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Within 15 years, solar will be a dominant energy source

Lucas Mearian | March 10, 2015
In just two years, solar will reach price parity in nearly all U.S. states with traditional electrical generation.

Solar capacity is expected to grow more rapidly in developing economies than in established ones. For example, China and India both expect to deploy an additional 100GW of solar power capacity by 2022, though specifics for how either country will do so are uncertain.

Today's current installed generating capacity in India is about 280GW; that figure is estimated to reach 800GW by 2035, according to Shah.

"Assuming installed generating capacity reaches 400GW by the 2022 timeframe, solar penetration would reach 25% of total capacity and nearly 60% of new installed capacity would be from [the] solar sector," Shah wrote.

In many U.S. states, the cost to purchase solar power is on par with traditionally generated power. Even before adding in government subsidies such as tax credits, solar is currently competitive in more than 14 U.S. states, Deutsche stated.

By the end of next year, about 47 states (including Washington DC) will be at grid parity, Deutsche predicted.

One of the factors spurring growth is the expiration of the federal government's solar investment tax credit (ITC). That measure, passed in 2008, offered a 30% tax credit for residential and business installations. When it expires in 2016, the tax credit will drop to a more permanent 10%.

"Therefore, we expect a significant rush particularly in the residential segment, as large installers rush to complete as many installations as possible while the economics are best," the report stated.

The cost of small (less than 20KW of capacity) distributed generation systems, such as those on residential rooftops, generally ranges from $2.50 to $4.00 per kilowatt hour of capacity.

"We see solar becoming increasingly mainstream as it passes cost competitiveness with traditional forms of generation," Shah wrote. "While we will likely see some utilities fight at every step of the way (because it threatens their business model), we expect system economics will ultimately win in the longer run."

 

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