Viewpoints

About Photovoltaics

Photovoltaic cells convert light energy directly into electrical power in applications ranging from residential homes and utility-scale power to off-grid applications, including space vehicles, wristwatches, and water pumps for developed countries. Manufacturers can produce cells of just a few square centimeters or combine modules into arrays of virtually unlimited size. The cells are silent, produce no emissions, usually have no moving parts, feature very low operation and maintenance costs, and typically last for more than 25 years. New materials and production processes have enabled substantial improvements in the performance and production costs of PV cells, with silicon as well as some thin-film PV technologies setting new standards. Flexible substrates and novel manufacturing techniques are also enabling PV's use in novel applications such as building-integrated photovoltaics and portable power sources that can charge a user's mobile-electronics devices or a portable computer. Opportunities exist for module producers, production-equipment vendors, material suppliers, and makers of balance-of-system equipment such as power inverters, mounting and racking hardware, and tracking systems, but competition in many segments has become fierce, with a number of companies going bankrupt. Installation costs still represent approximately 50% of the final price of PV systems, providing plenty of opportunities for installers (and manufacturers that produce easy-to-install PV systems) to increase operational efficiencies, reduce overall system cost, and improve profit margins.

In the past decade, the number of grid-connected PV installations has increased dramatically as PV production costs have dropped substantially and policy support for PV has increased. The PV market currently depends on a variety of public-support systems that differ by country and region, including renewable-energy-production mandates for electricity utilities and various forms of subsidization through feed-in tariffs or tax incentives. After decades of development, the PV industry is approaching a point of critical mass, at which it has become possible to provide energy from PV at a price that is competitive—in some regions—with the price of conventional electricity production. Financing innovations such as solar leases and power-purchase agreements have helped to grow the residential and commercial-scale markets, and many PV-module makers have moved to a vertically integrated model to build, own, and operate utility-scale plants under contract to utilities.

Leading nations throughout the world are working to reduce carbon emissions while still satisfying the increasing energy needs that accompany economic growth. Solar PV power is meeting some of that need. Developing economies are also desperate for energy supplies as they work to raise the living standards of billions of people while at the same time looking to a future in which fossil-fuel use will be more restricted (because of either supply or regulatory constraints). PV systems offer clean, reliable, economical power, whether connected to a distribution grid or operating in areas in which grid power is not readily available. In rural, "off-grid" locations, PV (with battery backup for overnight use) can be a particularly economical solution, especially where transporting in fuel for generators is difficult or costly.