From a standing start when the first U.S. solar park connected to the electricity grid in 1982, solar power generation has increased to represent only 2% of electricity capacity in 2020. Small though that may be now, 43% of all new generation capacity added to the grid came from solar in 2020.
The first photovoltaic cell made from silicon was created in 1954, generating enough power to run an electric device for several hours. Like other renewable energy sources, solar remained on the fringe for decades but has become a legitimate complement to our global energy portfolio.
Increased attention to renewables to address climate change explains only a part of the growing interest in solar. More practically, accelerating demand stems from a dramatic reduction in the cost to generate solar power. According to the World Economic Forum, the global average costs for solar power have dropped by two-thirds just in the last four years.
At the end of Q1 2021, installed solar capacity in the U.S. was 103 gigawatts. To put that in relative terms, recall from the 1985 movie Back to the Future that Doc Brown’s DeLorean required 1.21 gigawatts of power to travel through time. If you are more visual, 1 gigawatt equals roughly 3 million photovoltaic panels or more than 400 utility-scale wind turbines.
Solar power is generated nationally, with 17 states holding more than 1 gigawatt of installed capacity. California is the leader with 32 gigawatts. Texas is next with 9, North Carolina with 7, while Arizona and Florida each have 5 gigawatts of installed capacity. Even cold-weather, northern states such as North Dakota and Alaska have solar installations.
Utility installations represent the biggest solar generators, and they are in the middle of a construction program that would double capacity in the next few years. Much of the backlog derives from the growing demand for renewable energy from both consumers and government policy. Also pushing faster development forward are impending step-downs in the Investment Tax Credit used to help pay for solar projects.
While most solar power generated is distributed through local utilities, solar is also suitable for commercial applications where large property owners develop solar facilities primarily for their use. Apple is the largest commercially based solar power generator in the U.S., followed by Amazon, Target, and Wal-Mart. These four enterprises alone, whose primary businesses have nothing to do with energy generation, generate more than one gigawatt of power. Thousands of private homeowners generate the remaining capacity. These owners are more often putting the power to their use rather than selling it to the distribution grid.
Globally the story is the same, only with bigger numbers. Installed solar capacity reached 707 gigawatts in 2020 after installing nearly 137 gigawatts of new capacity. Asia represented more than half of the total, and China itself put up 49 gigawatts. Despite a slowdown from COVID, projections remain on track to reach more than 1,450 gigawatts of solar power capacity worldwide by 2024, a 20% annualized growth rate.
Growth in solar power is here to stay, benefitting companies along the supply chain. From distributed applications in residential, commercial, and industrial user bases to power generation and distribution on a utility-sized scale, solar energy is becoming a material part of our global energy portfolio. Investors who do their research will find rewards in the growth that is yet to come.
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