The energy crisis and the drive to achieve net-zero emissions have enhanced the prospects of solar power.
As Frédérique Carrier, head of investment strategy in the British Isles and Asia at RBC Wealth Management explains, solar power is attractive because:
- It generates less than four percent of global energy at the moment, but this share could increase fivefold by 2050.
- It is the fastest-growing form of renewable energy: it is the cheapest energy source, can help countries reach net-zero emissions targets, and benefits from government incentives.
- Storage solutions for solar have improved.
- Installing solar arrays in existing spaces, including parking lots, farmland, and bodies of water, offers "much promise".
Carrier said: “Today, solar represents a mere 3.6 per cent of global energy generation, though the percentage varies widely by country.
“Despite its seemingly low share of global electricity production, solar is one of the fastest-growing renewable energy technologies and appears poised to play a major role in the global electricity generation mix in the future.”
Photovoltaic (PV) systems or solar power systems are devices that convert sunlight into electricity. They can take the form of mini-grids for personal use on rooftops, or combined in solar farms to generate electricity on a commercial scale.
The technology, created in the US in 1954, was initially almost exclusively used in the space industry.
In 2000, after prices of modules had fallen markedly, Germany passed a law to boost renewable energy development, creating an exploitable market for the solar industry in the process. A fixed price on energy generated from renewable sources encouraged people and companies in Germany to use solar panel systems, Carrier said.
China, spotting an opportunity, ramped up solar cell production to a scale which remains unmatched in the West, and the country accounts for 70 per cent of global production today. Having gained popularity in Europe, solar energy use has spread globally.
“Despite its seemingly low share of global electricity production, solar is one of the fastest-growing renewable energy technologies.According to the International Energy Agency (IEA), the sun could be the largest source of electricity by 2050, accounting for more than a quarter of worldwide power generation. The IEA estimates that solar PV systems could generate up to 16 per cent of the world’s electricity by 2050 while solar thermal power - another solar technology - could provide an additional 11 per cent of electricity.
While various government initiatives around Europe and the US will boost solar power production, there have been some challenges. This year has seen supply chain disruptions.
Meanwhile, it has been difficult to add a lot of solar to the existing power grid because there is a limit to how much energy can be put on it. Too much solar could overpower it, so excess energy needs to be put somewhere.
Storage can help stabilise the grid, balance energy output with demand, and increase the efficiency of renewables. So far, storage solutions for solar have been cumbersome. But, battery technology is improving.
Carrier added: “Solar appears set to play an increasing role in our energy supply. Its many advantages, including being the lowest-cost technology and emissions-free, make it an attractive candidate, in our view, to help countries decarbonize.
“The energy crisis today makes this even more of an imperative. Generous incentives in Europe and now also in the U.S. should further underpin solar’s growth.”
