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Global renewable energy market heating up

The global outlook for renewable energy , The Interpreter, 3 March 14, My previous article showed that there has been an unprecedented level of investment in renewable energy over the last decade. Let’s consider the drivers for this in more detail and look to the future.

Policy measures introduced in Europe and North America kick-started the market for wind turbines and solar photovoltaic (PV) cells and helped build what are now multi-billion dollar global industries. More recently, China has taken over as the main destination for investment and has also become a major manufacturer.

Policies are often categorised as either ‘push’ or ‘pull’ measures. The former include incentives such as R&D funding and tax breaks, while the latter provide a price signal for deployment via feed-in tariffs (FITs), for example.

It is unclear how long it would have taken the industry to reach critical mass without such policy measures. In the last two and a half years, the global solar PV industry, for example, jumped from 50 gigawatts (GW) of installed capacity to just over 100 GW, yet it took decades to add the first 50 GW.

As we gain experience with producing wind turbines and solar PV modules more efficiently and at a larger scale, and investors become more comfortable with financing projects, the cost of each unit produced starts to fall.

Raw materials costs also have an important role to play. If we look at PV, the decline in installed system prices is primarily due to falling costs of producing modules, which in recent years has at least partly been driven by the sharp fall in polysilicon prices. Polysilicon prices fell 65% in 2011 and around 40% in 2012, according to a US solar industry publication. Prices are expected to recover in the coming years, however, as demand starts to outstrip supply.

In 2008 to 2012, annual average PV module prices on the global market fell by $2.60/W according to the US Department of Energy , with this accounting for 80% of the overall decline in installed prices. By comparison, the costs of hardware such as inverters and costs associated with customer acquisition and financing have remained flat. These ‘balance of system’ costs are expected to fall further in the coming years.

By 2020, the US is aiming for a total installed cost of $1/W for utility scale PV, $1.25/W for commercial-scale, and $1.50/W for residential installation prices…….http://www.lowyinterpreter.org/post/2014/03/04/Whats-the-global-outlook-for-renewable-energy.aspx

March 4, 2014 - Posted by Christina Macpherson | Uncategorized