Solar energy is the most invested type of renewable energy globally, it’s seeing significant growth in market leaders such as the US and China, and new business models continue to disseminate solar energy to even further regions of the globe.
According to Bloomberg New Energy Finance, about US$310 billion was invested in clean and renewable energy in 2014. Of that, almost half—US$150 billion—went to solar energy systems, more than any other technology. Solar’s amount was an impressive 25% larger than annual investment in the sector for 2013. Some particular types of solar investment, such as those from venture capitalists, actually grew a whopping 175% in 2014.
By contrast, wind energy – the second largest source – received only US$100 billion in 2014. “Energy smart” technologies received even less at only $37 billion. Some clean energy technologies such as biofuel, biomass, waste-to-energy, and small hydroelectric dams actually saw investment levels fall.
A glowing force in sustainable energy.
Clearly, solar dominates the global market for clean energy. If reflected as national Gross Domestic Product, the investment in solar is close to the entire national economy of New Zealand, which reported about US$150 billion in GDP in 2014.
This domination is reflected not only in raw investment numbers, but also in annual installed capacity. About 40,000 megawatts (MW) of solar energy capacity was installed last year, an amount equivalent to roughly 40 nuclear power plants, or the national nuclear capacity of Japan before Fukushima.
In some particular countries, such as market leaders China and the United States, solar’s numbers are even more impressive. In China, 23,000 MW of solar were installed—an amount so large it would power about half of Australia. In the United States, 6,200 MW of solar systems were installed in 2014, a 30 per cent increase over 2013.
Solar energy’s promise is not limited to grid-connected configurations. The International Energy Agency estimates that at least six million new off-grid household solar systems reached 29 countries in 2014. One of the most successful programs has been carried out in Bangladesh, where more than 3 million systems were operational at the end of April 2014 (with 65,000 units being sold every month) serving in total 13 million beneficiaries, or 9% of the population.
More affordable and reliable solar technology is only one major driver behind these trends. Another is the emergence of new, innovative business models. Pay-as-you-go (PAYG) models are especially effective for solar systems because price levels and schedules are set to match customers’ variable cash flows and their energy consumption patterns. One PAYG model operating in Africa had 30,000 solar systems in the distribution channel as of March of 2014. Kenya and India are also using PAYG for household solar systems on a large basis.