Solar Photovoltaic installed capacities grew at a CAGR of 49% during 2005-10 significantly higher than that of wind (27%), hydro (3%), etc. 2010 was the bumper year for PV industry as close to 16.6 GW of capacity was added in a single year.
According to estimates the PV cells sales generated revenue of close to USD 80 bn in 2010 up from USD 40 bn in 2009. Based on various estimated, the market is expected to reach close to USD 100 bn by 2014.
Exhibit: PV capacity trend 1996-2010
Source: Renewables 2010, Global Status report
Some of the key drivers for solar PV cells market are:
Overall growth in Solar energy market:
Government subsidies and incentives: As solar energy generation is still expensive than using traditional methods (coal / oil/ gas) to promote its usage, Governments run incentive programs to ensure both customers and investors gain financial returns. Germany and Japan have been aggressive in incentivizing solar energy usage.
- Go Green drive: People across the globe are getting inclined towards green technologies, thus popularity of solar energy is increasing
- Ease of usage of PV cells: PV cells can be easily installed and their capacities can be varied easily as compared to concentrating solar thermal power (CSP). PV is very popular for retail purposes (roof tops / office complexes, etc.).
- Easy maintenance: PV cells are easy to maintain as they have very few moving parts. They can also withstand relatively harsh weather conditions (wind / temperatures, etc.)
- Technology difference: To generate power, PV cells use Global horizontal irradiation (GHI), a type of solar radiation which is more widely available than Direct Normal Irradiance (DNI) which is not available as widely.
Challenges for solar PV cell market:
Low penetration levels except in developed countries: Solar energy has low penetration in developing and poor economies because of associated costs and low inclination towards green technologies
- Sunlight availability: Low availability of sunlight in many parts of world makes usage of the technology relatively unviable for those regions. Also there is always a short term uncertainty associated with access to sun’s radiation (cloud weather, rains, storms, etc.) and thus also with energy generated through it.
- High costs as compared to other energy sources: Cost per unit energy generated through PV cells is higher than conventional methods (coal / gas, etc.). It is also higher than other renewable sources such as wind and biomass.
- Cost competition with CSP: CSP is cost effective vis-à-vis PV cells. Typical energy cost for a 200kW to 100 Mw plant based on PV is 15-30 US cents per kw-hr, while for CSP in the same range is 14-18 cents per kw-hr.
There remain significant opportunities of growth for PV cell market in future. Government incentives, innovative technologies and drive towards a greener earth will provide boost to solar power adoption.