Introduction
In 2013, solar panel systems reached a market value of 12 billion dollars, exceeding the annual growth rate of 50%. The US Energy Administration reports that federal funds for solar energy rose from 530 million dollars to 1.13 billion dollars during the period from 2007 to 2010, with 179 million dollars also reported for the United States. It would be wise to look at the economics of solar panels by contacting my neighbor Cindy, who wants to start a contract business. It is true that there are savings for households and businesses through the installation of solar panels on their roofs every year. It is also true that there are government incentives to install solar panels (Glenn, Anthony & O’Brien, 2013).
This information is not enough to assess the solar-panel economy and put it in an appropriate context. In the case of solar photovoltaic panels, renewable energy has had little effect on the market for alternative energy sources, but it shows great prospects and potential. In the United States, the solar energy industry is at C3, and about 600,000 solar power installations are progressing toward the 1 million contribution in 2015.
In recent years, solar energy has made significant progress due to technological changes, government support, and cost reductions supporting the development and use of renewable energy sources. This study analyzes the technical, economic, and political aspects of the development and distribution of solar energy. Recently, the cost of solar energy has fallen rapidly relative to the cost of traditional energy technologies. Like other renewable-energy technologies, solar energy has many financial incentives in many countries, including tax breaks and benefits, tariff rates, preferential interest rates, renewable portfolio standards, and voluntary green-energy programs.
Growing markets for carbon credits are expected to increase incentives for solar energy distribution; however, the scope of incentives provided by existing carbon-market instruments, such as the Kyoto Protocol Clean Development Mechanism, is limited. Despite the great technical potential, the extensive development and use of solar-energy technologies throughout the world continue to require us to overcome a number of technical, financial, regulatory, and institutional barriers. For many years, there may be a need for ongoing political support to maintain and improve the growth of solar energy in developed and developing countries.
The Five Determinants Of Demand Are:
- Price of goods or services. This is the final price of a solar-panel unit, which has been declining over the past 30 years. The latest report from the US Solar Market Insight for the third quarter is $0.70 per watt.
- Prices of related goods or services. They can be either complements, which tend to be used in conjunction with the requested product, or substitutes, which can replace the requested product. Batteries complement solar panels by storing energy when the sun is not shining.
- Income of consumers. In 1980, the average price was $7,000 per kWh, while solar panels were available only to consumers with high incomes. However, because of the decline in prices over the past 30 years, solar panels are available to consumers across income levels (Davies, 2010).
- Consumer tastes or preferences. This includes consumer demand for rooftop panels, top panels, and solar panels for road transport.
- Expectations. Usually, the question is whether prices are expected to rise. Continuing declines in solar-panel prices mean that many consumers are happy to wait for the best deal, while some believe that the price of solar panels may rise soon.
Current Demand Data
As current data cannot be obtained, previous data will be used. The demand for solar electricity increased by 30% annually as costs and prices declined rapidly over the past 20 years. Economies of production explain the reduction in cost, along with improving technologies and increasing efficiency of solar cells. In 2009, PV installations increased by 20% to 7.3 GW compared with the previous year. For the first time, the cost of generating electricity from the sun can compete with traditional energy sources in a number of important markets. Solar energy can become a practical and cost-effective way to meet the ever-growing global demand for energy as battery technology advances.
To understand the growth potential, the model of solar energy needs to be examined carefully. The industry naturally favors regions with more sunshine and favorable weather, but the most important factors in growth for many years have been regulatory and financial incentives, such as appropriate tax policies. Local regulatory dynamics can shed light on trends in sustainable-energy policy, markets, and investment strategies, including structures that determine the costs of creating and operating projects in a global environment. The demand for solar energy is expected to rise by 47 gigawatts per year on average from 2014 to 2020. The major markets account for 39 GW per year: the United States, Europe, China, Japan, India, and Brazil. The same group accounted for demand of 36 GW in 2013 and raised global demand to 40 GW.
Solar Currents In Flux
China is expected to account for 27% of this demand, so it is not surprising that in recent years, the government has strongly supported the solar-energy sector. The unprecedented growth in the country over the last twenty years has brought favorable prices to the market. Ironically, China’s current focus on pollution and emissions can slow down solar-energy growth. According to analysis associated with Morgan Stanley’s Asia-Pacific Research Group, the Chinese government is below the required level of solar energy in China and is trying to compare solar-energy generation with nuclear and wind generation to reduce the cost of achieving emissions-reduction targets (Hoover, Eloranta, Holmström & Huttunen, 2002). Indeed, the factors that influence the growth of solar energy and national trends remain. For example, while Japan reduces solar subsidies, thereby reducing the potential for solar energy, the limited availability of land suitable for solar-energy production can also prevent growth in India.
In Europe, there is a slowdown in Germany; however, solar-energy growth is expected to be offset by other countries in the region. The demand for solar energy in the United States is a bright spot. “We are growing the demand for solar demand in the United States,” said Stephen Byrd, a research president in North America for energy, infrastructure, and clean energy. Strong rooftop growth and development indicate that the economics of solar energy around the country will continue. “In the long run, we believe that in some subsidized states, solar energy will be economically viable without subsidies” (Smock, Rudzki & Rogers, 2007).
Rooftops And Batteries
Growth in the rooftop-solar market, not only in the US but around the world, should be part of the large demand and commitment to solar-energy growth. Large-scale “solar plantations” will continue to provide major reductions in the overall cost of solar energy compared with other energy sources, but small-scale rooftop-solar installations for private houses and small and medium-sized businesses are also important. The solar-energy perspective connects vitality and daily sustainability with visible change. Seeing neighbors with solar panels on their roofs and knowing what this means for energy bills, home values, and social values transforms an abstract and inaccessible debate into something concrete and practical (Taylor & Weerapana, 2007).
Energy-storage technology has made significant advances that make rooftop solar energy more attractive. Related changes have also occurred in the fuel-dependent automotive industry. Over the last decade, there have been innovations in hybrid and electric vehicles using batteries to solve the problem of how to create a solid, scalable, relatively small but durable battery that charges quickly. This means that battery technologies used in vehicles can also be suitable for homes and offices that need power. Energy storage helps solve a problem with many renewable-energy sources: variable production. The sun goes down, and the wind does not always blow. Usually, power is supplied through the grid, but when renewable production is unavailable, consumers may have to rely on power stations fueled by coal or natural gas (Donahue & Nye, 2004).
The US government plans to stimulate solar-energy consumption as another source of energy (Hoover et al., 2002). The company known as 1366 Technologies received funds from the US government to create plants to produce photovoltaic solar cells. Some other manufacturers and solar-energy utilities received government funds through the American Recovery and Reinvestment Act of 2009 to support investments of 12 billion dollars and create a $16 billion project. State subsidies are targeted at production to increase the availability of solar panels for consumers. Solar-panel manufacturers will use the latest technology, which will significantly reduce the cost of solar panels. The company is planning to produce silicon wafers directly from molten silicon for solar panels, reducing the cost associated with forming and cutting silicon blocks. In addition, the company intends to use materials that will enhance panel performance.
The US government intends to increase global demand for solar energy, hoping to increase the US market share for solar panels. However, many people still have doubts about the impact of solar energy as another source of energy, both now and in the future. Companies may charge higher prices for products that use new solar-panel production technology in order to recover their technology-investment costs as soon as possible. Although electricity can be generated from the sun, the energy industry has limitations that prevent solar power from being treated as the sole source of generation. However, there are two facts that the energy industry should remember. The first is that power must be delivered to clients regardless of the weather or time of day. Secondly, energy companies, like any other company, work to make money. Because of both of these facts and the current state of technology, solar energy cannot by itself replace the current energy-generation fleet (Swann, 2007).
There are two significant demand peaks, between 6 and 8 a.m. and between 5 and 7 p.m. The first peak occurs when people carry out their morning routines before work. The second peak occurs when people come home from work, turn on the TV and air conditioning, prepare meals, and carry out other household activities. During these sharp peaks, the power system must satisfy both requirements. Generation can be viewed in different ways. The most obvious is to divide it by the source of production, such as nuclear, coal, natural gas, diesel, and hydroelectric power. The second way is to classify generation according to the number of hours and opportunities it is available each day (Taylor & Weerapana, 2009).
Solar-energy production is one of the fastest-growing low-carbon energy technologies. The production of solar energy has grown rapidly in recent years. The main achievements include advances in technology, prices, and productivity and the development of creative business models that encourage investment in residential solar systems. However, further progress is needed to achieve a significant increase in solar-energy adoption at socially acceptable costs. A team of more than 30 experts was responsible for studying the future of solar energy and examining its potential for large-scale expansion. The experts examined the current state of solar-energy production in the United States, technologies for converting sunlight to electricity, different technological approaches, the environment surrounding the solar-energy industry, and policies that can influence it. The purpose was to assess the current potential of solar energy and the competitive state of the industry and to describe policy changes that could support more stable and effective long-term growth (Banerjee, Banerjee & Duflo, 2011).
The worldwide expansion of solar-energy production is an essential part of a major strategy to mitigate the effects of climate change. Fortunately, sunlight is widely available, while demand for electricity continues. In recent years, the cost of solar energy has fallen sharply, and installed capacity has significantly increased. However, solar energy accounts for only 1% of electricity production in the United States and in the world. In particular, without a significant price on increasing carbon-dioxide emissions, raising solar-energy production to a level appropriate to the climate problem would not be possible without significant changes in government policy concerning the value of its deployment. The main objective of United States solar policy was to create a major base for solar-energy production in the years ahead.
Solar-energy growth can have a huge impact on other industries. Electric cars or electric trains that can be powered by solar energy can be encouraged to develop. Ultimately, this will reduce the demand for oil and natural gas and have economic consequences for oil- and gas-producing countries. At present, Middle Eastern countries provide a high percentage of energy needs around the world. Solar-energy growth can make energy more democratic and reduce dependence on fossil-fuel reserves. For example, the EU depends heavily on gas flows from Russia. If some of this energy is replaced by solar energy, the Russian energy industry and economy may be adversely affected, while the EU will depend less on energy imports. Recent political developments in Russia and Ukraine indicate that solar-energy growth can have important geopolitical effects. This could reduce US reliance on oil imports from the Middle East. An important element of solar technology is its potential to help achieve CO2-emissions targets without compromising economic growth. This could provide cleaner energy together with economic growth and a higher quality of life.
References
Banerjee, A., Banerjee, V. & Duflo, E. (2011). ‘Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty.’ PublicAffairs.
Donahue, J. D., & Nye, J. S. (2004). ‘Market-based Governance: Supply Side, Demand Side, Upside, and Downside.’ USA: Brookings Institution Press.
Glenn R., Anthony, H. & O’Brien, P. (2013). ‘Economics.’ Pearson Education.
Hoover, E., Eloranta, E., Holmström, J. & Huttunen, K. (2002). ‘Managing the Demand-Supply Chain: Value Innovations for Customer Satisfaction.’ USA: John Wiley & Sons.
Smock, D., Rudzki, R. & Rogers, S. (2007). ‘On-demand Supply Management: World Class Strategies, Practices, and Technology.’ USA: J. Ross Publishing.
Swann, G. (2009). ‘The Economics of Innovation: An Introduction.’ Edward Elgar Publishing.
Taylor, J., & Weerapana, A. (2007). ‘Economics.’ USA: Cengage Learning.
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