Our solar capacity has grown 20 fold since President Obama took office. Seven U.S. states now provide over 80 percent of their energy from a mix of renewable sources: Washington, Oregon, Idaho, Nevada, South Dakota, Iowa, and Maine. By 2020, only China is likely to have more solar capacity than the United States.
Only three nations added more solar last year than the state of California: China, Japan, and the United States. California installed more solar in the past 2.5 years than in the previous 25 years, achieving over half of all new solar in the U.S.
In the United States, 16 states have RPS requirements for more solar. Utility-scale solar will lead and in some areas accelerate with the use of large-scale storage and smart grid technology managing distributed variable renewables like a virtual power plant.
The United States leads in financial innovation that removes the barrier of large upfront capital expenditure (capex). Commercial, residential, and utilities use power purchase agreements (PPA), leases, and other contracts that remove capex barriers and provide long-term certainty for energy costs. Solar financing is now big business for securitization, green bonds, yieldcos, and REITs as billions are invested in solar projects with predictable cash flows for 20 years and more.
California is the dominant installer of residential solar. California will be 33 percent renewable by 2020. California’s worst drought in 1,200 years has reduced available hydroelectric power from within California and imported hydroelectric power from the normally rainy Pacific Northwest. The drought has also raised costs for water-dependent nuclear and natural gas plants (California has no coal power plants).
Across the USA, commercial solar is fast growing with 100kW to 1MW installations representing half the commercial market, but 1 MW+ is the fastest growing commercial sector.
Solar installations may decrease in the USA in 2017, when the investment tax credit decreases. Although there is major disagreement about ITC renewal and impact, the majority of the solar industry expect record installations in 2016, and again in 2018 or 2019.
The electric utility industry is being disrupted. There was a time when 10 percent annual growth in electricity use was met with new centralized coal and gas plants. Now, in a more efficient USA, electricity demand is only growing one percent, decentralized solar can completely meet this incremental demand and centralized power plant production is likely to decline.
Renewable energy provided half of new installed U.S. electrical generating capacity during 2014, notes Ken Bossong, Executive Director of the SUN DAY Campaign. For 2014, new generation capacity added was 21 percent solar, 27 percent wind, with small additions of biomass, geothermal, and hydropower. Natural gas added 49 percent of the new generating capacity. One percent was from new coal and nuclear power capacity for the U.S. was reported in the “Energy Infrastructure Update” FERC report.
Record booth space and conference workshops were devoted to energy storage, which I will cover in an article later this month. Far less than one percent of grid-connected solar included storage last year. Despite Tesla’s recent announcements, installed storage will be difficult to cost justify for 90 percent of installed storage for a few more years. In the longer term, lithium batteries and other storage will accelerate the transition to solar, distributed generation, and more reliable energy delivery.
Solar energy’s global installed capacity has tripled in the past four years, thanks to falling module prices and improved approaches to large-scale ground mounted, large commercial rooftop, and residential systems. Global solar capacity will again triple by 2020 with the added advantage of storage to use solar power when it is of greatest value. Leading the way are China, Japan, and the United States.
Solar exemplifies the global transformation in how we save, create, store and manage energy. Solar energy is the fastest growing source of renewable energy. Wind, water, and sun (WWS Report) have the long-range potential to meet all of the world’s energy needs. Installed global renewable energy capacity will be greater than nuclear by 2016, and greater than either natural gas and coal in a few years.