The Rise and Rise of Utility-Scale Solar Power
BY PHILIP WOLFE, author of Solar Photovoltaic Projects in the Mainstream Power Market
Solar power has long been seen as a small-scale, expensive and marginal contributor to the world’s electricity supplies. Many might therefore be surprised that utility-scale solar capacity grew by almost 60% in 2012 to over 9,000 megawatts, posting a third consecutive year of record growth (1). This was achieved despite declining subsidies in the major markets, and the recent – probably temporary – weakness in traditional energy costs.
So why has solar power become the fastest-growing energy source, not only for rooftop systems but also mainstream power supply? The main reason is dramatic continuing reduction in costs, which have fallen by half in less than two years.
The long-term trend in the price of traditional energy sources like oil and gas, conversely, is remorselessly upwards. This leads to a crossover – known in the industry as ‘grid parity’ – where solar power costs become cheaper than fossil fuels. Grid parity is much closer than most people realize; it is projected to roll across Europe over the next six years, and it has probably already been reached in locations with good sunlight levels and high energy costs.
The transition from a subsidised to a financially-driven market is broadening the geographic take-up of mainstream solar generation. Europe’s share of global new capacity fell to 50% for the first time in 2012. It is likely to be much lower in 2013, with several massive solar power stations of 300 to 800MW being built in the South-Western United States. Growth in Asia is also dynamic, particularly in India and China, and take-up is accelerating in South America and Africa.
The smart money is already anticipating the viability of utility-scale solar generation. Warren Buffett’s MidAmerican Energy made several acquisitions in the sector in 2012, ending the year as the world’s seventh largest owner of utility-scale solar power stations. Its project pipeline could take it to number one by 2015, based on developments announced to date.
The traditional utilities, by contrast, have mostly been slow entrants to the solar power sector. Only in France and Japan do they control 50% or more of this capacity. About 15% of US and Canadian solar stations are held by utilities, and the percentage in other countries is no more than 5%. This may change once they realize the contribution that solar generation is likely to make. I talked last year to a senior manager at one of California’s largest utilities, who was initially unfamiliar with the term ‘grid parity’. Having explained their reverse auction mechanism for buying both green and traditional ‘brown’ power, he noted with some surprise that solar power was now oftentimes offered at prices not dissimilar to fossil-fueled electricity. “That’s grid parity” I told him.
Solar power has a unique ability to continue down the cost learning curve. The main constituents of solar power plants are the solar cells which convert light into electricity. Like other semiconductors these get ever cheaper as production volumes increase, with a so-called ‘progress ratio’ of 82% – in other words the cost reduces by 82% for every two-fold increase in the cumulative installed capacity.
Combine this with an almost universal fuel source – daylight – and a benign environmental impact and it seems inevitable that solar energy will become the world’s dominant energy source within our lifetime.
Develop large-scale solar photovoltaic projects with this book, to feed power into a grid.
Contains case studies of the Waldpolenz Energy Park, Germany, Lopburi Solar Plant in Thailand and what will be the world’s largest PV plant, the Topaz Solar Farm in California. Also included are interviews...
Published October 21st 2012 by Routledge
(1) 2012 utility-scale (stations of 10MW and over) solar statistics available at www.wiki-solar.org/country.html