Is Green Energy Becoming Mainstream? | Moores Law of Computing & Grid Parity for Solar Energy Power
By: Paul Ghezzi
Most readers will be familiar with Moore’s Law, the observation that microprocessor power doubles about every 18 months especially relative to cost. In fact we have all experienced the cost declines in computers while benefiting from the efficiency gains along the way. It is easy to forget today that computers and their associated software platforms were the growth darlings of the markets from the early 1990s to the mid-2000s. After 15 years of mass industrialization, proliferation and commoditization, computers are considered a low margin and low growth global industry.
How Does Moore’s Law Relate To The Solar Industry And The Concept Of Grid Parity?
According to GTM Research, it has taken nearly four decades to install 50,000 megawatts of solar energy power capacity worldwide. However in the last 2 years, the industry jumped from 50,000 megawatts of solar energy power generation to just over 100,000 megawatts. The solar industry is on track to double in the next 3 years with another 100,000 megawatts coming on-line by 2015. This represents an approximate doubling of existing installed capacity.
Driving this growth is the massive cost declines in solar energy panels and corresponding annual efficiency gains. Since the year 2000 solar panels have declined in cost by 80% and have experienced, on average, efficiency gains of 7% per annum. While the initial support for the global solar industry has been primarily Government driven, the realization of Grid Parity throughout many parts of the world will create a natural end to Government subsidies.
Grid parity occurs when an alternative energy source can generate electricity at a cost which is equal to or less than the current price to purchase power from the local electricity grid. The term is most commonly associated when discussing solar power generation. Achieving Grid Parity is considered a tipping point for the growth of green energy infrastructure without the need for Government support.
The solar energy power generation sector is experiencing the type of growth similar to the early days of computer hardware and software proliferation. This growth will be further accelerated by the fact that for many countries the cost of solar energy has reached Grid Parity. For example most of Latin America, Africa, Southern Europe and the many States in the US can now install solar energy at a cost that is lower than the levelized cost of energy paid by consumers and businesses.
What About Canada And Grid Parity?
Grid Parity is not a one size fits all definition for the solar energy industry. The reaching of Grid Parity depends on the local cost of energy and the amount of solar irradiation relative to the installation costs of a solar energy power generation installation. Further complicating the Grid Parity outcome in Canada is that energy is a Provincial matter and the current Federal Policy is to provide flow-through tax advantages to fossil fuels but not solar energy power.
Creating a flow-through tax regime, which is currently available to oil, gas and mining companies in Canada, could bring about Grid Parity for solar energy power generation in most Provinces.
Provinces Doing It On Their Own.
While Ontario was the early mover in solar energy power they are now scaling back on their support as the cost of solar energy power generation declines. Ontario is on the path to Grid Parity by 2016.
British Columbia and Alberta which each receive about 15% to 20% more solar irradiation than Ontario have both recently introduced solar energy policies designed to encourage home owners to use solar energy power for their homes. It can be argued that both of these Provinces are at the early stages of Grid Parity in 2013 and by 2015 could see large scale increases in installed solar energy power generation.
2013: The Grid Parity Tipping Point.
2013 will be remembered as the tipping point year for solar energy power generation globally. If Moore’s law of computing is a barometer the growth rates for installed solar energy power generation will continue to accelerate.