Solar Power

Quick Facts

Solar power currently accounts for less than 1 percent of electricity production in the United States. In 2005, solar, geothermal, wind, and biomass together accounted for just over 2 percent of global electricity generation.
Total global solar energy production grew at a rate of over 40 percent a year from 2001 to 2005; grid-connected solar photovoltaic capacity grew 60 percent per year for much of this time.
The approximate levelized cost of electricity¹ from a new silicon PV installation is about 20-28 cents per kilowatt-hour (kWh) including federal tax incentives.² These costs, however, are highly dependent on a number of assumptions and are very sensitive to the inclusion of various tax incentives for solar power.

Background

Solar power harnesses the sun’s energy to produce electricity. Solar energy resources are massive and widespread, and they can be harnessed anywhere that receives sunlight. The amount of solar radiation, also known as insolation, reaching the earth’s surface every hour is equal to all the energy currently consumed by all human activities annually.³ A number of factors, including geographic location, time of day, and current weather conditions, all affect the amount of energy that can be harnessed for electricity production or heating purposes (see Figure 1).

Figure 1: Average Daily Solar Resource for South-facing PV Panels with Latitude Tilt

Source: National Renewable Energy Laboratory (NREL), "PV Solar Radiation (Flat Plate, Facing South, Latitude Tilt)-Static Maps." From Dynamic Maps, GIS data, and Analysis Tools, accessed 5 March 2009.
Note: This map shows annual average daily total solar resources. The insolation values represent the resource available to a photovoltaic panel oriented and tilted to maximize capture of solar energy. This map displays an annual average; maps for individual months reflect the seasonal variation associated with solar energy.

Although solar energy is abundantly available, it is also variable and intermittent. Solar power cannot generate electricity at night, and it is less effective in overcast or cloudy conditions.

The two most frequently discussed solar technologies for electricity are solar photovoltaics (PV), which use semiconductor materials to convert sunlight into electricity, and concentrating solar power (CSP), which concentrates sunlight on a fluid to produce steam and drive a turbine to produce electricity. Solar PV currently accounts for about twice as much installed capacity as CSP.⁴ Both solar PV and CSP are expensive relative to other forms of electricity generation, but technological improvements have helped bring these costs down in recent years.

Description

Solar power uses the sun’s energy to produce electricity. A number of solar technologies are currently available or under development, including:

Solar photovoltaic (PV)
Solar PV is the most familiar solar technology. Photovoltaics use semiconductor materials—most frequently silicon—to convert sunlight directly into electricity. PV installations can vary substantially in size and application. The modular nature of solar PV makes it well-suited for distributed generation (small-scale installations close to where the electricity will be used, such as on the roof of a house); PV can also be used for utility-scale power plants.
- Silicon-wafer photovoltaics
  In 2008, approximately 90 percent of installed solar capacity employed silicon-wafer-based PV systems.⁵ PV modules are produced by slicing silicon ingots into wafers which are then electrically connected and packaged into modules that can then be assembled into arrays. Today’s silicon-based modules have a conversion efficiency of about 12-15 percent (meaning they convert up to 15 percent of the energy they receive from the sun into electricity), though these efficiencies are improving.
- Thin-film photovoltaics
  Thin-film technologies use very thin layers (only a few microns) of semiconductor material to make PV cells. Thin-film PV is less efficient at converting light into electricity than traditional PV and thus needs more surface area to produce a given amount of power. However, thin-film PV requires significantly less material to manufacture (approximately 5 percent of the material required to make a traditional PV cell) and can be integrated into buildings or consumer products. Processed silicon is an expensive material, so the use of lower-grade silicon, or even non-silicon materials such as CIGS (copper-indium-gallium-diselenide) and CdTe (cadmium telluride), promises lower manufacturing costs for these and other next-generation PV via the use of less expensive materials or reductions in the amount of material needed for PV cells. Though it comprises a relatively small share of the solar PV market today, the use of thin-film is expected to grow significantly over the next decade.⁶
- Next-generation photovoltaics
  Researchers are developing next-generation PV materials as well as new methods for producing photovoltaics. Concentrating PV—using lenses or mirrors to concentrate sunlight onto special PV materials—may prove to be a lower-cost solar energy option. Nano-scale materials, such as carbon nanotubes, could also yield breakthrough applications for PV materials. Others believe they can achieve low-cost solar electricity via the use of organic materials, bioengineering, and streamlined manufacturing processes.
Concentrated solar power (CSP)
Unlike PV, which converts sunlight directly into electricity, CSP uses the sun’s thermal energy to produce electricity. CSP is a utility-scale application of solar power that uses arrays of mirrors to focus sunlight on a fluid and produce steam to power an electricity-generating turbine. CSP systems require a significant amount of area and ideal solar conditions.

Environmental Benefit/Emission Reduction Potential

Electricity produced using solar energy emits no greenhouse gases or other pollutants.

As with any electricity-generating resource, the production of the PV systems themselves requires energy that may come from sources that emit greenhouse gases and other pollutants. Since solar PV systems have no emissions once in operation, based on current technologies, an average traditional PV system will need to operate for four years to recover the energy and emissions associated with its production; a thin-film system currently requires three years. Technological improvements are anticipated to bring these timeframes down to one or two years. A residential PV system that can meet half of average household electricity needs is estimated to avoid 100 tons of carbon dioxide (CO₂) over its lifetime.⁷

One estimate of growth in global solar PV installations suggests that between 200 and 400 gigawatts (GW) of total capacity may be installed by 2020, up from about 10 GW today.⁸ This represents 1.5 to 3 percent of total projected global electricity output, but approximately 10 to 20 percent of annual new power capacity over that period. This level of installed solar capacity could reduce CO₂ emissions from the electricity sector by between 125 and 250 million metric tons (0.3 to 0.6 percent of estimated business-as-usual global emissions in 2020).⁹

Cost

The cost of solar power has fallen substantially over the last few decades. A study of over 75 percent of grid-connected solar PV systems in the United States shows that, in real 2007 dollars per installed watt, the average cost of these systems declined from $10.50 dollars per watt in 1998 to $7.60 per watt in 2007.¹⁰ When the technology was first developed in the 1950s, solar PV cells cost $300 per watt.¹¹

In addition, PV manufacturing and installation costs have fallen by about 20 percent with every doubling of installed capacity.¹² Though these represent substantial cost improvements, solar power is still expensive relative to other forms of electricity generation. Recent analyses calculate the approximate levelized cost of electricity¹³ from a new silicon PV system at about 20-28 cents per kWh. These costs, however, are very dependent on a number of assumptions and are highly sensitive to the inclusion of various tax incentives for solar power, especially the Federal Investment Tax Credit.

Some analyses indicate that by 2020, solar PV power in regions with particularly suitable conditions (such as California) and relatively high electricity costs will have achieved grid parity (the point at which solar electricity is cost-competitive with electricity produced using conventional sources on the power grid) without tax and other incentives. The International Energy Agency estimates that solar PV generation costs could fall to 5 cents per kWh by 2050, assuming significant and sustained investments in R&D and incentives for deployment.¹⁵

Levelized electricity generation costs for new CSP plants are estimated to be approximately 14-19 cents per kWh.¹⁶ These costs may be higher or lower depending on a given project’s specifics.

Current Status of Solar Power

Photovoltaics
In the United States, solar energy provided less than 1 percent of total net electricity generation in 2007.¹⁷ Installations of solar power appear to be increasing quickly. For example, industry analysts at SolarBuzz estimate that 220 megawatts (MW) of PV systems were installed in the United States in 2007,¹⁸ which implies U.S. expenditures on new solar installations of around $1.8 billion to $2.4 billion for that year. The U.S. Department of Energy’s 2009 preliminary forecasts anticipate an annual growth rate in U.S. domestic solar PV generation of 21.3 percent through 2030, but other analysts anticipate substantially higher growth rates.¹⁹

Globally, solar energy currently accounts for only a small fraction of total commercial energy production (less than 1 percent).²⁰ Global installed solar PV capacity is currently about 10 GW and projected to grow to somewhere between 200 and 400 GW by 2020.²¹ From 2001 to 2005, total solar energy production grew at a rate of over 40 percent per year, with grid-connected solar PV capacity growing at 60 percent per year for much of that time.²²
Concentrated solar power
As of mid-2008, total global installed CSP capacity was approximately 431 MW, with the potential for an additional 7,000 MW to be installed by 2012.²³

Obstacles to Further Development or Deployment of Solar Power

Cost
Solar power remains expensive relative to electricity produced using traditional fossil fuel generation sources as well as certain renewable energy sources like wind. In recent years there has also been a lack of input materials (notably processed silicon) for the manufacturing of photovoltaics, though these shortages are expected to ease in the near future. Lack of materials may also place constraints on the manufacturing of some advanced, next-generation photovoltaics.
Intermittency
Solar power is constrained by intermittency issues (it is variable due to weather factors and the fact that daylight hours are limited) and the uneven geographic distribution of solar resources. To achieve its full potential, solar power will rely on advanced variety of enabling technologies such as demand response and improvements in energy storage. Energy storage technologies would allow electricity generated during peak production hours (i.e., on bright, sunny days) to be stored for use during periods of lower or no generation.
Transmission
Solar power, specifically utility-scale PV and CSP, is also held back by a lack of transmission infrastructure (necessary to access solar resources in remote areas, such as deserts, and transport the electricity generated to end users). However, solar technologies offer a number of opportunities for “on-site” or “distributed generation” applications in which energy is produced at the point of consumption, including rooftop PV arrays and building-integrated photovoltaic (BIPV) systems. Such systems can make solar power more cost competitive by avoiding costs associated with transmission and distribution.

Policy Options to Help Promote Solar Power

Price on carbon
A price on carbon, such as that which would exist under a greenhouse gas cap-and-trade program, would raise the cost of coal and natural gas power, making solar more cost competitive in more parts of the country, especially as technological advancements continue to bring down the cost of solar power.
Renewable portfolio standards
A renewable portfolio standard (sometimes called a renewable or alternative energy standard) requires that a certain percentage or absolute amount of a utility’s power plant capacity or generation (or sales) come from renewable sources by a given date. As of May 2009, 29 U.S. states and the District of Columbia had adopted a mandatory RPS and an additional five states had set renewable energy goals. Renewable portfolio standards encourage investment in new renewable generation and can guarantee a market for this generation. States and jurisdictions can further encourage investment in specific resources, such as solar power, by including a carve-out or set-aside in an RPS, as is the case in Delaware, Colorado, Maryland, Nevada, New Jersey, and Pennsylvania (all of which mandate that a given percentage of their renewable energy requirements be met through new solar generation).
Development of new transmission infrastructure
One of the greatest barriers to investment in new renewable generation and tapping the full potential of renewable resources, such as utility-scale solar power (using either PV or CSP systems), is the lack of necessary electricity transmission infrastructure. While estimated solar resources are vast, frequently the areas with the most ideal conditions for utility-scale solar electricity generation are remote and far removed from end-users of electricity. In particular, the U.S. Southwest possesses enormous solar resources but lacks transmission to transmit large amounts of solar power to load centers in the east. Policies that promote the buildout of new electricity transmission lines (such as the streamlining of transmission siting procedures) allow access to these resources, thereby providing additional incentives for utilities to invest in them. Lack of transmission can also be addressed by instead incentivizing distributed electricity generation using solar PV, rather than focusing on large, utility-scale systems.
Feed-in tariffs and other financial incentives
Feed-in tariffs can be used to promote the deployment of solar power or other renewable electricity generation by guaranteeing electricity generators a fixed price for electricity produced from particular resources (i.e., solar), usually enough above the retail price for electricity to cover the costs of the generation and also provide the generator a profit. Typically, utilities are required to purchase this electricity at the specified price and then spread the additional costs across the utility bills of its customers. This fixed price is usually guaranteed for some specified period of time (Germany, one of the most high-profile examples of a country employing feed-in tariffs, guarantees the fixed rate for 20 years). These policies might also direct electricity grid operators to give priority to electricity produced from solar or other renewables.

Other financial incentives to promote solar power can include tax incentives or credits, net metering, and loan programs. These incentives can be offered to utilities or to individual customers installing their own power systems.

Business Environmental Leadership Council (BELC) Company Activities Related to Solar Power

Related Pew Center Resources

Race to the Top: The Expanding Role of U.S. State Renewable Portfolio Standards, 2006

Wind and Solar Electricity: Challenges and Opportunities, 2009

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