As we approach the new decade, we’ve entered a new world of energy sources. In 2016 solar was the fastest growing source of energy in the world, and it has only continued to grow since. In 2014, renewable energy made up 24% of global electricity generation and is projected to grow to 31% by 2040. By the year 2050, solar energy alone is projected to increase to 36% of renewable generation, up from 7% in 2015.
According to executive director of the Paris-based International Energy Agency Dr. Fatih Birol, “What we are witnessing is the birth of a new era in solar photovoltaics (PV). We expect that solar PV capacity growth will be higher than any other renewable technology up to 2022.”
What is driving the growth?
Along with recognizing the growth in solar, it is equally important to understand why solar is growing. There are three prime factors that are driving the expansion of solar energy; market conditions, policy decisions, and specific regulations geared toward reducing carbon emissions and moving quickly to adapt renewable energy in lieu of fossil fuels. In 2016, 196 different nations signed the Paris Climate Agreement which sought to reduce carbon emissions by 20% and increase renewable energy’s share of the market to 20% as well as increase energy efficiency by 20%. Independently, businesses are taking their own efforts to utilize renewable energy by building their own facilities using solar roofs. In 2017 a United Nations cited a study from International Renewable Energy Association that found switching to clean energy sources such as hydro and solar could accomplish 90% of the climate goals set by the Paris Accord.
Part of why solar energy is experiencing such rapid growth is due to how accessible it is and how easy it is to harness. According to the Proceedings of the National Academy of Sciences of the United States of America, the amount of solar radiation that reaches earth’s surface every hour is more than the total amount of all energy used by human activity in a given year. According to the IEA; India, the United States, and China will account for 2/3rd of all renewable energy expansion.
The U.S.’ booming solar market
While during the previous administration, the United States saw the largest boom in oil production in US history, now the US is poised to see a massive boom in solar production. According to International Business Times, based on reliable indicators all signs point to a huge boom in solar production through 2024 and likely beyond that. The Solar Energy Industry Association cites the passage of the Solar Investment Tax Credit (ITC) in 2006 as the catalyst that provided stability in the industry, allowing solar to experience an average annual growth rate of 50% during the past decade.
The ITC alone has proven to be a highly effective policy in job creation and energy production. Since its passage, the ITC has created north of 200,000 American jobs and added $140 in private sector investment into the economy. On top of that, the ITC helped grow solar deployment by 10,000 percent since its introduction.
Despite recent efforts by the US to pull out of the Paris Climate Agreement, the solar industry is still experiencing rapid growth and prices continue to drop. Even with the current administration’s promises to focus on coal, Green Solar Technologies projects that, “[w]ith the solar industry growing at such exponential rates, it seems that the U.S. is on track to switch its fossil fuel dependence to renewables like solar over time.” Similarly, the SEIA projects that global solar capacity will more than double by 2024.
Environmental awareness among consumers
Not only is there surge in renewable sources of energy such as solar, led by governmental policy, consumers as well have created a new demand for environmental consciousness. According to a 2018 report from Nielsen, “Consumers in markets big and small are increasingly motivated to be more environmentally conscious and are exercising their power and voice through the products they buy.”
With that, according to a survey conducted by Nielsen, in total 81% of consumers believe that companies should play a role in preserving the environment. Nielsen noted that this is not just wishful thinking on the part of the consumer but that it plays an increasing role in the companies that consumers do business with. Particularly among younger generations, consumers are more drawn to engage with companies that take environmental efforts to reduce the harm of climate change, creating a market demand for environmental consciousness.
Another factor driving this increased demand for alternatives such as solar energy is health and health related issues. A negative externality of climate change is a decrease in air and water quality. Specifically, health issues such as typhoid and asthma are linked to decreasing air and water quality. Similarly, according to the World Health Organization, 12.6M people die each year due to environment related causes attributed to changing climate.
Similarly, on the consumer end of things, the spike in energy prices has created a new appeal of switching to solar as a source of energy. This phenomenon has two main driving points; 1) the costs of solar are dropping at exponential rates and 2) electricity prices are surging. In some ways these two correlate with each other. A Bloomberg report from this past summer noted that the road to a green infrastructure necessarily led to skyrocketing electricity prices. Regardless, recent backlashes against electric companies such as PG&E in California for forced blackouts or APS in Arizona for repeated rate increases, has solar looking like a great alternative source.
Solar as a source of energy has been declining in price and rising in demand in tandem with traditional electricity sources becoming more expensive. According to a new article in PV Magazine, the cost of solar has gone down by 89% during the past decade with an average annual decline of 20%. There are multiple factors responsible for the decrease. From a rise in environmental consciousness among consumers to the Investment Tax Credit in the US market and the surging solar market in China, solar energy is projected to soar over the next coming decades not just in the US but around the world.