The Sun Wins… The Magic of Sunlight That Doubles in 3 Years[딥다이브]

‘Magic silicone that lasts almost forever’.
In 1954, when Bell Labs (now AT&T) developed the world’s first solar cell, the New York Times article was so excited. And now, 70 years later, the magic of sunlight is becoming a reality. As the price of solar modules plummets, solar power generation is growing at an explosive rate.

The growth of solar power generation is not noticeable. Is it an environmentalist’s delusion? Let’s look a little further afield, away from Korea. Cheap Chinese solar panels are starting to cover the roofs of homes in Europe, South Asia, and Africa, as well as the deserts of the Middle East and the lakes of Southeast Asia. Solar power is changing the landscape of the global energy marketLet’s take a look.

A power company worker walks past solar panels installed in Nairobi, Kenya, Africa. The global solar market is experiencing explosive growth as solar panel prices plummet. AP News

*This article is the online version of the Deep Dive newsletter published on the 20th. Subscribe to Deep Dive, the ‘economic news that you’ll get hooked on as you read’ newsletter.

Rooftop covered square board

Shiny square panels cover the roofs of houses, hospitals, factories and mosques. Solar panels are a common sight in the Pakistani capital Islamabad. This change comes as electricity prices in the country have doubled in the past three years. Instead of using expensive electricity from the state-run power company, Businesses and homes are installing Chinese-made panels on their roofs to generate their own solar powerIn the first half of the year, the power generation capacity of solar panels imported by Pakistan from China was a whopping 13 gigawatts (GW). This country Adding nearly 30% of official power generation capacity (46 GW) in just 6 monthsIt’s done. The unprecedented ‘solar boom’ is making the state-run power company weep (power consumption is falling), but there is no stopping the trend. The price of solar panels is falling further. In Pakistan, the price of solar panels is now 30 rupees (about 143 won) per watt (W), down more than 60% from a year ago (80 rupees).

In Pakistan, where electricity bills are skyrocketing, a boom in solar panel installations is underway. Local installers advertise that “you can recover your investment in three years.” Local company website

It’s not just roofs that are being covered with cheap Chinese solar panels. According to the FT, in the Netherlands and Germany, they are now Solar panels used to make garden fenceYes. Putting solar cells vertically to receive sunlight? It may be less energy efficient, but it saves installation costs because you don’t have to go up to the roof to work. BloombergNEF analyst Jenny Chase says:Solar panels have become so cheap that they can be installed just about anywhere.This is a result of the fact that the installation cost (not the panel cost) takes up the majority of the cost.”

In Germany, the energy crisis was severe due to the Russian-Ukrainian war, which caused energy prices to skyrocket, and the shutdown of nuclear power plants. As a result, there was a boom in installing solar panels on roofs and balconies in German homes. Last year alone, 14 GW of new solar systems were installed. 85% growth rate compared to a year agoI recorded it.

A German house covered with solar panels on its roof. Recently, in Germany, the number of houses with solar panels installed not only on the roofs of houses but also on the balcony railings of apartment buildings and garden fences of houses has increased significantly. This is due to the energy shortage and the plummeting price of Chinese solar panels. AP Newsis

Another place where the solar era is being felt is Africa. In this continent where 600 million people do not have access to electricity, expensive equipment such as diesel generators were previously needed as emergency equipment to provide a stable power supply. Now, cheap solar panels are replacing them. According to the nonprofit Sustainable Energy Africa (SEA), rooftop solar systems in Namibia, Eswatini, and South Africa have grown to account for about 10% of the total official power generation capacity.They are cheap and the African market is flooded with Chinese panels. “For most companies,[solar]is the obvious choice.” (Joel Nana, SEA analyst)

An aerial view of a refugee camp in Kenya in January. Square solar panels can be seen on the roofs. Inexpensive solar panels are now lighting up African businesses and factories, as well as small huts without electricity. AP News

All predictions were wrong… Exponential growth

In short, cheap Chinese solar panels are quickly taking over rooftops around the world.

How cheap is it? According to the US OPIS survey The price of solar modules in the Chinese market is currently around 9.5 to 10 cents per watt (W) (0.095 to 0.1 dollars).It was 24 cents at the beginning of last year and 15 cents at the end of last year, so the rate of decline is too fast. Just 10 years ago, there was a fuss about it falling to ‘below $1 per W’, but 1/10 in 10 yearsThis is it.

This is inevitable because production capacity is seriously overcapacitated. According to Rystad Energy, at the end of last year Global solar cell manufacturing capacity increases 70% in one year to 1,200 GWIt has been blown up. Last year, the whole world Newly installed solar power capacity increased 80% year-on-year to 444 GW(BloombergNEF estimate). It means that the factories are churning out three times the amount that the market can handle. As the oversupply is not being resolved but rather is getting worse, the price of polysilicon, a key raw material for solar panels, has fallen by one-eighth (from 235 yuan per kg to 32 yuan per kg) in just one and a half years. China’s four major polysilicon companies recorded massive losses in the first half of the year.

The growth trend of polysilicon production capacity worldwide. According to energy consulting firm Rystad Energy, China accounts for 96% of the global polysilicon market share (the red line in the bar graph is China). As Chinese companies have expanded production capacity so rapidly, the price of polysilicon has plummeted to the point where it is now below the cost of production. Rystad Energy

This kind of overproduction and chicken game from China. It’s been repeated so many times in the solar industry that it’s boring now, right? What we’re paying attention to is not the chicken game itself. It’s the energy market situation that has changed significantly because of it.

Let’s look back to 2009, when the Lee Myung-bak government was calling for “green growth.” At that time, the global solar power installation capacity was only 23 GW. What did the International Energy Agency (IEA) predict at the time? It predicted that it would increase to 244 GW (cumulative concept) over the 20 years from 2010 to 2030. So what’s the reality? It already surpassed that number in 2016.

At the time, there was an organization that made a more daring prediction – reaching 921 GW by 2030. It was the environmental group Greenpeace. At the time, it was laughed at as absurd. Looking back now, it was a truly humble prediction. As of the end of last year, global solar power generation capacity had already reached 1,419 GW.Because it did. It is an explosive growth that far exceeds expectations.

In other words, a situation is unfolding that no expert could have predicted even 15 years ago. As China plays chicken by adding ridiculous excess capacity, surprisingly, the market catches up and grows within a few years. The pace is so fast that it’s hard to keep track of what’s happening in this market.

To help you understand, let’s borrow a brief explanation from British energy analyst Michael Liebrich. In 2004, it took the world one year to add 1 GW of new solar power capacity.I got this. One month in 2010, one week in 2016, and one day in 2023.It won’t take long. This year, it could take half a day or so, as annual new capacity is estimated at 592 gigawatts (BloombergNEF).

According to BloombergNEF, newly installed solar power capacity worldwide increased by nearly 80% last year compared to the previous year. This year, it is expected to reach 592 GW, up 33% from last year.

“The Sun Has Won.” American technology investor Rob Carlson declared in a report two years ago that as the cost of solar power continues to fall, “solar power (not fossil fuels) will dominate global power generation in the next 30 years.” This victory declaration, which seemed a bit premature at the time, has now become a reality.

Solar power in deserts and lakes

The biggest advantage of solar power is its cost efficiency, but there are other advantages as well. Once installed, it produces electricity without noise, smoke, or additional resources. In fact, the key resources required for solar power are very cheap sand (the raw material for silicon), virtually unlimited sunlight, and land on which to install.

Of course, the most lacking of these is land. In Korea, there is a lot of criticism that ‘all the places where solar power plants can be built are already built, and they are even going to farmland or mountains.’ However, the solar power market can grow more rapidly than expected worldwide. A country with plenty of land and abundant sunlightBecause there are many of them.

The world’s largest single-site solar power plant, Al Dhafra, is under construction in the United Arab Emirates. The desert sand has been leveled and then filled with solar panels. Al Dhafra homepage

A representative example is the United Arab Emirates. It is located about 30km south of Abu Dhabi City. Al Dahfra, the world’s largest single-solar power plant‘ is being built. It’s 4 million solar panels on a flat desert the size of 3,000 soccer fields. The scale is enormous.

Adani Green Energy, an Indian conglomerate Adani GroupThe plans are even more ambitious. They are building solar farms in Gujarat and Rajasthan in India. If they covered all that land with panels? They say each could have a capacity of 30GW.

If land is scarce, how about floating solar panels on the ocean, lakes, or dams? ‘Water Solar Power’Floating solar power, also known as solar power, is an innovative solution in Southeast Asia, where agricultural production is important, although Korea is not very active in this area (it already exists in Korea).

The Cirata floating solar power plant in Indonesia, which began operation in November last year. Floating solar power is gaining attention in Southeast Asia, where vacant land is scarce. Korea, which has similar conditions, has also been promoting this type of floating solar power since the early 2010s. Cirata Power Plant Homepage

What if there is electricity left or not?

There are no signs of slowing down the growth of the solar power market. The installed capacity doubles every three years. Yes. This year, solar power will provide 6% of the world’s electricity. If 6% seems too small, consider the graph below. According to the International Energy Agency (IEA), under no scenario will solar power By the mid-2030s, solar energy will be the largest source of global electricity production.This will happen. Nuclear power, wind power, hydro power, gas power, coal power, etc. It is expected to surpass the current power generation energy sources that are much larger than solar power.

Changes in the share of energy sources for electricity generation by scenario as published by the IEA in its ‘World Energy Outlook 2023’. In all scenarios, the energy source that accounts for the largest share after the mid-2030s is solar power (orange). IEA

Of course, solar energy has a critical limitation: the sun only rises during the day. Electricity shortage at night or electricity surplus during the dayWhat should we do? In Korea, during the sunny autumn days, there is excess solar power generation capacity, which is a headache. In the end, the fact that solar power generation is growing exponentially like this That’s how important it is to store or transport electricity.It means to be dissolved.

There are active projects in this regard, for example, the Australian government Project to export electricity generated by solar power generation in the desert to Singapore (Australia-Asia Power Link)It was recently approved. It is a huge plan to supply up to 15% of Singapore’s electricity needs by connecting 4,300 km of submarine cables. Can such a long-distance connection really be economically viable? If so, An era in which the world sends electricity from brighter to darker places, that is, from west to east, or from the equator to higher latitudes.I wonder if it will open too.

Battery storage technology will also be utilized. An example is the battery-on-wheels business promoted by the American startup SunTrain. Solar farms are built in empty fields along the railroad tracks, and electricity produced there is produced. Electricity is charged into large, heavy batteries built into freight trains and then transported to where it is needed.The plan is to transport coal, just like that. If that becomes a reality, running a few battery trains a day could replace the construction of high-voltage transmission lines.

The U.S. startup SunTrain is pursuing a business model that transports electricity generated from solar power by carrying batteries on trains. It takes a long time to build a new transmission network, but the advantage of this method is that it can be transported immediately as long as there is a railway. As the solar power generation market grows, storage, transportation, and connection become increasingly important. SunTrain homepage

But even as solar power continues to inspire imaginations about a new era, one thing has always bothered me: China dominates the industry. China accounts for 90% of the world’s solar panels and 96% of polysilicon(Rystad Energy 2024 estimate). As China’s dumping offensive accelerates, European solar power companies are closing their factories one after another, and even in the US, where subsidies are being provided in large quantities, there are news that factory construction plans have been canceled. Will this market, which is expected to grow several times in the future and where the real game is just beginning, be taken over by China forever? The US is trying to grow this industry by mobilizing subsidies and tariffs. What should we do? By. Deep Dive

Extremely cheap and abundant electricity can change many aspects of human life, especially in underdeveloped countries where electricity is scarce. That’s why we should pay attention to the explosive growth of solar power generation. Let me summarize the main points.

-Chinese solar panels, whose prices have plummeted, are covering rooftops around the world. Instead of using expensive power company electricity, people are turning to their own solar power. It’s the result of China’s solar chicken game.

-Solar power generation capacity is growing exponentially. Every expert prediction has been wrong. Solar will surpass all other energy sources to become the world’s largest source of electricity generation by the mid-2030s. The sun is winning.

-Now the important thing is how to transport the abundant electricity generated during the day to other places where it is needed. Various methods are being explored, such as connecting submarine cables and transporting ESS.

*This article is the online version of the Deep Dive newsletter published on the 20th. Subscribe to Deep Dive, the ‘economic news that you’ll get hooked on as you read’ newsletter.

2024-09-22 11:19:09