05, March 2016: INDUSTRY OVERVIEW With the continued volatility of oil prices and the fact that the average citizen has become more aware of their environment, there has been a strong push for the development of renewable energy. The push for clean energy will benefit solar companies as demand increases for solar and other renewable. The need for companies to appear eco-friendly has resulted in large scale ad campaigns from energy giants like BP and General Electric, highlighting their investments in renewable sources of energy. Not only are the energy giants investing more in renewable energy, but the rising cost of natural gas and oil have forced electric prices higher and made “eco-friendly” energy sources such as solar, an economic alternative. Demand for solar energy has grown at 30% per annum over the past 15 years. In 2009, photovoltaic (PV) installations grew by 20 percent, compared to 2008, with over 7.3GW of PV installations globally. Revenues in 2009 for the PV industry also increased, reaching $38.5 billion.
With the expansion of the industry and increased investment, PV solar energy has made great strides in the last five years as panels have become more efficient and costs of production have decreased. According to the Department of Energy’s Solar America Initiative, they hope that with continued research and more companies entering the market, PV solar power will become a competitive source of commercial electricity by 2015. PV prices have declined by 4% per annum over the past fifteen years, due to improved conversion efficiencies and declines in manufacturing costs.
For investors in solar, the Holy Grail is using solar power for on-grid electricity generation– i.e., solar as a replacement for the coal, natural gas, and nuclear energy that typically provide electricity in the developed world. While other applications of solar energy, especially off-grid electricity application (e.g., for remote residential consumers or industrial consumers) or for consumer electronics, have been cost competitive for many years, only recently have the economics of on-grid solar energy become attractive enough to warrant commercial consideration.
The appeal of solar energy is obvious. It is a virtually limitless resource. It’s free of greenhouse gas emissions, widely thought to contribute to global climate change. In developed countries using lots of air conditioners, it generates more electricity exactly when you need it– at times of peak electricity usage (e.g, you run your air conditioners more during the hottest, sunniest days of the summer time). Once installed, solar systems can function for 30 or more years with little maintenance or oversight. Solar comes with limitations, however, most notably the poor efficiency of PV modules, which is further reduced by the need to convert DC from solar cells into AC current. Moreover, solar is weather dependent and intermittent, requiring storage or back-up systems to supplement during times of weak generation.
Historically, and for the foreseeable future, solar power represents a tiny fraction of total global electricity generation and energy demand (less than 1%). However, growth has been rapid, and governments around the world have also encouraged solar energy through tax incentives. In 2009 Europe accounted for 5.60GW, 77% of global demand. German, Italy and the Czech Republic accounted for 4.07 GW as a group. Germany is the largest market in the world, followed by Italy.