Energy 2.0 will be all solar


Energy 2.0, or however you wish to call the future iteration of the energy industry, will be solar. While there will be a lot of other technologies, like battery storage, smart grids or demand management, it is solar pv that made this new energy industry even possible. Just like the PCs who enabled the internet revolution.

Let’s start with the basics.

The solar discussed here is solar photovoltaic (pv) technology. The flat, black or blue-grey panels you see on houses are solar pv. Its working principle is based on the photovoltaic effect: the creation of electricity in a material when exposed to light. In simple terms, there is a solar cell that is exposed to light which generates electricity. The more light the more electricity is generated. It doesn’t work at night, but does work on cloudy days (it doesn’t need direct sunlight). There are different materials used to manufacture these solar cells, but the working principle is generally the same. Solar pv is different from other solar energy technologies like solar water heating of CSP (concentrated solar power) that use thermal energy for heating or generating electricity using steam turbines.

The amount of electricity generated is determined by 3 factors: 1) the amount of sunshine, 2) the efficiency of the solar panels, 3) the size/number of the panels. The amount of sunshine depends on the geographical location, weather, time of day and year. The panel efficiency (in general) and the number of panels is constant, once a system is installed (over a long period of time panels lose efficiency, about 0.5% a year on average). This means that a pv system generates different amounts of energy depending on the different weather conditions.

The size of a pv system or a panel can be described using nameplate capacity or rated power. This value describes the power, in watts [W], that is generated in specific weather conditions. The same testing condition is applied for every panel so the output can be compared. Depending on the cell efficiency and the size of the panel, it generates different output. Popular panels right now have the rated power of between 250 and 270 W. A 5kW residential system would consist of 18-20 panels.

The same 5kW pv system would generate different amounts of electricity depending on its geographical location. On average, throughout the year, this system could generate up to 4,500 kWh in Scotland or over 9,000 kWh in Arizona.

It’s important to understand the difference between the system size described by nameplate capacity and the amount of electricity generated by a system. When discussing numbers regarding the deployment of solar, the rated power is commonly used. Amounts of energy generated are used to describe, for example, the share of renewables in the total electricity generation. 

There is much more to a solar pv system than just panels, but we don’t have to discuss it now. Anyone interested can find a lot of online resources discussing details like pv system components, sizing, installation etc. (Like my book for example: ).  

How it all started.

Wikipedia say “the photovoltaic phenomenon was first observed in 1839”. Yes, it was in the 19th century. By the end of the same century the first solar pv cell was built and the first pv patent was granted.  

But it wasn’t until the Cold War when solar cells were found really useful. In the 1950s, the space race started and Bell labs used pv cells to power satellites in the US space program. The first commercial application was a solar-powered calculator in 1978. The type of solar panels popular today were first introduced in 1982 by Kyocera Corp. But in the 1980s and 1990s, the application of these panels were a niche, limited to remote off-grid systems, research facilities and maybe some very rich environmentalists. The cost of just the solar cell was at $30/W in 1980, so for a 5kW system the cells alone would have cost $150,000.

How did we get to $0.30/W?

In 1977 solar cells cost $74/W. By 2015 they had dropped to only $0.30/W. That’s 246.6 times cheaper! Why? Because solar pv is a technology industry, similar to the semiconductor industry, there is a learning curve. We have Moor’s law for transistors and for solar pv we have Swanson’s law. In essence, Swanson’s Law says that the more solar cells you manufacture, the cheaper they get. In 1992, the total solar pv capacity installed in the world was 105 MW (105,000 kW), an equivalent of 420,000 of today’s panels or 21,000 average domestic installations. The pv cells then cost about $8/W. In 2015 there was a total of about 229,300 MW (229,300,000 kW) installed globally. Equivalent to almost 1 billion panels or 46 million average domestic installations.

Currently, pv technology is at the point where it is cost competitive with other electricity sources. In some locations, like Chile or the Southwest US, it is by far the cheapest generation technology. So it’s natural for it to be the first choice technology for all new generations coming on line now. This demands that larger volumes of panels are manufactured, enabling costs to go down further. This, in turn, makes solar an even more competitive energy option in more locations in the world and so on… But someone had to start buying the expensive panels in large volumes for the Swanson’s law to kick in.

It was the Germans!

There are lot of things Germany is known for, but sunshine is not one of them. A pv system in Berlin can generate about the same as what a pv system in the UK or Alaska would. And yet, in 2000 Germany decided it would become a global solar pv superpower. However, in 2000, solar was way too expensive to compete with existing coal, gas or nuclear generators. It needed the government’s support. But it also had at its disposal one of the best engineering support systems in the world.    

First introduced in 2000, the Renewable Energy Act was part of a larger scheme of support of renewables in general. It was based on 2 simple principles: 1) renewables had grid priority; and 2) renewables received a feed-in tariff (FIT) – a fixed price for every kWh of electricity generated, for 20 years.

The FIT worked like magic for the following reasons: it subsidised the generation, not the cost, of the installation. Therefore, a market was created where many installers competed to offer the best mix of installation costs and electricity production. It also promoted quality because clients had to be sure pv systems would generate effectively for at least 20 years. Moreover, the FIT rates were designed to decrease every year. The government anticipated the reduction in the system costs and wanted to make sure support levels would be in line with the initial installation costs. This created a situation where people were given the incentive to install solar as soon as possible so as to benefit from higher FIT rates. Finally, the support mechanism was financed by all of the electricity rate payers. A special surcharge was introduced and added to every electricity bill. This created a situation where not installing solar meant giving away money to competitors or neighbours who did install solar. Installing your own solar was the only way of getting this money back.

The grid priority rule meant that homeowners and small businesses had no problems connecting to the grid and they knew their entire generation would be off-taken by the grid and paid for with FIT. Rooftop solar pv became a low-risk, high yield investment for millions of homeowners and small businesses in Germany.

Between 2001 and 2011, Germany installed around 25,000 MW of solar (around 100 million panels) or 35% of all solar installed in the world by 2011 (70,469MW). In 2005, solar delivered 0.1% of all the electricity consumed in Germany. By 2015 it was 7.5%, 75 times more in just 10 years.

What’s next.

There have been other countries, mainly in Europe, that have promoted solar pv in a similar fashion, using a set of FITs. But it was the German program that was the main driver in the technology development, volume increase and costs reductions. Somewhere around 2014-2015, solar pv became cheap enough that it is now able to compete, without subsidies or government support, with other generation sources. Based on Swanson’s Law, one can only expect the cost of solar to continue to decrease, and decrease, and decrease… until the energy industry will be all solar. It’s not the question of “if” anymore, but rather “when”.


About the author

Michal Bacia runs Hi Energy People, a team of solar pv construction experts who have built over 170MWp of solar pv projects for the top European EPCs. In addition to pv construction management services, Hi Energy People offer bespoke software solutions for the solar industry.