Solar PV has so far been a niche player in electricity generation, currently meeting around 2% of global electricity demand. And while the industry is rapidly growing, the degree of that growth is still greatly affected by policies.
On Wednesday, the International Renewable Energy Agency (IRENA) released a new report at the Intersolar Europe trade show which looks at multiple aspects of the dramatic growth of solar industry. Letting in the Light forecasts that global solar PV capacity could increase roughly 10-fold from 227 GW today to 1,760-2,500 GW.
Due to an projected 50% increase in electricity demand to 2030, driven by developing economies, this means that according to IRENAs projections solar PV can meet 8-13% of global electricity demand by that date.
The agency cites multiple factors for this prediction. A primary role is given to falling costs for solar PV, noting that electricity from utility-scale PV plants commissioned over the last year typically cost US$0.06-0.10 per kilowatt-hour (kWh) in Europe, China, India, South Africa and the United States.
The report also notes PV contract prices under $0.05 per kWh in Peru and Mexico, and a bid at $0.03/kWh in an auction in the United Arab Emirates, and finds that in many places utility-scale solar is a cheaper alternative than new natural gas or coal-fired electricity generation.
Integrating the high levels of solar PV that IRENA is predicting will not come without challenges. The organization estimates that 10-20% of the solar PV can be integrated into an electricity system without problems, but that higher levels require the need for a higher degree of interconnection, demand-side management, electrification of transport and the building sector, and finally electricity storage.
The question facing policy makers today is not whether the shift to solar PV will happen it has already begun – but how best to manage it, notes the report.
IRENA also stresses the importance of integrated framework to both enhance technology development and boost deployment, which can be seen as a friendly critique of the Mission Innovation program launched at COP21.
Consequently, deployment policies stimulating market pull and business engagement need to go hand-in-hand with technology and innovation policies to support continuous support for research, development and demonstration, reads the report.
IRENA may be understating this point. If anything, the global track record of renewable energy installation shows that deployment policies have been more effective than R&D support. Denmark became the world leader in per-capita wind generation due to the first large-scale policies to stimulate demand in the 1980s, at a time when other nations were focusing on research and development.
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