PV to lead rapid increase in decentralized power generation over next 5 years14. August 2012 | Top News, Applications & Installations, Industry & Suppliers, Global PV markets, Markets & Trends | By: Becky Beetz
Quickly becoming the new industry buzzword, distributed power generation, led by photovoltaics, is set to "rapidly" expand over the next five years to reach an annual installation rate of 63.5 GW by 2017.
According to Pike Research's latest Renewable Distributed Energy Generation
report, centralized energy generation is becoming more costly and, when taking into consideration an expanding population with escalating energy needs, decentralized structures are increasingly presenting more cost-effective options. Specifically, it says renewable distributed energy generation (RDEG) is "uniquely positioned to disrupt this traditional paradigm".
Over the next five years, the research company predicts that RDEG will grow almost three-fold to reach annual installations of 63.5 GW a year in 2017. Between now and then, it says nearly 232 GW of capacity will be added, of which photovoltaics is expected to account for 210 GW.
In 2011, 20.6 GW of RDEG was said to have been installed, thus representing global revenues of US$66.5 billion. Europe is the leader in terms of installed capacity, with Germany and Italy reportedly accounting for 58 percent of the market. Meanwhile, in the Asia Pacific region, China was said to comprise 49 percent of all RDEG installations.
For this year, Pike Research estimates that while Europe, North America and Asia Pacific will continue to lead growth, markets like Africa and the Middle East are becoming "indispensable". "Europe will continue to be the largest market for RDEG during this forecast period … but Asia Pacific, led by China, will grow the fastest as untapped domestic markets for RDEG installations emerge," write the authors.
They add, "North America, led by the United States, will see significant growth as the cost of renewable energy approaches that of conventional energy in many parts of the country and the solar lease and power purchase agreement business models gain momentum. Meanwhile … developing countries are increasingly looking to RDEG technologies as a critical piece to their short- and long-term growth."
This swing from centralized to decentralized is said to have been driven by a shift in the economic, environmental, social and political landscapes, following such changes as the modern scale of fossil fuel and renewable energy systems, and growing environmental concerns.
The report’s authors add, "The centralized power generation, transmission, and distribution model is growing more costly to maintain at current levels, let alone expand to meet the rising electricity needs of growing (and increasingly city-dwelling) populations. Therefore, despite being smaller in scale, renewable distributed energy generation (RDEG) sources such as distributed solar photovoltaics (PV), small wind, and stationary fuel cells, with less need for transmission and little to no emissions, are uniquely poised to turn the 20th century power production paradigm on its head."
They go on to point out the two energy concepts are not mutually exclusive, and admit that RDEG, which currently contributes less than one percent to the total electricity generated, is still in its infancy, compared to centralized energy models.
"That said," they state, "RDEG is rapidly maturing and expected to play an increasingly important role in meeting the energy challenges of the 21st century. One such indicator is that in a growing number of cases around the world, RDEG technologies are more cost-effective than centralized installations that require transmission to population centers. In many ways, the overall momentum is shifting to RDEG sources that inherently provide consumers more control over the electricity they consume and generate."
In order for RDEG to realize its full potential however, Pike Research says investments must be made, new business models created, technology developed, and utilities must become involved. Furthermore, they believe such financing options as solar leasing programs, will help drive the market as the technology becomes more available to end-consumers.
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