Will solar be the cheapest form of electricity in the next 10 years? Is there no end to the cost decline of photovoltaics?
This is a question several of our clients are asking — so we threw it out to our panel of on-the-ground solar experts across developing markets.
Their answer: we certainly hope so!
More than a ray of hope
Indeed, solar seems to be rounding the corner, especially in the case of utility-scale projects. There is significant buzz right now, especially around conventional silicon-based solar technologies and ground-mounted systems.
Shedding light on true costs
How cheap is solar?
Panels are becoming cheap, but the math is more complicated.
There are other factors, agree Advisors Fernando Alvarado and Alejandro Brenes from Costa Rica and Mark Hankins from Kenya.
Storage: if energy storage can become more efficient, solar will become much more competitive
Efficiency: solar still has a relatively low plant factor versus hydroelectric, wind, and biomass
Other costs: the cost of several components further from the technology curve — land, structures, inverters, cables, transportation and financing — all need to come down as well
Off-grid versus on-grid: while off-grid is showing potential (especially commercially installed home systems), governments are focused mostly on on-grid (or utility-based) expansion
Regulators in the spot light
Often times the market is ready but the law is not.
As Brenes put it, “in the short term, the success [and cost reduction] of solar energy in each country will depend heavily on the openness of the policymakers regarding the regulatory framework.”
“Governments need to promote clear legal frameworks, shorten permitting processes, and establish incentives that go beyond subsidizing rates, such as direct benefits to promote investment flow,” advises Fernando Alvarado.
Where to find the sun
India, Middle East, and North Africa are typically recognized as the most promising regions, but Alvarez and Brenes are bullish on Solar’s potential in Latin America. The region increased installed capacity three-fold between 2013-14. Installed capacity is expected to triple it again over the next year.
Yet some of the best solar deals pop up in places you might not expect.
Take Rwanda, for instance, where the first utility-scale solar energy project in the whole of East Africa, a 8.5 MW plant, now will supply 6% of the country’s electricity.
To summarize — our Advisors agree that investors and developers need to pay extra attention to regulation and storage possibilities. Overall, however, the market is more than ready. As Hankins put it, “things will only get better for solar.”
Get smart fast on Solar’s potential across frontier markets
To gain additional insights on the solar energy market from top industry professionals across all developing markets, contact OnFrontiers today at firstname.lastname@example.org
About the Advisors consulted for this article
Fernando Alvarado, a former investment banker, is a Costa Rican international consultant on financial mechanisms for sustainable energy development, a project developer and an entrepreneur.
Mark Hankins, a Kenyan, is the CEO of African Solar Designs Nairobi. He is an engineer, advocate and consultant for renewables, and has worked throughout Africa in this capacity.
Alejandro Brenes is the CEO and Founder of Enertiva Costa Rica. The Costa Rican has worked on over 4,000 projects with Enertiva, designing and implementing small scale renewable energy solutions.
Founded in 2014, OnFrontiers is a global advisory network and research firm that provides rapid access to targeted, high quality insights in hard to reach frontier markets.