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Solar Power: Disruptive Innovation in the Global Energy Market

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Photo Credit:  Some rights reserved by  Mountain/\Ash on Flickr.

Photo Credit: Some rights reserved by Mountain/\Ash on Flickr.

The battle to advance renewable energy against the strongholds of fossil fuel is being fought on many sides. But it could very well be with solar power that is won or lost, especially when it comes to cost and consumption.

According to the authors David Frankel, Kenneth Ostrowski, and Dickon Pinner of McKinsey Quarterly, the solar power industry is poised to assume a bigger role in global energy markets. The authors say that is a more cost-competitive power source today than it was a decade ago. Solar power holds the potential to disrupt the global energy industry as the world knows it today.

 Solar’s Cloudy Past

The solar power industry wasn’t always cloud-free. Competition from cheap natural gas and convenient fossil fuels made it difficult for pioneering solar start-ups to get into the mainstream market. Subsidy cuts coupled with the financial crisis led to the bankruptcy and bargain-price acquisitions of more than just a few solar firms. But thanks to rising consumption and falling costs, solar power is rapidly gaining ground. The authors say that solar is progressing toward grid parity in the residential segment. According to the IEA, solar PV was the fastest growing renewable energy technology worldwide. A massive 65 gigawatts of cumulative installed capacity of solar PV was reached at the end of 2011, compared to only 1.5 GW in 2000.

Solar Cost and Consumption

Beyond points for social responsibility and eco-friendliness, businesses and organizations are upping their solar consumption levels for more tangible gains. These include energy expenses savings, power supply diversification, and consumer appeal. It is now possible for businesses with high energy costs and large footprints to install commercial-scale rooftop solar at a lower cost than continually buying energy from a utility company. In its report “Solar Means Business 2013”, SEIA listed the top 25 companies by solar capacity in the U.S. as:

via Solar Energy Industries Association (SEIA)

via Solar Energy Industries Association (SEIA)

In addition, companies that operate in isolated, physically demanding environments such as mining and defense firms need solar as a much-needed power option.

Low costs do not only drive consumption but also investment. Cost of capital for solar power is falling, the authors say. Together with its long-term contracts and comparative insulation to fuel price fluctuations, investment options for solar are becoming more appealing.

Potential for Disruption

Aside from its current (small) share in the energy supply market, solar power’s true disruptive potential lies in its ability to capture all new demand in the energy market. In the past, this has fueled a large part of annual revenue growth. According to the article, new solar power installations could account for up to 50% of new consumption. This will directly affect the amount of its competitors’ new capital as well as returns. In the near future, solar could have wider implications in the utilities market and a deeper one with partner industries such as security systems and energy-information services.

For too long, solar’s potential (disruptive and otherwise) have been undermined by a number of industries. That could turn out to be a costly mistake sooner than most would think. Solar’s impressive progress on the battlefront could not only mean a breakthrough but a bellwether for more renewable energy sources to gain mainstream entry.

Estel M.
About Estel M. (348 Posts)

Estel Grace Masangkay is a creative writer who enjoys outdoor trips and nature activities. She is passionate about sustainability and environment conservation. Follow Me @Em23me.


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6 Comments on “Solar Power: Disruptive Innovation in the Global Energy Market

  1. Solar power has been growing very rapidly; businesses everywhere are switching to solar power. According to IEA solar power has been growing so rapidly that they say, “A massive 65 gigawatts of cumulative installed capacity of solar PV was reached at the end of 2011, compared to only 1.5 GW in 2000.”; which is absolutely incredible! As a planet I am glad to say that were working towards a healthier planet. If only we could get people to stop using oil and natural gas we can make a world with fewer emissions and more green power! My question however is with solar power growing so rapidly here in the US would I have the same stronghold in other countries around the globe? We are a very spoiled nation, but is there any way we could get people of other nations to join in our fight for renewable energy and to save our planet?!

    • Kit – solar power and other sources of renewable energy are definitely taking hold in other countries. For example, Germany has been a leader in solar for many years now. China is increasing solar energy production to help cut down on smog. I’m optimistic about our clean energy future.

  2. The problem with the current natural gas and fossil fuel competition in the market is that they are rich and powerful. Unfortunately, they are rich enough and powerful enough to prevent any meaningful amount of change to occur in this industry. If we had a fairer marketplace, we would probably be seeing many more inventions aside from solar power that could change the look of energy as we know it today. But, who knows…I know I am looking forward to when solar power becomes more main stream.

  3. I think solar power is fast becoming a very viable option for households and businesses but as the supply meets demand the elctricity system will inevitably struggle to cope with the increase in power thus become another tax channel for the governent?

  4. It would be interesting to have a spyglass that would let us look 20 years into the future. I expect we’d be surprised at just how much solar power we’re using – both on and off the grid.

  5. Yay for solar power! It’s great to see panels on more and more housing association houses built in the UK now, let alone when big companies get on board. We (The Forest Centre, Bedfordshire, UK) are now completely powered by our photo-voltaic panels on the roof and the wind turbine recently installed by Blue Energy in our Country Park and we have never been more proud.

    We have a blog about environmental and climate issues if you ever fancy aking a look, it’s over at http://www.marstonvale.org/news

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