As the demand for solar power soars, we’re well into the energy shift.
Bloomberg’s senior renewable energy analyst, Rob Barnett, predicted worldwide solar capacity installations will expand by 30 percent this year and continue to grow at a double-digit rate through 2023 and 2025.
Astonishing is an understatement when it comes to the global solar situation right now. We expect to put in about 250 gigawatts this year in terms of solar capacity.
I understand that many people don’t think of gigawatts, yet that is a tremendous amount of energy.
“It’s more than a couple of European countries have installed.”
The number of solar panels installed in China is expected to treble this year, putting the country on top of the globe in terms of solar capacity.
Across the globe, renewable energy production is at an all-time high. For example, Bloomberg stated that Germany’s record for solar power was broken on July 17 during Europe’s scorching heat wave.
In addition, solar and wind power generation in the United States reached a record high of 28% in April, partly because of these developments.
“There is this tremendous, top-line growth scenario that we see unfolding for all companies engaged in the solar supply chain,” Barnett said of the solar boom, which is just getting started.
In Barnett’s view, investors can use this theme in various ways to their advantage. First Solar and Canadian Solar manufacture the modules you see on rooftops or fields, he explained.
Other firms like SolarEdge or Enphase make the inverters that convert the DC electricity generated by solar panels into AC for the grid.”
Many countries have stuck to their climate commitments, at least on paper, in the face of global catastrophic weather events that show the climate problem is happening now.
Oil and gas costs have risen sharply recently, notably in Europe, complicating the picture.
Earlier this month, the European Union took a step backward by voting to classify natural gas as a green energy source in some cases. However, as natural gas and oil costs have risen, renewables have become more affordable.
When dealing with climate change, “I do believe that there is an increased focus on all sorts of remedies,” Barnett said. “However, I would say that rising energy costs in Europe are the primary driver of demand for renewable energy.”
Solar’s cost-competitiveness has been boosted by the rise in oil prices precipitated by Russia’s invasion of Ukraine. However, the cost of solar has already fallen drastically in recent years.
As efficiency and module costs have fallen, solar prices have fallen much faster than expected, surprising even the experts who forecast a gradual decline. For example, solar modules cost roughly $4.88 per watt in 2000. By 2019, the cost per watt had dropped to $0.38.
This year, IRENA predicted that renewable energy would be the cheapest source of electricity by 2021. According to IRENA’s findings, putting online new coal plants is now cheaper than two-thirds of the renewable energy projects studied.
As a result, even if oil and natural gas costs fall, the demand for solar power will continue to grow.
If traditional gasoline markets were loosened, “it’s entirely feasible that it would take the accelerator off,” Barnett said. In clean energy consumption, though, “I don’t see that as a substantial risk.”
The intermittencies of renewable energy sources like solar mean they aren’t always a “turnkey solution,” but Barnett believes that the economics of such sources are already promising. So, if you’re thinking about the electric grid, you’d need to see a significant shift in gas or coal costs to reverse some of the current patterns. In addition, I don’t think there’s a lot of interest in it.