The global market for solar photovoltaics (PV) is ‘one to watch’ for every financier, policymaker and energy professional. If you are looking for a technology that is going to boom over the next few decades, you’ve found it.
This is ‘the one’ that is going to transform the way we generate our energy – at home and overseas.
Why? Because ultimately a solar panel is not that dissimilar to a computer microchip. Both are semiconductors. Both have seen staggering falls in costs as manufacturing economies of scale increase. For computing hardware this is known as Moore’s law, for solar it is Swanson’s law. Costs drop astronomically and efficiency goes up as more and more of the stuff is made.
And that means solar is quickly becoming a mainstream electricity generation technology. Bloomberg New Energy Finance recently predicted that there will be $3.7trillion of investment in solar between now and 2040, much of it small-scale rooftops. That is a market worth getting in on.
The International Energy Agency is predicting that globally solar could be the largest source of electricity by 2050. India is aiming to install 100 GW of solar by 2022 – more than twice the amount needed to supply all of Britain's power needs. China is moving faster still, and will have far exceeded 100 GW by 2020. Hillary Clinton is talking of installing a billion solar panels across the United States. From Chile to Morocco to Bangladesh, the solar revolution is accelerating fast.
According to the International Energy Agency, we could have 440 GW of solar PV capacity installed worldwide by 2020. At present the UK has a world-class solar design, installation and financing sector and could, with help from UKTI, be out there getting our share of that business. Some already are, with leading solar businesses Solarcentury and Lightsource examples of home grown solar companies already starting to set up shop abroad.
However, in order to reap the rewards of export markets you need a stable domestic market to build on, and sadly the situation here in the UK could not be worse. Cliff-edge cuts to the Feed-in Tariff, Renewables Obligation and (in effect) Contracts for Difference has led the market to crash by over 80% according STA analysis, with thousands of jobs and exportable skills disappearing as we speak.
By 2030 solar could be generating 13% of global electricity by 2030, according to a new report from the International Renewable Energy Agency. Some might say “ah but that’s just for southern climes in the global sun belt”. Not true. Solar works well in Britain – solar panels in London generate much of the power they would in Madrid. Cooler British temperatures prevent the panels from overheating, keeping them efficient. Solar uses daylight, not sunshine or heat, generating power even from just diffuse light on a cloudy day.
The cost of solar has come down by 70% over the last five years. The cost of a typical solar installation on a home has dropped from around £20,000 five years ago to £6,000 today. Not yet cheap enough for it to be attractive without government support, but that gives you an idea of how cheap a way of generating power this has become.
And as the cost of the actual modules falls through the floor, the rest of the cost of installing a solar PV system, such as the labour, scaffolding, mounting gear and the inverter that converts the power from DC to AC make up an increasing proportion of the total cost. That means it is more important than ever to support a stable domestic industry with a broad based supply chain that can work to reduce costs as installed volumes increase.
The prize is enormous – a market of $3.7 trillion. If the UK moves now we can still get a significant slice of that. But export markets and domestic markets are inextricably linked, and if we want our businesses to thrive abroad, we have to allow them to thrive at home first.
Paul Barwell is CEO of Solar Trade Association
The views expressed in this article are those of the author, not necessarily those of Bright Blue.