Solar Economics Continue to Improve
Lastly, a couple comments on ‘old fashioned renewables,’ i.e. solar and wind. Global solar installations rose about 10% in 2011, although module revenues probably fell over 10% (and inventories exploded in 2H ’11!). Italy surpassed Germany as the single largest market, despite dramatic cuts in both subsidies although, without subsidies. Consultants now estimate the levelized cost of ‘utility’ solar to be within 20% of ‘conventional’ power in Italy, but at/below grid parity for many rooftop applications. Module prices continue to slip in early 2012, although polysilicon prices have stabilized – for now. Consensus for 2012 is about 10% higher volume, led by US (utility projects), China, and possibly Japan/India. The takeaway is that solar is getting cheaper all the time, but cannot make up the gap with US-priced natural gas.
Wind installations have resumed growth in most markets after a very difficult 2008-2010. The US is one exception, where weak electricity demand has slowed the biggest projects. China installed 20 GW last year – possibly 25% of its total electric capacity expansion, and new, fast growing markets now include Brazil and Australia. Reports of significant projects in Kenya and offshore China are examples of the ‘spreading out’ of interest in wind power (similar anecdotes for solar and biofuels) to a much broader global market.