by Jerome a Paris
Fri Jan 13th, 2012 at 07:24:48 AM EST
As end-year statistics are beginning to be published, a rather heartening image emerges for the solar industry, slightly different from what a casual observer may have in mind (high subsidies, Chinese imports, bankruptcies left and right):
Germany 2011 solar installations exceed expectations
Due to a surge of demand in December, Germany's 2011 total solar installations reached 7.5GW, exceeding installations in 2010 and expectations. (...) Germany's revised 2011 installations caused many research institutes to change their 2011 global installation estimates from 17GW to 23GW.
Solar surge drives record clean energy investment in 2011
Total new investment in clean energy increased 5% to $260bn in 2011, despite the sluggish global economy and a painful squeeze on manufacturers. (...)
2011 highlights include a 36% surge in total investment in solar technology, to $136.6bn. This was nearly double the $74.9bn investment in wind power, which was down 17% on the previous year. (...)
“The performance of solar is even more remarkable when you consider that the price of photovoltaic modules fell by close to 50% during 2011, and now stands 75% lower than three years ago, in mid-2008."
Further solar power expansion in Germany leads to minimal additional increase in electricity price
The German Solar Industry Association (BSW-Solar) estimates that the share of solar power in the German electricity mix will increase in the next four years by 70 percent, from around four percent in 2012 to approximately seven percent in the year 2016. As a result, according to Prognos AG, electricity prices will increase by nearly two percent. (...)
"The cost controls that the legislator has applied to the support for solar power are working."
In other words, the solar industry, largely driven by Germany (although Italy and China will have installed almost as much new capacity in 2011), is enjoying record investment and massively falling costs. This happened largely on the back of the German support system, designed to be simple, open to all (and in particular to retail investors) and flexible (the support level is adjusted once or twice a year to follow actual costs). That system, by guaranteeing a good level of demand and stable returns for investors made two things possible: (i) cheaper financing for projects and (ii) investment in production capacity in R&D over the medium term, both of which make cost reductions possible.
As a result, solar energy has reached the scale necessary to be a visible part of the system, even though most production is decentralized, and is reaching 'grid parity' at the same time - i.e. it now costs more or less the same for a retail investor in Germany to buy power from the grid or from a solar system. If these trends continue, and there is no reason today to believe it won't be the case, parity with wholesale production costs could be the next target, and again, on a scale that makes a difference.