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The Solar Revolution in China – and Canada

It seems far away, but it’s extremely relevant, since the mass adoption of solar PV in China could accelerate the dramatic fall in solar prices.

A year ago, China had a goal to install 5 GW (5,000 MW) of solar PV by 2020 - the equivalent of 2.5 million houses each with a 2kW system. With 5 GW installed in 2012 alone, however, China increased the target to 21 GW by 2015 – and then last week, it increased it further to 40 GW by 2015.

The fall in the price of solar modules over the last two years has been dramatic, going from $4 to less than $1 per watt. For a full installed system, the price is now under $8/watt for a household, and around $3/watt for a 10 MW project. (http://www.nrel.gov/docs/fy13osti/56776.pdf)

But how much power will 40 GW of solar actually produce, compared to China's electricity demand in 2015? If we assume a 17% capacity factor, 40 GW of solar PV will yield 60 TWh a year (40 x 24 x 365 x 17%).

Platts tells us that China's electricity consumption in 2012 is expected to be 5 trillion kwh = 5,000 TWh. Demand is growing by 6% a year, so that's 6,000 TWh by 2015.

On these calculations, 60 TWh of solar energy will only meet 1% of China's electricity demand in 2015. Sigh.

However, if China could sustain a 100% annual growth rate in solar PV installations, stimulated by the steadily falling price of solar, solar could be providing 10% of China’s power needs by 2020.

Here in Canada, the critical breakthrough involves the arrival of solar price parity – the year when the falling price of solar meets the rising price of electricity, making a solar investment self-financing. From that point on, price-based resistance to solar PV disappears, in the same way that price-resistance to smart-phones and I-Pads has disappeared. Here in BC, the BCSEA has an intern working on the likely arrival date, but given our cheap electricity prices, it is unlikely to be before 2020.

The other critical factor, as well as the falling price of the modules and the balance-of-system parts and labour, is the cost of finance. Solar needs long-term financing, ideally over 30 years, wrapped into a mortgage. A solar PV system can operate for up to 50 years, but no-one is offering 50-year financing at present.

So here’s my prediction: the key to the solar breakthrough will lie with someone coming up with an innovative model of financing, as much as it will lie with the falling price.

- Guy Dauncey

Source: China to Double 2015 Solar PV Target to 40GW