Return on investment from solar power is higher than from any other renewable energy source, thanks to large-scale technological improvements that are expected to bring down the cost of power generation to $1/W by 2020, according to a new report from SBI Energy. The payback period for a typical PV project has also come down to three to five years, from seven to 10 years.
The report predicts that the cost of solar power production will decrease by half every 10 years, reaching as low as $0.50/W by 2030. Large-scale adoption of PV technology and the emergence of low-cost production sites in China, Taiwan and other Asian markets will further reduce the cost of production in coming years.
Since 2000, cumulative PV installations have grown at a compound annual growth rate of 35%, reaching 40 GW globally in 2010, and the market is estimated to reach 400 GW by 2020. SBI Energy also estimates that the global PV inverters market, currently valued between $5.5 billion and $5.8 billion, will reach $7.5 billion in 2015.
‘During 2011-2012, we expect a short-term lull in the European Union PV market, primarily due to [feed-in-tariff] rate cuts and regulations on farm land usage for ground-mount installations,’ states Arun Kumar, SBI Energy analyst and author of the report. ‘But this will be offset by installations in the high-growth markets of North America and Asia, and China in particular.’
China's market is likely to reach the 1 GW cumulative installation mark this year, according to the report. India and the rest of the Asia Pacific region hold long-term growth potential, with clear government road maps for increasing the share of renewable energy generation to reach 2020 targets.