Friday, December 30, 2011

China & India Installing 35,000 Megawatts of Solar; Driving Down Global Solar Prices

A big change in the global solar market in 2012 will increase this momentum toward lower prices and more solar, with China and India, two of the world's top ten economies, pursuing large solar installation plans.  China is moving from almost exclusively exporting solar modules to deploying them domestically as well. More solar leads to lower prices; lower prices yields more solar; and so the sun rises.

About 40,000 megawatts of solar are operating in the world, but China and India have installed just a small fraction of that total, probably together no more than 1,000 megawatts.  Their plunge into installing solar is a major change and energy event.

China recently raised its 2015 solar deployment goal from 10,000 to 15,000 megawatts by 2015, and India plans on installing 20,000 megawatts by 2020. The Chinese and Indian solar installation programs will probably account for about 5,000 megawatts per year and will drive down solar prices further through economies of scale.  The current global annual solar market is about 20,000 megawatts.

The New York Times reported yesterday that solar in India is priced at about 16 cents per kilowatt-hour, and recent price declines and the certainty of further price reductions mean its 20,000 megawatt target could be achieved before 2020. China's and India's domestic solar plans increase the downward solar price slope.

That matters a lot across the energy world, including in the US energy industry, for what happens in China and India does not stay there.

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