Solar energy outstrips other renewable energy sources despite its fair share of ups and downs in recent years

• Overview of the overall renewable energy market
• Analysis of increasing investment and capacity addition for solar energy
• Road ahead for the renewable energy

The global renewable energy market is currently valued at $1,469 billion (as of 2017) and is projected to reach $2,153 billion by 2025, registering a CAGR of 4.9% from 2017 to 2025. The main reasons for the rise of renewable energy are a movement of governments and businesses to renewable energies as fossil fuels are limited. Addedly, in order to reduce carbon emissions and curb climate change, achieve energy security and avoid dependence on fossil fuels mainly crude oil and coal. Further, with the advancement of technology, the feasibility of renewable sources to produce energy is also a key reason in the rising use of renewable energy.

According to the research by the REN21, solar power is the fastest growing renewable energy in the world. In 2017, ~180 gigawatts (GW) of the renewable capacity additions were made, solar’ s capacity expanded the most at ~100 GW, with China leading the way. This growth was driven by a fast reduction in costs due to technological advancement and competitiveness. While new investments in all other energy sources including wind power, biomass and waste-to-energy, hydropower, biofuels, geothermal and ocean energy either declined or remained constant as compared to 2016, solar power came close to an all-time high from 2015 and stood at $160.8 billion in 2017. It also registered an increase of new investments by about 18% in 2017 as compared 2016.

Additionally (in 2017), renewable energy attracted more investors than fossil fuels or nuclear power generation sectors. An estimated $280 billion was invested to construct new renewable power plants. This was way much higher than the investment in fossil fuel and nuclear power plants combined at approximately $103 billion and $42 billion, respectively. Overall, renewable energy accounted for ~70% of the total amount invested in the new power generating capacity in 2017.

In the same year, the global capacity added through solar was more than any other type of power generation technology. Similar to the investment numbers the solar energy units capacity installed were more than the capacity addition by both fossil fuels and nuclear energy. This surge was due to the major contributions from Japan and the US including many growing economies, with the likes of China and India. The US-led the pact followed by China and India for solar power capacity additions, with more than 75% of the global solar capacity being added in these three countries in 2017 alone. Of the lot, China increased its new installations by around 50% from 2016 and India also doubled its capacity. Globally, the expansion of solar power was largely due to the increasing competitiveness of the solar PV along with the rise in demand for electricity in the developing economies. This was due to the increasing awareness of the potential of solar power for the reduction of pollution, while at the same time providing access to energy. Nevertheless, global growth was mostly driven by governments’ incentives and regulations.

Furthermore, looking into the investment deals in solar start-ups, 2017 was a good year for the industry despite its fair share of downs in the previous few years. According to the data reported by the CB Insights, there were a total of 99 deals in the first three quarters, with an expected full-year run rate of about 127 deals. This was a 34% increase in the number of deals as compared to 2016. While the number of deals increased, the average funding (disclosed) reduced in 2017, as investors in spite of their interest in the sector were a little more cautious with their money. The main reason for their consciousness on financing in the start-up investment for the solar segment was due to a fierce competition both in terms of the pricing and technology. Thenceforth, the well-funded Solyndra, which after raising more than $1.6 billion in funding had to shut down in 2011 because of pricing out against cheaper technology and alternatives. Hence, investors in the sector have been all the more cautious with their investments.

The renewable energy industry and the market started to gain prominence in the developed economies, but their centre of mass shifted to the emerging markets. Renewable energy, especially solar and wind power have moved from mainstream to preferred energy sources around the world. As the renewable energy sources reach both the price and performance parity with the fossil and nuclear sources showing their ability to enhance, become increasingly efficient and competitive via new technologies, the shortcomings faced earlier are also dissolving. Once dismissed as a product for only the niche market as it was too expensive, the renewable energy sources at present can beat conventional sources on pricing, while these are becoming equally competitive in their performance as well. In addition, with an increasing demand for renewable energy, the case for renewable has become stronger than ever.

Today around 80% of the global energy is supplied by fossil fuels and as per the International Energy Agency (IEA), the demand for energy is projected to double in 50 years. There will be massive progress in the number of renewable energy technologies deployed in the world at that time. Despite all this, the IEA’s forecast states that because of heightened demand, the fossil fuel energy supply will still be catering to about 80% of the total world energy’s demand. As stated by many experts, technology will be the key to expanding access to renewable energy.