Solar power generation has emerged as one of the most rapidly growing renewable sources of electricity. Solar power generation has several advantages over other forms of electricity generation:
Reduced Dependence on Fossil Fuels. Solar energy production does not require fossil fuels and is therefore less dependent on this limited and expensive natural resource. Although there is variability in the amount and timing of sunlight over the day, season and year, a properly sized and configured system can be designed to be highly reliable while providing long-term, fixed price electricity supply.
Environmental Advantages. Solar power production generates electricity with a limited impact on the environment as compared to other forms of electricity production.
Matching Peak Time Output with Peak Time Demand. Solar energy can effectively supplement electricity supply from an electricity transmission grid, such as when electricity demand peaks in the summer.
Modularity and Scalability. As the size and generating capacity of a solar system are a function of the number of solar modules installed, applications of solar technology are readily scalable and versatile.
Flexible Locations. Solar power production facilities can be installed at the customer site which reduces required investments in production and transportation infrastructure.
Government Incentives. A growing number of countries have established incentive programs for the development of solar and other renewable energy sources, such as (i) net metering laws that allow on-grid end users to sell electricity back to the grid at retail prices, (ii) direct subsidies to end users to offset costs of photovoltaic equipment and installation charges, (iii) low interest loans for financing solar power systems and tax incentives; and (iv) government standards that mandate minimum usage levels of renewable energy sources.
Despite the cost, an advantage of photovoltaic systems is that they can be used in remote areas. Anywhere a diesel generator is the technology of choice, many times a photovoltaic system is a much better life-cycle cost option.
Stand-alone photovoltaic systems produce power independently of the utility grid. In some off-the-grid locations even one half kilometer from power lines, stand-alone photovoltaic systems can be more cost-effective than extending power lines. They are especially appropriate for remote, environmentally sensitive areas, such as national parks, cabins, and remote homes.
The solar power market has grown significantly in the past decade. According to Solarbuzz, the global solar power market, as measured by annual solar power system installations, increased from 427 MW in 2002 to 1,744 MW in 2006, representing a CAGR of 42.2%, while solar power industry revenues grew to approximately US$10.6 billion in 2006. Despite the rapid growth, solar energy constitutes only a small fraction of the world's energy output and therefore may have significant growth potential. Solarbuzz projects in one of its forecasts that annual solar power industry revenue could reach US$31.5 billion by 2011.