Friday, June 26, 2009

Solar energy pushed back because of recession

Economic recession and credit crisis is having serious effect on future development of solar energy sector. A year ago optimism around solar energy was constantly rising with many energy experts proclaiming it as renewable energy source NO.1 , and one of the top future energy sources. What has happened in only one year that changed all of this? First of al investors have started thinking twice before investing into solar energy sector mostly because of falling government tax receipts. What investors want are some positive incentives and this is something that has been very rarely seen in last couple of months.

Some energy analysts claim the same scenario will continue in following months and how we haven't still seen the worst. Their major concerns are that higher cost of finance will continue to prevent further growth of solar energy sector, which will put much more emphasis on some cheaper energy projects. We must also not forget that solar energy is only in its early stage of a 30–50 year run after which according to many energy experts should show its full potential.

Cost competitiveness is still factor that is sorely missed in solar energy sector. Energy is still all about more efficiency and less funding and this is something solar energy still isn't providing. There is no doubt that once solar energy becomes competitive with fossil fuels, we should expect completely different story. Financial incentives would of course have to play major role in achieving this competitiveness but this can be only expected once financial crisis is over.

There are already some positive experiences in solar energy sector that should be good basis for future projects. For instance experience in the flat-panel and semiconductor industry indicates that even without technology or efficiency gains, productivity improvements are likely in the 10%–30% range per year, with annual yield improvements of 10%–15%.

Cost decline is the most important thing that solar energy needs to fully blossom. Once costs decline, solar energy technology is likely to advance. In order to achieve this there would also have to be a network that would connect resellers and distribution, making technology transfer fairly easy.

Of course some other factors will also play important role like geography and politics. Geography is very important factor that will determine the shipping costs as well as manufacturing location, and politics should provide incentives and tax benefits to attract major players in solar energy sector. Solar energy projects have been steadily growing in China, India, Korea, Spain, and in many other countries around the globe. Good old Uncle Sam is also focusing more on solar energy sector, especially in sunny states like Arizona and California.

So we are definitely seeing some positive movement in solar energy sector but sadly not as much as we would want it. It will be very interesting to see whether solar energy sector will experience big boost once credit crunch is over, or will primary attention turn to some other energy source.

There is absolutely no doubt that solar energy has extremely high potential and that we should give this energy sector a chance that it definitely deserves. We mustn't forget that energy demand is growing each year and that we should be already thinking how to satisfy our future energy needs. Solar energy could be one of the best solutions, not only because of its high potential but also because it is ecologically acceptable energy source.

1 comment:

Anonymous said...

solar energy will rule the future and end up as the future number one energy source...