Solar Energy Costs and Economic Impact

According to a global price survey, solar energy prices have declined an average of 4% per year for the past 10 to 15 years. There is a progressive increase in conversion efficiencies of cells, and manufacturing economies of scale are the underlying drivers of this price decrease. The Solarbuzz Global Price survey clearly indicates that prices have consistently declined for over the last two years.

A detailed analysis of the worldwide photovoltaic market is present in on the the leading industry reports, the Market Buzz 2009. A residential solar energy system typically costs about $8-10 per Watt in 2009. When government incentive programs exist, and coupled with with lower prices secured through volume purchases, installed costs for solar panels can become as low as $3-4 watt - or some 10-12 cents per kilowatt hour can be achieved. Without incentive programs, solar energy costs range between 22-40 cents/kWh for very large PV systems.

Another system being used for large power stations is the concentrating solar power (CSP) technology, this is a large array of mirrors or lenses that are focused to either produce heat, or directed towards PV systems. These are built at a cost of $2-$4 per Watt. Some estimate that these types of solar arrays can produce 25% of the world's energy needs by 2050. It is expected that the cost of CSP can become as low as 6-7 cents per kwH, as low as conventional energy production. The CSP industry is growing quickly in Spain and the United States, and the SEPA is tracking over 5,000 MW of new project announcements that are slated for development until 2015. Not all of them will be built; permitting, financing, technology and other factors need to fall into place first but the industry is poised for rapid growth regardless of any individual project's outcome.

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Solar energy already has a tremendous effect on the world economy. Domestically, the US market for PV is expected to be around $27 billion dollars by 2020 according to the Department of Energy, and directly and indirectly create 150,000 new jobs. Practically speaking, solar energy also allows countries without a grid infrastructure to power isolated areas, and individuals to power their own home independently, constantly receiving a free source of energy from the sun. Even in the U.S., distributed transmission lines and independence of energy sources is becoming more critical due to aging infrastructure and local emission restrictions. As an example of energy independence, Hawaii's Mauna Lani Bay Hotel's installed PV cells on its large rooftop. These generate 75 kW of energy and this solar panel array is expected to pay itself off in 5 years.

Solar power is not subject to political risk, and it is impossible for it to be blocked. Solar panels can also be placed on non-arable land, such as that present in New Mexico, the California Desert, and Arizona. This can also be considered in other countries, like Pakistan, India, China, and even the Saharan Desert in Africa. It is calculated (from a Rice University whitepaper) that it would take 25000 square kilometers of solar panels to produce all of the U.S. Electricity needs for one year, and there is definitely this amount of land available in the United States. In fact, more land is being used to grow ethanol currently. I expect that within 30 years, solar power will become the dominant energy source in much of the developing world and the United States.

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By Davino Greeno
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1 comment:

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