Solar installations across the world are gaining popularity due to an onset of government programs being introduced for commercial and domestic scale systems. The world’s global level of installed solar capacity is currently 64,000 MW driven by a 40% surge since 2010. Where did this increase come from and what is driving it?
One driver in solar power’s growth are the very large solar farms being introduced such as this one in China completed in 2011. However, a large amount of program funding is available in many countries for small scale, decentralized solar systems on household roofs rather than solar farms. In the USA, there are federal grants for solar panels covering 30% of the costs of installing a system for domestic or commercial use. Feed In Tariffs are available in California, Washington, Hawaii and Michigan to decentralized systems. There are similar tariffs for home-owners in other countries including Germany and the UK.
The primary advantage of centralized solar farms is the economies of scale that this sort of system can utilise. Large system purchases of solar modules can win lower prices purchasing directly from a solar panel manufacturer. Wiring and installation costs are lower on a per panel basis in a giant array. Labor costs are lower from fewer installation employees per square foot of solar panels. Similarly, transportation costs per square foot are much cheaper for delivery to one large location rather than driving solar panels to thousands of different houses. These costs savings estimates for large scale solar in a favourable European location are €293/MWh compared to €400-700/MWh for domestic systems.
Why do governments subsidise solar for smaller installations when it seems more efficient to get large projects financed? One reason is that centralized systems incur transmission losses which can vary from 6.5% in the USA to 25% or more in countries with less developed infrastructures. For example, India loses around 24% of its electricity during transmission and a further 10-15% is lost through theft or billing issues.
There are also risks tied to electricity transported across large distances. Even small faults within the grid can lead to serious problems. For example, the Northeast blackout of 2003 affected 50 million people across 8 states and 10 million people in Ontario.
Small scale solar can also be more environmentally friendly – large solar farms take up 30 acres or more of space. This larger scale can require deforestation, impairment of natural desert environments and species endangerment. In countries with high population density where land is expensive a decentralized solar panels on rooftops saves space and money.
Arguably, decentralized solar can increase society’s awareness of energy use and efficiency as people often see houses with solar panels. This effect has already been shown where electricity meters given out to home-owners to enable their awareness of their real-time energy usage has resulted in average electricity usage drops of 7-10%.
Both centralized and decentralized solar have their places in increasing our renewable energy. The EU is legally bound to receiving 20% of its energy from renewable sources by 2020. 30 of the US states have mandatory renewable targets. Beyond regulatory mandates the economics of solar is gaining price parity with utility supplied non-renewable energy. Solar is growing as a renewable resource with small solar roof top panels as a significant contributor to the world’s renewable energy future.