Solar PV – deployed in Europe for over two decades – can hardly be called a new technology. However, in recent years we have seen the rapid adoption of solar PV throughout America and Asia – particularly in India, China and SEA. Solar is currently seen as a complementary source of power when compared to other renewable energy sources such as wind or thermal. However, in regions with favorable meteorological conditions and sunshine hours, solar is able to produce relatively higher levels of electricity than other renewable sources. Additionally, solar PV is stable, easily deployed and a predictable source of power that has experienced rapid reductions in the levelised cost of electricity – over 50% since 2011.
Solar power represents a mere 1% of total global power generation – a minute figure when compared to coal power generation at over 42%. Nevertheless, this situation is expected to change. Increased uptake over the next 20 years is likely due to the outcome of COP21 in late 2015. Global governments are committed to the development of renewable energy as means of lowering their carbon emissions and developing sustainable, self-reliant energy infrastructure. Global investment in renewables over the next 20 year period is expected to exceed $6 trillion with Asia accounting for 48% of this expenditure. The uptake in solar power investment will likely be boosted through attractive feed in tariff rates (“FiT”), risk mitigated power purchase agreements and priority dispatch requirements for renewable power.
Fueled by sustained growth in population and GDP per capita, both China and India will be predominant forces in Asia’s renewable spending (approx. 60% and 20% respectively) and over 40% globally by 2035. Recent legislation and policies within both these countries are expected to mitigate many of the potential bottlenecks facing the rapid adoption of solar PV – e.g. India’s recent government financial aid package to alleviate heavy debts of electricity distributors, therefore facilitating their ability to purchase generated solar power. This will likely be a key enabler for incremental solar investments due to sustainable uptake in FiT programs. However, growth in solar power generation will not come without challenges. As power generation increases, so does the challenge of sufficient grid infrastructure to cope with capacity and also the issues associated with peak loading and storage. Despite these issues, DW believes that ongoing initiatives towards tackling connectivity challenges coupled with sustainable investments by large growing economies will mitigate this risk and support substantially increased demand for solar PV to 2035.
Calvin Ling, Douglas-Westwood Singapore
+65 6635 2008 or [email protected]