Solar Energy Outlook - Extremely Sunny

By Robyn Griggs Lawrence

Tags: solar energy, General Electric, Solarbuzz, Solar Today, Bloomberg, solar power prices, solar industry, Robyn Griggs Lawrence

With more than 100 megawatts of solar power on order, General Electric today announced that it would build a $600 million thin-film solar panel factory—the largest in the United States. The announcement is part of a string of good news surrounding solar energy this week, including a report that solar is the nation’s fastest growing industry and a Solarbuzz prediction that solar photovoltaics (PV) would continue to be one of the most promising growth markets.

According to the Solarbuzz United States Deal Tracker report, the PV project order backlog for the United States market has now soared past 12 gigawatts. The U.S. market doubled in size in 2010 and is forecast to do so again in 2011, reports Solarbuzz, a market research business focused on photovoltaic industries.

Yesterday at the Bloomberg New Energy Finance Summit, industry analysts and executives predicted that solar panel installations would surge in the next two years as prices become competitive with coal, Ehren Goossens reports. Bloomberg estimates that large photovoltaic projects will cost $1.45 a watt to build—half the current price—by 2020. By 2013, Solar PV installations will almost double, to 32.6 gigawatts from 18.6 gigawatts last year, New Energy Finance estimates. Manufacturing capacity worldwide has almost quadrupled since 2008, to 27.5 gigawatts, and 12 gigawatts will be added this year.

In the final quarter of last year, electricity from coal cost about 7 cents a kilowatt hour compared with 6 cents for natural gas and 22.3 cents for solar photovoltaic energy, according to New Energy Finance estimates. Rooftop solar installation prices are expected to continue dropping by about 5 to 8 percent a year.

“We are already in this phase change and are very close to grid parity,” Canadian Solar chief executive officer Shawn Qu told Bloomberg. “In many markets, solar is already competitive with peak electricity prices, such as in California and Japan.”

Solar Today deputy editor Seth Masia writes that “the hole in the Japanese power grid” left by the nuclear disaster there will lead to strong demand for all forms of distributed power, from mobile generators to PV arrays. “In the rush to rebuild, distributed PV should turn out to be the low-cost alternative to imported natural gas,” Masia predicts. “If that's the case, Japanese demand for modules, domestic and imported, will spike.”

Roberta Gamble, director for energy markets at the research firm Frost & Sullivan, told Masia that she expects Japan to introduce more aggressive distributed-energy incentives with a local-content requirement. Given Japan's strength in research and development, she said, "we may see improvements in efficiency that will benefit the worldwide market.”