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The Solar Photovoltaic, PV, Industry

The recent McKinsey report titled, Solar Power: Darkest before dawn, deals with the Solar Power industry and how this industry grew from a small industry centered in Germany to a $100 billion industry worldwide. At the same time it is noted that the cost of the PV cells has dropped and the installed global capacity has reached the 65GW level!

Indeed the Solar Power industry is growing in many directions and it is now becoming part of every governmental policy in almost all countries of the world. Solar Energy, as a renewable green energy source, enables the nations to reduce their dependency on fossil fuel. There are 5 customer areas that have been identified as the areas which will grow considerably in the next 10-15 years due to the expected increased demand. These areas and segments are the following:

  1. Off-grid areas: The installation of Photovoltaic cells is ideally suited for power needs in areas where there is no access to the power grid. There are many such areas and these are mainly agricultural areas, mining areas or military infrastructure. Electricity in these areas would be needed for agricultural needs such as irrigation, industrial needs and the powering of military camps. These areas are currently powered with conventional diesel generators and these are gradually being replaced with photovoltaic cells. The replacement coincides with low cost financing and other incentive-related schemes provided by the local authorities as part of their Renewable Green policy. In the cases where the diesel generators are not replaced PV cells act as backup sources of electricity.
  2. Residential and commercial retail customers:This customer segment is further sub divided in two sub areas:
  • Sunbelt area with steeply increasing prices at peak demand: Due to the fact that prices increase steeply at peak demand while at the same time companies in these areas need to operate and produce within that time period, the companies have been forced to find alternatives and one such alternative is the production of their own electricity. Given the fact that they operate in the Sunbelt region the use of PV cells is the obvious way out. There are many such examples in the known Sunbelt areas of the USA, like California, Hawaii and Texas, Italy, Spain and India. There are also cases in the Southern hemisphere like Australia and South Africa.
  • Moderate Sun conditions but high electricity prices. These are areas in Europe, USA and Canada. In these areas customers opt for the production of their own electricity from Photovoltaic cells and their number increase as the financing costs of such projects decrease and incentives are provided. Production of electricity from PV cells is one of the many ways to reduce costs and expenses.
  1. Isolated Grids: There are isolated grids in remote villages in the African jungle, in the middle of the desserts or other remote locations in India, Africa and China which now produce their electricity from the use of diesel generators. Use of Photovoltaic cells in some cases replaces the use of such generators while in most cases acts as a complementary or backup source of electricity. The use of PV cells depends on the feasibility of the project and the unit cost of electricity to be produced.
  2. Peak Capacity in Growth markets: In growing markets and economies where new infrastructure is being build the use of Photovoltaic cells is integrated in the design and is planned to cater and cover the peak capacity needs of the power network that is developed. In all cases however the economics of the project are taken into consideration so as to make projects viable and sustainable. This is an important factor in countries which rely on imported liquefied natural gas.
  3. New large-scale Power plants. This area of Photovoltaic Cell installation is expanding in growing and emerging economies such as Brazil, India, Middle East and China where large-scale electricity plants are needed to cover the needs of the expansion. Since the infrastructure that is build is new the cost of solar is compared to coal, natural-gas and nuclear and with the use of the right incentives and low-cost financing the Solar PV power plants become feasible and economically viable.

Almost all the reports about the future of Photovoltaic Cells are optimistic as to the growth of this sector with, the as expected, decrease in the cost of production and installation of the photovoltaic cells with the parallel increase of their efficiency and effectiveness.