The business case for solar energy is getting closer
April 20, 2012
Despite the fluctuation in government policies regarding solar energy installations, the market continues to grow. This indicates that the business model for households is now close to break-even. The key reasons for this are:
• Massive Chinese production of solar panels, bringing prices down considerably.
• Significant increases in electricity prices over the last two years, with more price rises expected.
• A strong push from consumers to be ‘independent’ of grid supply in order to have better control over escalating charges/bills.
• The ongoing sentiment from consumers wanting to do their own bit for the environment.
One of the problems cited by the electricity industry is that a large increase in solar panels makes it more difficult for them to manage their network. The electricity grid was never designed to have a large distributed energy generation environment connected to it.
This unstoppable growth of home PV installations has far-reaching consequences for the management of the electricity grid. Solar generation capacity is often misaligned with demand – in relation to location, time of day and season. (This is also true, to a lesser extent, for wind energy). Large-scale distributed energy generation intensifies the need for storage and, while progress is being made, this remains an unsolved challenge within the industry.
Also, due to the destabilising effect the generation of these renewable energy sources has on voltages across the grid we are entering an era where visibility, control and demand/supply balancing need to be improved.
While some argue that only a few percentages of renewable energy will end up coming from solar, others forecast that as much as 30% of energy could come from solar energy by 2030. However to a large extent these arguments are becoming less relevant, as customers are voting with their feet. The sharp increase in competitively priced solar panels shows that customers are becoming more interested – they want to be independent, able to manage their energy costs, and do their bit for the environment. As a result of this the industry will increasingly need to take into account the customer as an energy producer when developing their business strategies for the future.
By Paul Budde
