Solarpower is one of the fastest-growing sources of renewable energyworldwide. Many nations, concerned about the environmental impacts ofelectricity generation from fossil fuels or from large-scalehydroelectric plants, have been turning to solar power as anenvironmentally benign alternative. Two solar power technologies—solarphotovoltaic and solar thermal—are widely employed today, and their useis likely to increase in the future.
At present, the costof electricity produced from solar photovolatics generally is too highto compete with wholesale electricity. In sunny locations, however, thecost can be as low as 23 cents per kilowatthour,a which may becompetitive with the delivered price of electricity to retail customersin areas where electricity prices are high, as they are in California,Southern Spain, and Italy. On the basis of installed cost per megawatt,solar photovoltaic installations are relatively costly, because thepanel components are expensive and the conversion of solar energy toelectricity in the cells still is inefficient. From conversionefficiencies of 5 to 6 percent for the first solar cells built in the1950s, there has been an improvement to efficiencies of 12 to 18percent for modern commercial wafer-silicon cells.
Efficiencygains, coupled with other technological advances, have reduced the costof solar photovoltaic capacity from approximately $300 per watt in1956d to less than $5 per watt in 2009. EIA’s Annual Energy Outlook2009 projects that, by 2030, overnight capacity costs for newgenerating plants using solar photovoltaics will be 37 percent lowerthan the 2009 costs. In addition, the efficiency of solar photovoltaicapplications is expected to improve as the technology continues to bedeveloped. As a result, U.S. solar photovoltaic generating capacity isprojected to increase from 30 megawatts in 2006 to 381 megawatts in2030.
Although prices for electricity from photovoltaicsmay not become widely competitive with wholesale prices for electricityfrom conventional generating technologies within the next 25 years,they may be competitive with high retail electricity prices in sunnyregions. Already, photovoltaic technology is gaining market share incountries where declining prices and government- backed financialincentives have led to increased usage.