The cost of energy generation from clean sources such as solar power is edging ever closer to costs attributed to traditional sources, fostering growth in the renewable energy sector, according to a new report from GlobalData.
The report shows that the global cumulative installed solar PV capacity increase of 100% demonstrated during 2009-2011 is likely to grow even further, as mass power consumers China and the U.S. reach grid parity within the next few years.
In the U.S, solar PV technology is expected to reach grid parity for some PV projects in 2014, GlobalData says. By 2017, most regions in the country are expected to reach grid parity in alignment with average electricity prices in the residential sector.
China is also due to witness similar developments, with grid parity for solar expected to reach in most regions by 2015 to 2016.
The levelized cost of electricity (LCOE) for solar PV will continue to decrease due to declining capital costs and an increasing capacity factor. These trends, combined with a lack of fuel costs and low operations and maintenance costs mean that the LCOE of solar PV technology is expected to be lower than average retail electricity prices from 2017 onwards.
Solar PV is also the fastest growing renewable power source in the world, having grown at a compound annual growth rate (CAGR) of 56.4% over the past five years, the report adds. The global solar PV market witnessed high growth in 2010 and 2011, with 44.3 GW of installed capacity coming online in these two years, in contrast to the 14.8 GW installed during 2008 and 2009.
Europe is currently the largest market for solar PV, but it is expected to lose its market share to newly emerging markets such as India and China. These countries have announced ambitious PV targets and are seen as the next hotbeds for PV investment, cushioned by favorable policy frameworks for the development of the renewable energy market.
The global solar PV installed capacity will continue to grow at a CAGR of 20.2% 2011-2020, to reach 362,842 MW by 2020, the report predicts.