Viewpoints

About This Technology

Photovoltaic cells convert light energy directly into electrical power in applications ranging from wristwatches and water pumps to homes and space vehicles. Manufacturers can produce cells of just a few square centimeters or combine modules into arrays of virtually unlimited size. The cells are silent, produce no emissions, have no moving parts, feature very low operation and maintenance costs, and typically last for more than 25 years. Leading nations throughout the world are working to reduce carbon emissions while still satisfying the increasing energy needs that accompany economic growth. Solar PV power is meeting some of that need. Developing economies are also desperate for energy supplies as they work to raise the living standards of billions of people while at the same time looking to a future in which fossil-fuel use will be more restricted (because of either supply or regulatory constraints). PV systems offer clean, reliable, economical power, whether connected to a distribution grid or operating in areas in which grid power is not readily available. In rural, "off-grid" locations, PV (with battery backup for overnight use) can be a particularly economical power supply, especially where transporting in fuel for generators is difficult or costly.

In the past decade, grid-connected PV installations have increased dramatically in number as PV production costs have dropped precipitously and policy support for PV has increased. The PV market currently depends on a variety of public-support systems that differ by country and region, including renewable energy production mandates for electricity utilities and various forms of subsidization through feed-in tariffs or tax incentives. After decades of development, the PV industry is only now approaching a point of critical mass, at which it will be able to sell grid-connected PV systems for prices competitive with prices of conventional electricity-production capacity—reaching "grid parity." (Many analysts believe that grid parity is achievable within the next five to ten years; others argue that it is already here.) Establishment of appropriate financing mechanisms and business infrastructure, along with cost reductions, has multiplied PV sales in the residential, commercial, and utility-scale PV markets. Financing innovations such as solar leases and power-purchase agreements have helped to grow the residential and commercial-scale markets, in particular. Utility-scale, grid-connected solar-power production is increasing and promises to be the next growth market for PV manufacturers, thanks in large part to renewable portfolio standards that require electric utilities to provide significant percentages of their electricity from PV.

New material configurations and improved production processes have enabled substantial improvements in the performance and production costs of PV cells. Several thin-film, organic, and nanomaterials-based PV technologies have set new standards for very low-cost PV cells. Flexible substrates and novel manufacturing techniques are also enabling PV use in novel applications such as building-integrated photovoltaics—PV materials that replace building-envelope materials and thereby offset construction-material costs—and portable power sources (for example, a PV-enabled backpack or purse) that can charge a user's mobile electronics devices or a portable computer.

Growth in the PV market should continue for the next several years, providing opportunities throughout the entire value chain. Unit shipments have grown by at least double-digit rates year-on-year for the past several years and look likely to continue to do so. Tremendous opportunities exist for module producers, production-equipment vendors, material suppliers, and makers of balance-of-system equipment such as power inverters, batteries, and tracking systems. Installation costs still represent approximately 50% of the final price of PV systems, providing plenty of opportunities for skilled installers (and manufacturers that produce easy-to-install PV systems) to increase operational efficiencies, reduce overall system cost, and improve profit margins. Utility companies are increasingly investing in multimegawatt- (and even some gigawatt-) scale solar PV farms, rural utility companies can use PV power to serve small isolated loads, solar lease programs and tax incentives are encouraging residential rooftop solar markets, builders of wireless-communication networks will continue to find PV power ideal for running remote-transmission units, and countless niche markets are forming, such as solar powered eco resorts, accessory power for automobiles, portable smartphone chargers, and electronic signage.