What Will The Solar Industry Look Like In 2025? National Competitiveness In The Global Solar Race

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solar cost growthWhat will the fast-globalizing solar industry look like in the year 2025? Who will win, who will lose, and by what mechanisms? Which nations? Which technologies? Which industries? Which companies?

These are some of the questions explored by a group of 20 of the top solar executives in the world at a day-long workshop at Stanford University last summer.

Brought together by Stanford University’s Steyer-Taylor Center For Energy Policy And Finance and the German Ministry of the Environment, these executives were asked to explore the crucial but little-explored question of how the rapid changes occurring in the fast-growing solar energy sector will play out over the next decade.

As many have noted, the industry is at a transformative intersection — big technological changes, big geopolitical fights, failing companies, fast-growing companies, etc. This makes the future of the industry somewhat hard to predict — amongst those brought together, though, some likely patterns did emerge as relatively close-to-consensus.

The gathering was built around the use of what the organizers have stated they “believe is a first-of-its-kind exercise” — “a tightly structured yet freewheeling discussion with industry leaders that sought to chart in-detail how, in four different scenarios, the solar industry might develop between now and 2025.”

The four scenarios — all being quite different (Global Sun, Solar Systems, Sunblock, and Total Eclipse) — created the opportunity to take a “realistic, unbiased look at the way that comparative advantage might play out in the globalizing solar industry.”

“The workshop aimed to flesh out, within each scenario, how the industry’s players might position themselves to maximize both their own financial strengths and solar energy’s overall cost-competitiveness.”

The four key conclusions of the report are detailed below:

1. “Glocalization” — This refers to the idea that in the near future a handful of dominant global players will likely each be doing different things in different end markets around the world. Which countries and companies are doing “what” is something that is of course quite hard to predict — and will, as the report notes, determine who makes money, and who doesn’t.

2. Countries’ Comparative Advantages — Different countries will play different roles in the global solar industry than they do now. The participants in the gathering generally agreed that the US and Germany were likely to manufacture “only the most sophisticated solar components in their home markets” while companies headquartered in China or other low-cost markets would likely dominate the production of commodity goods. There was considerable disagreement about where in the world this manufacturing would occur though.

3. Solar Beyond Subsidies — “The solar industry has grown based overwhelmingly on government incentives. Those subsidies will subside, participants agreed. Though solar power’s costs have fallen in recent years, workshop participants felt strongly that the costs need to fall much more for solar to become a sizable of the total global energy pie.”

4. Problems Plugging In — With the cost of solar falling, political and technical difficulties connecting solar installations into power-transmission grids are emerging as significant challenges to growth.

The full report is quite interesting. Those who would like to read it can find it at the Stanford Law School website.

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James Ayre

James Ayre's background is predominantly in geopolitics and history, but he has an obsessive interest in pretty much everything. After an early life spent in the Imperial Free City of Dortmund, James followed the river Ruhr to Cofbuokheim, where he attended the University of Astnide. And where he also briefly considered entering the coal mining business. He currently writes for a living, on a broad variety of subjects, ranging from science, to politics, to military history, to renewable energy.

James Ayre has 4830 posts and counting. See all posts by James Ayre

12 thoughts on “What Will The Solar Industry Look Like In 2025? National Competitiveness In The Global Solar Race

  • “Workshop participants felt strongly that the costs need to fall much more for solar to become a sizable [piece] of the total global energy pie.”

    Why did they think this? Both the global growth rates, and policy changes in many countries (Turkey, India, Mexico..), clearly suggest that solar has got it made at current prices. In Japan, China and Germany, there is still a small price premium, but one that governments and electorates have powerful political reasons to pay.

    The debate is in any case academic. Jinko’s 50c$ a watt manufacturing cost benchmark will work its way through the industry, as plants are consolidated by the first-tier makers into gigafabs. The US will catch up with Germany, Australia and Britain on BOS costs. Banks and financial markets are getting more comfortable with credit, and pricing solar assets as low-risk. Future cost reductions are certain, without factoring in any of the many schemes for fundamental improvements in the technology (tandem cells, perovskites, etc.)

    • It depends on the solar radiation each country receives also that solar price has yet to fall enough for it not to rely on subsidies in many countries (for a few it can). As subsidies while the enabler of solar are also the restriction of solar growth since only certain amount of solar will built for the amount of budget allocated to it by the government. Once subsidies are small or gone the government no longer has to pay and solar installing companies will no longer that have the limit and fear degression of subsides. Furthermore ordinary people will likely be willing to pay for solar panels since the upfront cost will be significantly cheaper which is currently one of the barriers of installations as most people not having the savings to pay for the initial cost and are unwilling to rent their roof for panels due too a variety of reasons.

      • Solar would likely be meter parity everywhere if two things happened.
        1) All fossil fuel subsidies were removed.
        2) Externals cost were added as a CO2 charge. Even just health costs, would push coal up 2-5 times.
        So solar only needs subsidies, because of much higher direct/indirect subsidies to coal/gas/oil.

        • No, you would be shoving a huge burden on too customers as those subsidies (both solar and fossil fuel) stop the poorest paying huge energy bills.
          Currently solar gets subsidies as it has high manufacturing costs and the need to upgrade the local electricity connections. Fossil fuel has nothing to do with it with solar costs! Also fossil fuels are already charged extra based on their CO2 emissions and the country’s renewable energy targets. This does vary by country though.
          Fossil fuel subsidies are being reduced as old power plants shut down and new renewable energy sources are built although again this varies by country. By suddenly taking away subsidies in a single day, guess who pays the extra to keep them running? As no energy source renewable or not cannot be built within a day, it is a gradually process of conversion.

  • A very rudimentary calculation to think about

    Price of crude oil
    100$/barrel>75€/barrel (http://www.oil-price.net/)
    1 liter petroleum>2,5 kg CO2>10kWh
    1 ton CO2>400 liter petroleum>2,5 barrels(159 liter/barrel)>4000 kWh>187,5€/255$

    Cost of 1 kWh of crude oil at current prices: 0,046875 €/kWh – 0,06 $/kWh

    Price of PV
    1 kWp of PV>1500 €/2000$
    At 1600 full solar hours (nearly everywhere in between 40° latitudes)
    (the whole of Africa, Indonesia, India, Australia, Middle-America and
    big parts of China, South-America, the US and Europe with Malta, Cyprus,
    Greece, Italy, Spain, Portugal,..)
    1kWp produces 32.000 kWh in 20 years
    1500 €/2000$ / 32.000 kWh>0,046875

    Cost of 1 kWh PV: 0,046875 €/kWh – 0,06 $/kWh

    It is indeed a very rudimentary calculation not taking into account the pre-financing cost for PV, but not the lower quotes at 900 to 1100 €/kWp PV right now. Nor does it take into account transport to consumption site nor refining the crude oil, so the rough comparison will not be too far off of reality.

    • What efficiency did you assume for the hypothetical solar panel array?

      Back of the envelope calculation, for California.

      Insolation about 2000 hours
      Hypothetical intensity = 1000 W/M2
      Efficiency about 25%
      Realization about 1 KW x 2000 hrs x 25% Eff = 500 KWH/M2 annual
      Value of KWH in California about $.125 x 500 yield $62.50 M2/Year
      Typical array = 5 KW = 10 M2 = yield $625
      $625 x 20 years = $12.500
      Cost of installation after subsidies about $11,000

      In the real World, these numbers are different. Currently panels go for $.70 a Watt. 5000 Watt x .7 = $3500. Add Labor, components and electronics to get costs. Now account for actual sunshine and how well the panels are pointed at the Sun at 2 pm to get yield.

      Upshot : Solar will get a little less expansive. But the major portion of the costs are labor and mounts for the panels. Mounts that cannot puncture the roof. Mounts that cannot prevent the roof being replaced. There’s the rub.

      Opinion : I think what the World really needs is a very long lasting photovoltaic roofing product. How many square meters of Southwest facing roof is there in the World? That is a lot of power. And if you only have to mess with it every 50 years… I think we would all be winners.

      • ” I think what the World really needs is a very long lasting photovoltaic roofing product. ”

        That’s something that I’ve been suggesting for a long time. A photo voltaic roofing system. Start with the bare rafters and design a edge to edge, top to bottom roofing system. Let the panels be the weatherproof skin and the mounting system provide the shear strength that otherwise would be provided by the plywood/chipboard decking.

        Offer skylight, roof door, and vent exit modules. Use easy to climb designs over the overhangs to meet fire department requirements. Sell in standard sizes and let the house designers/architects fit their design to the available components. That’s what they do now with other building components.

        Almost everything on the east/west/south (north in the Southern Hemisphere) could be power producing. Turn houses into mini-solar farms. Let people go into the solar business as a sideline if they wish to.

        (East- and west-facing panels produce about 80% of what south-facing panels produce and extend the solar day, lessening the need for storage/dispatchable generation.)

        The savings in decking and roofing would help bring down system costs. And the panels should be a 50 year, 100 year or longer roof. Another savings.

        • Ya see, folks! It’s not just me. Bob is nuts, too!

          If you say the ‘typical house’ is a single story 1000 square foot box with a peaked roof, half of that roof would be pointed more or less sunward. That side of the roof would be about 18 x 40 feet, call it 5 x 12 Meters. 250 Watts a Meter times 60 Meters pencils out to a peak power output of 15 Kilowatts. Multiply by however many hours per year (Dirk said 1600) and by however many houses there are.

          Each house would produce about 24,000 Kilowatts a year. For 50 years. Silently, pollution free, without so much effort as it takes to strike a match.

          Of course, no sensible person would go for such a crazy scheme.

          • Just a bit more insanity.

            Design houses with south-facing road exposures with roofs that slope E/W. That way there would be little issue with aesthetics A little cleverness on the part of designers could minimize the side views from the road.

            Use “attic trusses”. That way there’s a walkway down the center of the attic for easy back of panel access.

            Install a lightweight plastic membrane (heavy plastic sheeting under the panels and route it to a central spot so that any leaks would set off a signal rather than waiting for rot or ceiling damage as we do with normal roofs.

            Offer 20, 25 year PPAs to the homeowner so that they will know that their investment will pay off just as we do with wind and solar farms. The revenue after payoff would be a nice retirement sweetener.

            Coo coo as Coco Pops.

          • See? Bob’s even worse than me.

            Poppa oom mau mau!

          • Progress might have been made….

            “A small terrace house in the inner Sydney suburb of Glebe is hosting what is believed to be the world’s first building integrated solar system that generates electricity as well as heat.

            The array combines thin-film solar PV and solar thermal technologies into a steel sheet roofing product produced by Australian steel manufacturer Bluescope, with assistance from the Australian Renewable Energy Agency.

            The top layer of the roofing product (pictured) generates electricity in the same way as solar PV modules – although it uses thin film technology for less weight and thickness – while heat is trapped and distributed between the two layers for use in water and space heating.”


            A-well-a, bird

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