According to a new analysis from investment bank UBS, within a decade, the use of solar photovoltaic technology could account for 10% of electricity supply globally, beating out coal and nuclear as the “default” for power generation.
UBS, a Swiss-based global bank, projects that global installed solar capacity will more than triple between now and 2025, then triple again between 2025 and 2050. By the mid-century, UBS estimates that nearly 3,000 GW of solar will be installed worldwide.
Investments in solar could amount to more than $3 trillion over the next three and a half decades, the bank said. While many see the rise in distributed solar hurting utilities as they lose control of rooftop solar customers, UBS (and others) believe most solar projects will continue to be utility-scale because they are more cost-effective, making solar similar to the wind business, as Stephen Lacey’s post for Greentech Solar concluded.
During 2013, some 80% of the projects developed in the US and Europe combined were either utility-scale or utility-like, Lacey wrote. Therefore, as solar resources are highly decentralized in distribution, utilities could still maintain its market share.
Finally, as other analysts have concluded, complementing solar with storage will cause very few grid defections, as backup will come more economically from the grid. Although current solar storage technology has achieved economic feasibility, solar photovoltaic cells can only operate in the daytime, and storage technology is limited by the frequency of charging and discharging. Therefore, consumers will still need to rely on the grid for the time being.
What are the expenses of these solar resources? As UBS analysts estimate, related subsidies in the global PV industry will reach $70 billion by 2025, which is just a fraction of the global electricity consumption.
Despite this massive figure of $70 billion, the world’s total annual payment for electricity is 5.6 trillion euros, accounting for just 6% of global GDP growth. The annual subsidies of 70 billion euros in the solar field only contributes to about 1% of the total electricity consumption.
As highly efficient power plants with new technologies and new energy gradually replace the traditional power plants, renewable energy subsidies will be also be gradually reduced in the next few years. According to UBS’s analysis, in the next 10 years, the cost of generating electricity in solar photovoltaic projects will reach an average of 6 cents / kWh, which means that the solar field “no longer needs subsidies”.
UBS reminds investors to be concerned about the rapid rise of the solar photovoltaic and storage battery industry.
They conclude: “We believe that the financial industry, along with many industry experts, have seriously underestimated the continually declining costs and growth potential in global solar industries. Current global policies and the open market of the solar industry definitely deserves more attention.”
“UBS: Solar to Ultimately Replace Nuclear and Coal.” Of Week. Of Week, 12 June 2015. Web. 1 July 2015