Solar Planet

The sun is the most abundant yet untapped energy resource. Theoretically, the amount of solar energy hitting the surface of the earth in one hour is more than the total global annual energy consumption.  
 


The main impediment to wide spread use of solar energy is that it is expensive.  This is the reason that in 2006 only 0.18% of the world total electricity generation capacity was based on solar sources.
 
To promote solar electricity generation, governments around the world have provided feed-in-tariffs (“FIT”), subsidies and other economic benefits to solar projects.  FITs, which are the common way in Europe to subsidize solar energy, allow producers of solar energy to feed the energy they produce into to the grid according to a tariff that is well above market prices. For example, the FIT tariff for small PV systems in Israel is almost 4.5 times higher than the retail electricity tariff.  
    

Indeed, as result of these economic benefits the solar market has experienced tremendous growth over the last few years and is expected to continue growing at a fast rate.   As of the end of 2008 the cumulative global PV capacity was almost 15GW.  The market has grown at CAGR of more than 39% in the past 5 years and is expected to continue growing at fast rate (the forecasts range between 17% and 32% CAGR depending on the subsidies policies around the world)
 

At the same time technology advancement improves conversion efficiencies and driving down cost of solar energy.   The general expectations are that in 5-10 years, solar energy will reach “grid parity”.  Countries with high level of solar irradiation and high alternative electricity generation cost will reach this point earlier than those countries with low solar irradiation levels and low electricity prices.

When grid parity is reached, Solar will be able to play a central role in electricity generation (as well as to provide heating).  One of the benefits of Solar PV is that it is one of the few forms of a distributed generation technology. When solar PV reaches grid parity with retail electricity prices, it would make sense to install PV systems on every rooftop.  At some countries, this day is not so far away in the future.  In Israel, where retail electricity prices are relatively low ($0.11/KWh), grid parity will be reached when system prices will fall to around $2/Watt, a target expected to be reached within 5 years.