Although the US has recently clashed with China and introduced tariffs for solar panel companies such as Suntech Power and Trina Solar, the industry continues to expand at an ever increasing rate and news has emerged that the cost of energy generation from solar power is falling so quickly that it could be cheaper than power generated from traditional fossil fuels by 2017.
A new report from GlobalData called ‘Grid Parity for Wind and Solar Power – Future Outlook and Impact Analysis’ provides a detailed look at the current and future wind and solar power markets. Between 2009 and 2011, the global solar photovoltaic capacity increased by 100% and is expected to grow even further as both the US and China reach grid parity within the next few years.
In the US, some solar photovoltaic projects will reach grid parity by 2014 with most regions in the country expected to reach grid parity in alignment with average electricity prices in the residential sector by 2017. China is close behind and is set to reach grid parity for solar photovoltaic projects in most regions by 2015 or 2016.
The most important aspect of the report is the Levelized Cost Of Electricity (LCOE) which is the price at which electricity must be generated from a specific source to account for the cost of the energy generating system. Declining capital costs and the increasing capacity will cause the LCOE for solar photovoltaics to continue to decrease. This, combined with low operations and maintenance costs as well as no fuel costs, will mean that the LCOE for solar photovoltaics is expected to be lower than the average retail electricity prices by 2017.
As fossil fuel costs continue to rise, solar power is becoming increasingly important as a major source of renewable energy worldwide and it now accounts for around 14% of the global renewable capacity. Over the past five years, it has had a Compound Annual Growth Rate (CAGR) of 56.4% and is now the fastest growing renewable power source in the world. In 2008 and 2009, the installed capacity of solar power grew by 14.8 gigawatts, but this increased dramatically during 2010 and 2011 to 44.3 gigawatts.
Newly emerging markets such as China and India have announced ambitious targets for the development of solar power capacity within each country and are expected to overtake Europe as the largest market in the near future. With a CAGR of 20.2% over the next decade, the global installed capacity of solar power will reach 362,842 megawatts by 2020.