Solar electricity is expected to become competitive with other forms of electricity in an increasing number of markets globally due to declining solar panel and installation costs, according to a new report.
By 2030, solar power will generate $5 trillion in revenue worldwide, a 10-fold increase over today, according to the report from Deutsche Bank (PDF).
Today, unsubsidized rooftop solar electricity costs between $.08 and $0.13 per kilowatt hour of capacity (KWh), or 30% to 40% below the retail price of electricity in many markets globally. This is unsubsidized, meaning there are no government incentives such as tax credits.
In markets heavily dependent on coal for electricity generation, the ratio of coal-based wholesale electricity to solar electricity cost was 7:1 four years ago. This ratio is now less than 2:1 and could approach 1:1 over the next 12 to 18 months, the report stated.
The 185-page report, released last week, predicts 12 gigawatts (GW) of new solar will be installed this year and 16GW next year, which would bring the U.S. total to 50GW of photovoltaic capacity. Anywhere from 20GW to 30GW of that new total will come from distributed generation or rooftop solar versus utility installations.
"Over the next 20 years, we expect nearly 10% of global electricity production to come from solar. Bottom line: we believe the solar industry is going through fundamental change and the opportunity is bigger than it has ever been before," wrote Deutsche Bank analyst Vishal Shah.
Last year, the International Energy Agency (IEA) released a pair of reports that predicted solar would be the world's leading electricity source by 2050.
"By 2017, even the drop in utility installations [being predicted] will be mitigated by the strength in distributed generation," the report, titled "Crossing the Chasm," stated.
On average, solar capacity has grown 30% every year for the past 20 years. Even so, solar power only represents about 1% of the 6,000GW of capacity in the $2 trillion electricity market, the majority of that dominated by coal-fired power plants. In order for solar to produce 100% of the world's energy, the current installed base of solar power would need to increase 120 fold.
Over the next 20 years, the electricity market is expected to double to $4 trillion, and solar power will grow by 10 times. During the next two decades, the solar industry is expected to generate $5 trillion of revenue, and by year 2050, the amount of solar power capacity is expected to grow to represent 30% of all electrical power generated worldwide, the report said.
"The top 10 electricity-producing nations in the world generated over 16,000 terawatt hours (TWh or trillion watts) of electricity in 2013 and it would take roughly 12,000GW of solar to produce the same amount of electricity. Clearly, the total addressable market size is huge," the report stated.
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