Solar photovoltaic systems become more affordable with each passing year, and large-scale installations are already being deployed for less than 1 USD per watt. As you might expect, the kilowatt-hour prices of solar systems have dropped accordingly, and contracts have already been signed for less than 0.02 USD per kWh in many parts of the world. This trend will continue in the near future according to industry experts, driving new solar installations in all market segments: residential, commercial, industrial and utility.
According to the latest predictions in a global report by Wood Mackenzie Power & Renewables, a leading research and consulting firm, the world will have more than one trillion watts of solar power capacity by the year 2023.
Electricity prices will continue to drop along with the growth of solar power capacity, and contracts below 1.4 cents per kWh are very likely by then. Contracts with kWh prices lower than 2 cents per kWh are surprising today, but that will be the median price by 2022 according to the WoodMac report.
Asia will continue to be a major market for solar power in upcoming years: 20% of the global market will be concentrated in China, India and Japan by 2023. Activity in the solar industry will be particularly high before 2020, where half of all photovoltaic solar installations will be deployed in China and Japan.
North America and Europe will continue to represent a large portion of the global solar market by 2023, adding up 23% of the total share. Significant growth is expected in the Middle East, jumping from 3% to 9% of the market, and Latin America will account for 7% by 2023.
In Latin America, Mexico has assumed a leadership role in the solar industry in recent years. The latest energy auctions have resulted in some of the lowest solar power costs ever recorded, and the resulting photovoltaic installations that are among the largest in the region.
A common but erroneous argument against solar power is that it depends on government help to be a viable business. That was true one decade ago, when solar systems were much more expensive, but modern installations can beat the electricity price of fossil fuels without subsidies.
Solar incentives such as Renewable Energy Certificates (REC) in Australia make solar power a much more attractive investment. However, the business case remains favorable even if you remove them from the project’s financial analysis.
More investors are being drawn to solar power after recognising the global potential of photovoltaic technology. Solar panels are very durable, requiring less maintenance than conventional generation systems, and they also use an input that is free and guaranteed to be available – sunlight. In Australia, there have already been cases where renewable sources with energy storage are more cost-effective than restoring a coal power plant near the end of its service life.