Skip to main content
Read page text

Page Text

Return to Table of Contents

Solar Power Comes of Age How Harnessing the Sun Got Cheap and Practical Dickon Pinner and Matt Rogers

Solar power has been declared a winner before, only to flounder. It’s easy to remain skeptical today, given that solar power accounts for less than one percent of the global energy supply. But it is also expanding faster than any other power source, with an average growth rate of 50 percent a year for the past six years. Annual installations of photovoltaic panels increased from a capacity of less than 0.3 gigawatts in 2000 to 45 gigawatts in 2014—enough to power more than 7.4 million American homes. This time really is different: solar power is ready to compete on its own terms.

The momentum behind solar power is a result of innovations in regulation, industry, technology, and financing. In a number of markets, it no longer needs public subsidies to compete on price with conventional power sources, such as coal, natural gas, and nuclear power. The International Energy Agency, which has historically taken a conservative

Dickon Pinner is a Director in McKinsey’s San Francisco office, where he leads McKinsey’s Global Cleantech Practice. Matt rogers is a Director in McKinsey’s San Francisco office. In 2009–10, he served as Senior Adviser to the U.S. Secretary of Energy. He is a co-author, with Stefan Heck, of Resource Revolution: How to Capture the Biggest Business Opportunity in a Century.

approach to evaluating solar power’s prospects, has projected that by 2050, in the best-case scenario, solar energy could be the single biggest source of power, generating as much as 27 percent of electricity worldwide.

If that happens, the consequences will be profound. Electricity will reach places that have never known what it means to get light or heat on demand. The price of electricity could fall, and utilities will have to figure out how to adapt. But the environmental gains, in terms of lower emissions of particulates, sulphur, and greenhouse gases, would be profound. THE POWER OF POLICY Four factors lie behind the rise of solar power. The first is regulatory support. Around the world, governments have enacted a range of pro-solar policies, including requirements that utilities generate a given fraction of their electricity from solar power, feed-in tariffs (a guaranteed price per kilowatt of solar power), and subsidies to manufacturers of solar panels and the households that buy them. Policymakers have supported solar power for a number of reasons, including a desire to reduce emissions, diversify their countries’ energy supplies, and create jobs. Perhaps most important, they recognized the long-term potential of solar power and wanted to foster a market for it.

Germany, the country with among the most aggressive polices, added 35 gigawatts of solar-panel power in the last ten years, driving the majority of global demand for much of that time. In the United States, a set of mandates requiring utilities to produce a certain amount of electricity from renewable

March/April 2015 111

E N E R G Y ’

SH O T T E S T

S E C T O R

Skip to main content