More than a quarter of the world's electricity demand could be met with solar power by midcentury, surpassing generation from any other single source, including coal, natural gas, oil, wind, hydro and nuclear, the International Energy Agency has determined.
In two new "technology road map" reports published yesterday, IEA asserts that solar photovoltaic (PV) systems could generate up to 16 percent of the world's electricity by 2050, while concentrating solar power (CSP) could provide 11 percent of all power.
For that scenario to play out, global PV solar generation would need to surge from today's 150 gigawatts of installed capacity to 4,600 GW by 2050, according to the agency, while concentrated solar power would need to reach 1,000 GW of capacity by 2050, up from today's 4 GW.
If built, those solar systems could offset an estimated 6 billion tons of carbon dioxide annually by 2050, an amount roughly equal to all the carbon emissions from the U.S. energy sector, according to IEA.
Growth in PV technology would have to be particularly robust in the near term, with annual capacity additions rising to an average 124 GW per year, IEA found, with 200 GW of capacity added annually between 2025 and 2040.
That kind of growth could be fostered by steep declines in materials and installation costs for solar systems, according to IEA. The agency's road map assumes that solar PV will see average cost reductions of 25 percent by 2020, 45 percent by 2030 and 65 percent by 2050.
"The rapid cost decrease of photovoltaic modules and systems in the last few years has opened new perspectives for using solar energy as a major source of electricity in the coming years and decades," IEA Executive Director Maria van der Hoeven said in a statement announcing the findings.
"However," she added, "both technologies are very capital intensive: almost all expenditures are made upfront. Lowering the cost of capital is thus of primary importance for achieving the vision in these roadmaps."
The agency also said that meeting ambitious solar targets will require "clear, credible and consistent signals from policy makers, which can lower deployment risks to investors and inspire confidence."
By contrast, "Where there is a record of policy incoherence, confusing signals or stop-and-go policy cycles, investors end up paying more for their investment, consumers pays more for their energy, and some projects that are needed simply will not go ahead," van der Hoeven said.
Not projected, but possible
IEA officials were careful to point out that the new numbers are not projections but scenarios that energy experts believe could occur if certain economic, regulatory and political scenarios play out. These include electricity market reforms that encourage distributed generation models and government policies aimed at reducing global greenhouse gas emissions from traditional fossil-fuel-based power generation.
For solar PV markets, IEA projects that China will emerge as the world's No. 1 adopter of the technology over the next 35 years, followed by the United States, India, and parts of Asia and the Middle East. Europe, one of the world's most aggressive early adopters of renewable energy technology, will fall from its current No. 2 place in the solar PV market as other countries and regions eclipse its growth, IEA said.
For concentrated solar power, IEA sees emerging markets in North and South America, Australia, China, India, the Middle East, and Africa. But those markets are expected to develop more slowly than the PV market, with the strongest growth coming after 2020.
In a telephone interview, Paolo Frankl, head of IEA's renewable energy division in Paris, said the implementation of such policies, along with advances in transmission, energy storage and demand-side management, will be primary determinants of whether solar power can capture a significantly larger share of the global electricity market.
"There remain big questions about achieving socket parity, especially in Europe," Frankl said. While solar PV provides abundant electricity during the summer months in markets like Germany, it is unable to meet year-round power demand due to the continent's long winters and energy demand peaks.
In other markets, however, such as Southern California, solar power is becoming increasingly competitive with other electricity sources as supply and demand are more balanced throughout the year.
But experts say the costs to produce power in the United States will have to continue their downward trajectory if the technology is to become truly competitive with alternative fuels such as natural gas.
U.S. prices continue to drop
According to Solar Energy Industries Association data, the national average price of a residential solar system in the United States was $3.74 per watt at the end of 2013, while commercial systems installed on flat-roof buildings average $2.39 per watt.
Those prices are among the lowest ever seen in the United States, but some experts have warned that price pressure is rising in the second half of 2014 in part due to increased costs for polysilicon as well as the effect of U.S. tariffs on Chinese imports of solar modules.
Rhone Resch, SEIA's president and CEO, said in a statement that IEA's latest road maps for solar energy show "the future for solar is strong." But, he added, "we need to maintain and even expand smart public policies in order to give solar a fighting chance against entrenched energy sources, such as fossil fuels."
Foremost among those policies is the government's 30 percent investment tax credit (ITC) for residential and commercial solar projects, which SEIA estimates has undergirded a 1,600 percent growth in U.S. solar installations since 2006, when the tax credit was first implemented.
Another trend that has helped to expand solar in the United States is third-party ownership deals that allow homeowners, businesses, and even institutions like schools and hospitals to install solar systems with little or no down payment by leasing the equipment from independent companies like SolarCity, now the largest U.S. solar firm.
But Frankl expressed some doubt about the long-term viability of such models. While third-party financing can be very effective at helping to "jump-start" solar investment, he said, it remains unclear how the build-out of leased solar systems will affect markets over the long term as PV systems age and contracts among solar companies, homeowners and utilities expire or change.
As for the federal ITC, Frankl said the more important task for Congress is to give clear and early signals about the future of the tax credit rather than allow the question of extension to become mired in politics and last-minute dealmaking.
Lastly, growth in U.S. solar markets will be much affected by U.S. policy decisions on carbon dioxide. If U.S. EPA holds firm to its program to limit energy-sector CO2 emissions, Frankl said solar power could see a sustained boost. "If you put a cap on coal power, something else will have to go online, and I suspect it will not just be more shale gas," he said.
Click here to view the solar PV technology road map report.
Click here to view the CSP technology road map report.