Solar photovoltaics (PV) have been growing exponentially since 2007, doubling in capacity every two years. This means that annual installation rates have mushroomed from less than 4GW in 2007 to 42GW in 2014 – a more than ten-fold increase in just seven years.
This impressive rate of growth can be expected to continue as installation costs continue to fall. The costs of solar PV projects have tumbled over the past few years, halving between 2010 and 2014, as manufacturers and installers have scaled up and innovated in response to surging demand triggered by government policies in Germany and China. Some new utility-scale solar PV projects are now at grid-parity with fossil fuels without the need for subsidies; the lowest prices for solar power in the US are $0.08 per kWh, and similar new installations in the Middle East are expected to produce electricity at $0.06 per kWh. These are well within the range of $0.05 – $0.14 per kWh required for grid parity.
Deutsche Bank expects that solar PV will be at grid parity in 80% of the world by the end of 2017. Even the recent steep fall in the oil price since mid-2014 is considered unlikely to derail the continuing growth of solar PV.
Image credit: Activ Solar/Flickr
Strong growth in solar PV coupled with still-falling installation costs points to a potential system-level change in global energy systems over the next decade.
Exponential growth is difficult for humans to perceive properly as its effects are counter-intuitive; this means that the large near-term potential of solar PV has consistently been unrecognised and underestimated. For example, past projections by the International Energy Agency have persistently underestimated the growth in solar PV over the last decade, often by as much as a factor of ten.
Assuming that manufacturing can keep pace, it is possible that annual installation rates of new solar PV could reach 200 GW by 2025 or even 2020 (i.e. over 50% of new net capacity from all sources). And if those installation rates are then maintained for a further decade, solar PV could potentially represent a quarter of total global electricity generation capacity by 2035. Some experts go further than this- Ray Kurzweil, a well-known futurist who accurately predicted the growth of the internet, believes that solar PV benefits from the exponential nature of technology in the same way that computer processing power does. He expects solar PV to provide the majority of global power by 2030, due to tumbling costs and rapid innovation in the technology. Such a rapid shift would be both highly enabling and highly disruptive – again, the growth of the internet provides a useful analogy here.
The International Energy Agency (IEA) has a more conservative prediction that all solar power (PV and thermal) could generate a quarter of global electricity by 2050 – this may be useful as a lower bound due to the IEA’s previous track record in this area.