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McKinsey: solar will rebound after 2015

A new report from global consulting firm McKinsey anticipates continued growth in global PV installations until 2030, with falling prices offering firms attractive margins while increasing installed capacity.

The report, titled “Solar power: Darkest before dawn,” predicts that worldwide installed PV capacity will increase to 400-600 GW by 2020 and that the cost of a commercial scale P system could fall by 40 percent by 2015 and another 30 percent by 2020.

Credit: McKinsey

McKinsey cites the following market segments as promising most growth in the coming ten to twenty years:

  1. off-grid demand could reach 15 to 20 GW by 2020.

  2. residential and commercial customers in sunny areas where the price of electricity rises at times of peak demand (e.g. California, Hawaii, Italy, Spain), and areas with moderate sun conditions but high retail electricity prices (e.g. parts of Europe and the United States, Japan, Canada, parts of Latin America).

  3. isolated grids that mainly power remote villages in Africa, India, Southeast Asia, and parts of the Middle East.

  4. peak capacity in growth markets where substantial new electric-power infrastructure is set to be built (India, Brazil, the Middle East, and China) or in countries that rely on imports of liquefied natural gas (Japan).

  5. new, large-scale power plants, most likely in emerging markets that are expanding infrastructure and where the cost of solar will be compared with the cost of a new coal, natural-gas, or nuclear plant.

In developed countries, distributed rooftop generation will likely be the primary source of growth, whereas distributed ground-mount generation will be dominant in developing countries.

The report emphasizes that the underlying costs of PV will drop by up to 10 percent annually until 2020, and despite reduced government subsidies, manufacturing capacity will double over the next few years.

The current market over supply will continue in the short run, but McKinsey says these are “natural growing pains, not death throes.” Instead, the solar industry is “entering a period of maturation” that will lead to more stable and expansive growth after 2015.


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