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Published on August 2nd, 2013 | by Giles Parkinson

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Solar PV About To Enter “Third Growth Phase”: Deutsche Bank



This article first published on RenewEconomy

Deutsche Bank analysts have painted a bullish outlook for the global solar market, noting that solar PV is about to enter a “third growth phase” where it can be deployed without subsidies, and can resist a backlash from utilities.

The report by analysts led by US-based Vishal Shah estimates that three-quarters of the world’s market will be “sustainable” for solar within 18 months, meaning they can operate with little or no subsidy. (see graph at end of story). In two years, the market for solar will have flipped from one largely “unsustainable” – needing big subsidies – to one mostly sustainable.

That’s because with module prices stabilising at around $US60c-70c/watt, and installation costs of around $US1-$US1.20 a watt, the levellised cost of solar electricity is between US10c-20c/kWh.

“We believe the underlying economics of the sector have improved significantly and we may be just at the beginning of the grid parity era,” the Deutsche Bank analysts write. “Low natural gas prices may make large utility scale solar deployments in the US less attractive for now, but we remain bullish about rapid development of utility scale solar in several international markets over the next 3-5 years.”

Deutsche Bank said that although the market in Europe had contracted, at least one third of new, small to mid size projects were being developed without subsidies. Multi-megawatt projects were being built south of Rome for €90c/W. This was delivering electricity costs (LCOE – with 80 per cent self consumption) of around €80/MWh (€8c/kWh)

In India, unsubsidised large scale projects are being bid at US12c/kWh, and power purchase agreements were being written for solar projects in the US at $US9c/kWh.

But it also noted that distributed solar (or rooftop or local ground-mounted solar) was also likely to take a signficant share of the solar market as leasing models became more mainstream and various markets adopt policies to support the technology.

It said innovative financing was the key – and could lead to growth in above all expectations if new sources of low cost capital is made available for the sector.

It also noted that the speed of the sector’s transition to grid parity meant that most governments are “somewhat behind the curve” in adjusting regulation to promote the desired growth of the solar sector over the next several decades.

And it said the solar sector could also continue to face significant backlash from major utilities as this “disruptive technology” is clearly a big threat to the their business model.

But it said rising electricity prices, a need for competitive generation sources, and lowered balance of system costs will drive further improvement over the next several years. And despite the backlash from major utilities, solar and distributed generation would continue to gain significant share of new capacity

“We believe solar will appear increasingly attractive in a long term environment of rising electricity prices and fuel price uncertainty.“

However, Deutsche Bank warned that being at grid parity on paper does not necessarily equate to a robust market.

“We believe overall grid capacity, demand, and regulatory constraints will prove to be significant hurdles in many countries going forward. As more markets reach cost competitiveness over the next 3-5 years, we expect sustainable demand to ramp accordingly as governments adopt more sustainable policies and consumers recognize the value proposition.

“Solar appears to be in the beginning stages of transitioning between ‘alternative energy’ and a truly cost competitive source of energy that may help both producers and consumers hedge against rising electricity rates and fuel costs.”

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About the Author

is the founding editor of RenewEconomy.com.au, an Australian-based website that provides news and analysis on cleantech, carbon, and climate issues. Giles is based in Sydney and is watching the (slow, but quickening) transformation of Australia's energy grid with great interest.



  • rt85

    ok nice,
    but wha are the three phases?

    • Shiggity

      The first main growth phase was for satellites and super specialized operations. The second growth phase was heavily subsidized by the government while production scaled up. The third growth phase is when solar rises up to rival and/or surpass the other core energy producers. The fourth growth phase would be something in science fiction, like a dyson sphere, where we surpass a Kardeshev type 1 civilization.

  • Gabe McHugh

    Does anyone know where I could find this report?

  • CaptD

    An important article about why Solar is such a threat to all US Utilities, which I think of as a Fiscal/Energy War for market share:

    Disruptive Challenges:

    Financial Implications and Strategic Responses to a Changing Retail Electric Business

    http://www.eei.org/ourissues/finance/Documents/disruptivechallenges.pdf

    and

    Energy Expert Predicts Solar Could Upend Major Utility in California on Price http://www.renewableenergyworld.com/rea/blog/post/2013/05/energy-expert-predicts-solar-could-upend-major-utility-in-california-on-price

  • Matt

    Now imagine two things
    1) World adds a $20/ton price on CO2 and ramped it to $50 by 2020.
    2) World drops the subsidy to fossil (as agreed at the first climate conference).
    The light purple portion of the graph would go away.

  • Steeple

    I wonder what the right model will be for ownership of these solar panel assets. Should homeowners actually buy them and be responsible for maintenance, etc… Or will a leasing model where a third party owns, maintains and keeps up to speed as the subject matter expert on interaction with the local utility, etc… I would think that the latter might have an edge so we’ll see.

    • Bob_Wallace

      Maintenance is about zip.

      Apparently a lot of homeowners in California are leasing while the math is better for owning.

      I think there was an article on the site recently. Try a search.

      • DrewRL

        Maintenance = zip? What about when the inverter reliably goes dead in year 10, 11, or 12? $1,700 to $2,600 charge right there.

        The system will last 30 years. That’s 2 inverter replacements right there. I wouldn’t call that zip.

        • Bob_Wallace

          Where does this “reliably goes dead after 10, 11 years” stuff come from?
          I’ve been offgrid for over 20 years. I know several people who have been off longer. No one that I know has experienced an inverter failure.

  • http://www.dailykos.com/user/shpilk shpilk

    Rather than subsidizing up front costs with ‘rebates’, governments should be encouraging adoption of these alternative technologies primarily through long term loans, instead.

    Loans will allow consumers and businesses to adopt, and the money is paid back {with a little interest even} to the government. Use of loans is much more responsible and stable than giving a selected group, (the more wealthy) rebates.

    • Bob_Wallace

      I copied this comment off Greentech Media a couple of days ago. Sounds like there is a federal program for financing solar.

      “Contact Admirals Bank. They service the entire nation with an FHA $0
      down solar loan, no equity is needed and only a 650-660 credit score is
      required. Ask for Dennis Watson and tell him that Solar Home referred
      you.

      There’s also the Lightstream $0 down solar loan with no fees and no
      collateral needed and only a 4.99% interest rate.”

      • CaptD

        These long term solar loans look like a win-win-win for both the home owner, the loan company and the planet, no wonder the Utilities are getting very nervous about the surge in non-utility solar ownership!

        • Shiggity

          Renewable energy funds are crushing the gains of the overall market. Invest in solar and the future will be bright for you :)

      • DrewRL

        Great post I have worked with Admirals and can attest to their excellence.

    • DrewRL

      Agreed. Rather than subsidizing mature, 100+ year old coal oil & gas industries to the tune of $4Billion a year, the government should just allow the market to accurately price itself. Then we’ll see which is really the superior 21st century technology.

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