Trends and benefits of photovoltaic energy

From Electrical Installation Guide
Home > PhotoVoltaic (PV) installation > Trends and benefits of photovoltaic energy

Worldwide growth of solar PV

This technology enables electricity to be produced directly from sunlight, which is a source of renewable energy.

Photovoltaic (PV) energy is one of the most promising technologies addressing the global challenge of climate degradation and meeting the pressing need for green renewable energy and sustainable development. PV energy production has several benefits: solar energy is unlimited, is available worldwide, does not emit greenhouse gases (GHG) or other pollutants during operation, and consumes little or no water. PV panels are silent producers and require little maintenance.

In addition, producing energy from the sun reduces the dependence on energy imports, and over the long term should improve the security of energy supply and stabilize the cost of electricity generation.

Pushed by sustainable energy policies, extensive country engagement, technology development, and cost reduction, today’s installed PV capacity is growing rapidly. By 2022, cumulative PV capacity reached 1185GW compared to only 100GW in 2012.

Fig. P1 – Installed photovoltaic capacity through 2022. Source: IEA PVPS 2023 Snapshot of global Photovoltaic markets

Decentralization of electricity production

PV installations are usually split into two main categories:

  • Large utility-scale PV installations, which typically inject all electricity production into the grid. Utility-scale PV installations are more cost-effective due to their scale. As the number of large utility-scale PV installations is growing, the new grid codes require them to support the grid and assure its stability
  • Commercial and residential installations (rooftop, car park or building integrated) where produced energy can be consumed locally or sold back to the grid.

These installations represent the half of the installed PV capacity today.

Self consumption on the rise

There are two main options for photovoltaic energy use:

  • Export it to the grid
  • Self consumption

The exporting-to-the-grid option offers a long-term contract with guaranteed rates for exported PV energy (feed-in tariff policy).

This model was popular in the past because it was supported by a massive subsidized campaign to expand solar energy deployment. With the decrease of PV system costs and the increase of PV installed capacity, feed-in-tariff rates have progressively decreased in many countries, becoming even lower than end-user electricity rates. When that is the case, self-consumption becomes more profitable, and thus progressively replaces exporting to the grid for residential, commercial, and industrial buildings.

The trends for feed-in-tariff, price, and cost of electricity in Germany are shown in Fig. P2. In 2006, an industrial customer in Germany was paid roughly 40 cents per kWh for selling its PV energy production, buying its electricity at the much lower tariff of around 10 cents per kWh. Exporting the PV production was financially advantageous and this option was preferred. Ten years later, in 2016, the tariff for selling the PV energy is lower than the electricity rate, so self-consumption is more profitable.

Self-consumption is the economic model where the residential, commercial, or industrial entity uses the generated PV electricity to cover its own electricity needs, thus acting as both producer and consumer, or prosumer. The solar energy being produced is consumed instantaneously.

If and when the generated PV electricity exceeds the prosumer’s consumption, several options exist to give value to the PV production excess: it can be injected into the grid; it can be stored and used in deferred time; or prosumer consumption can be shifted to fit the PV production.

Self-consumption is the model promoted and supported today by a growing number of countries because it makes energy consumers active players in the energy transition and contributes to meeting the objective of increasing the share of renewable in the energy mix.

Prosumers also prefer the self-consumption model for several reasons:

  • It offers, or will offer in the near future, the greatest economic benefits
  • It allows prosumers to consume their own solar energy
  • It provides better control of energy bills
  • It promises greater future independence from the grid and electricity rate variations
Fig. P2 – Evolution of feed-in-tariff rates and electricity price in Germany. Source: Recent Facts about Photovoltaics in Germany, Fraunhofer ISE, 2017

Access to energy

Photovoltaic energy production remains one of the only means of supplying electricity to 2 billion people who currently do not have access to it.

This is a massive way of supplying electricity, independent of any network.

In order to size these off-grid installations correctly, it is first necessary to identify the required load curve and the number of days where the installation will not be exposed to sunlight in order to identify how much energy needs to be stored in batteries. This information is used to determine the size and type of batteries required.

Then, the surface area of the photovoltaic sensors must be calculated to ensure that the batteries can be recharged in the worst case scenario (shortest day of the year).