- Here is My Take  - August 2016

  5 Reasons why solar will soon become the most reliable and lucrative energy investment 

According to recent publications, and particularly reports froREN21 and UNEP/UF, the Renewable Energy sector has experienced its largest annual increase in capacity ever with nearly $ 286 billion investment in the year of 2015.  Such a milestone is a testimony that the transition to a lower carbon economy highly advocated in the Paris Climate agreement is already on its way and is now unstoppable despite the downfall of fossil fuels prices that would presumably pose more challenges to clean energy deployment. The annual global investment in new RE capacity, especially in solar and wind has doubled the combined investment in coal, oil and gas powered stations. Solar represented $148.3 billion the largest power capacity investment, followed by wind with $ 107 billion. In most developing and emerging economies, solar investment is predominant and solar power is expected for the following reasons to become the most reliable and lucrative investment in the global energy market for the next coming decades. 

1. Solar Technology has reached maturity: 
 The solar energy industry globally has shown an extraordinary growth over the last decade mainly driven by the maturity of solar technologies, their increasing performance and reliability, and cost effectiveness. Right now, there is a variety of solar power generation technologies in the marketplace or underdevelopment, however the most prominent and mature technologies of these remain by far the solar Photovoltaic (PV) technology and the Concentrated Solar Power (CSP). From less than 5% three decades ago, solar cell efficiency has significantly improved over the years with some commercial prototypes reaching now 20%; meanwhile the record of 40% sunlight to electricity efficiency has already been broken in laboratory setting since 2006. Recent published statistics show that solar power capacity from the PV technology now accounts for more than 227 GW worldwide with 50 GW of new capacity added in 2015 alone. Concentrating solar thermal power systems, also known as concentrated solar power (CSP), have also gained momentum in recent years as the technology become highly efficient and cost-effective.

2. Solar Power competitiveness is real The costs of solar power have tremendously dropped in recent years as a result of technological advancement and more resources being directed toward research, development and deployment. These incremental resources have dramatically expanded technological breakthrough and are improving smart-grid integration systems as well as battery storage and monitoring equipments; pulling further down the solar premium costs. Data from a variety of clean tech monitoring agencies such as IRENA, REN21, NREL, USDOE, USEIA and IEA among others have shown a spectacular drop in PV prices in the last decade. According to Bloomberg New Energy Finance, silicon made solar PV prices have plunged from $76 per Watt to $0.30 between 1977 and 2015. Meanwhile the LCOE from solar technologies has been recently estimated for less than USD 0.04/ kWh in some developing countries, far less than the cost of power generation from fossil fuels sources. These plummeting costs are now making solar the most lucrative power generation investment in the global market while fostering a clear shift towards a green economy era.

3. Solar Energy has a strong Political and Societal Support: Over the last decade, there has been a growing awareness worldwide on environmental stewardship, propelled by the green revolution and the emergence of a stronger social opposition to major development projects associated with adverse environmental effects.  Whether it’s through air pollution, water and soil contamination, climate change and global warming, various components of our terrestrial ecosystem have been severely and irreversibly disrupted in the pursuit of economic development by means of traditional approaches. The gravity of the situation and pressing warnings from the scientific community, have led to social forces everywhere across the planet to stand up against environmental degradation and forcefully advocating for sustainable development. On the policy front, governments are widely adopting policies and regulatory mechanisms such as feed-in-policies, net billing tarification, tax incentives, solar subsidies’ programs, carbon policies and to a greater extent tendering to promote their renewable energy agenda. Additionally, coal and nuclear are being phased out in many jurisdictions while a growing number of cities around the globe are setting bold objectives to run on a 100% renewable electricity by 2050.

4. Solar Resource is abundant and widely availableThe average solar radiation over the course of one year arriving at the top of the Earth's atmosphere at any point in time is approximately 1,366 watts per square meter, according to the World Meteorological Organization.  Depending on the Sun angle at different times of the year, scattering processes in the Earth's atmosphere, the cloud cover effect and absorption, the Earth's surface at ground level receives a direct irradiance between 1050-120 W/m2The overall power of solar radiation on Earth is estimated at 180,000 million megawatts, more than 15,000 times the world's present installed power capacity. About 1.9 x 108 TWh per year is absorbed by the land surfaces of the Earth, in comparison to the worldwide energy consumption of 1.3 x 105 TWh per year. Thus, each year, sunlight provides over 1000 times our actual total energy consumption. And, unlike other energy resources such as wind, geothermal, biomass and fossil fuels that are more confined in only some parts of the globe, the solar resource is more equally distributed, abundant and can be harnessed everywhere to provide enough electricity for the world population.

5. Solar Projects now benefit from robust Financing Mechanisms: Following the Paris Climate agreement, world leaders with the support of the private sector have pledged to bring substantial resources to foster clean energy technologies against the prospect of climate change and global warming. In many countries, local authorities are taking bold initiatives for solar financing through government and power utility incentive programs. Those programs, some being funded via carbon regulations, offer subsidies, grants and tax rebates for solar power deployment in the residential, commercial or agriculture sectors as well as the greening of public buildings and infrastructures. Financial institutions such as commercial banks and private equity firms are increasingly facilitating the acquisition of long-term solar loans and investing in large solar projects. We’ve seen in recent years, the private sector in large and billionaire philanthropists come forcefully in support of low carbon initiatives. At the international level, Kyoto mechanisms as well as international development banks’ green programs, and other environmental funds also offer considerable solar project financing opportunities, especially for developing and emerging economies.

Solar power offers one of the most effective solutions in meeting the crucial needs for electricity of a growing worldwide population while cutting on carbon emissions and protecting the environment. With large or small scale applications, solar energy is helping improve the quality of life for billions of people worldwide through a better access to clean water, health care, safe food and education in urban populated cities as well as in rural isolated areas. With solar technological breakthrough in recent years and now thanks to its highly competitiveness and a remarkable support from both government and the private sector, global trends in energy investment clearly suggest that solar energy is leading a new energy era and will likely be the largest, most reliable and lucrative investment in most electricity markets for the next coming decades of this 21st century.   

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