Rising Oil Prices Vs Solar Energy

Rapidly rising oil prices have led to such a demand for solar energy that the industry could operate itself without subsidies in just a few years, according to industry leaders.

At the Munich solar industry trade fair, industry leaders were increasingly confident that grid parity - where electricity from the sun can be produced as cheaply as it can be bought from the grid - is now just a few years away.

Solar photovoltaics (PV), which convert sunlight into electrical power, have long been dismissed as too expensive and not efficient enough to make a meaningful contribution to the battle against climate change.

But costs are falling dramatically as PV production escalates as electricity prices rise rapidly year on year in line with soaring oil and gas prices.

Germany now has nearly half a million houses fitted with PV panels. The feed-in tariff pays people with solar panels above-market rates for selling power back to the grid. Governments around the world might well take notice of the German approach.

With high oil prices have boosting demand even more. The market will probably expand another 40% this year, according to the German solar industry association.

Previous predictions that grid parity would be reached in Germany in 5-7 years, now look very conservative since. Germanys predictions allowed for only a 3% rise in electricity prices each year. In many countries increases of 20% a year are becoming the norm.

The China-based Suntech, the world's biggest maker of PV panels, plans to double production this year.

They believe grid parity in Germany can be reached within 5 years. In California and Italy, where there is lots of sun and high electricity prices, they said grid parity for PV systems had already been achieved.

And the great thing about solar energy is that although you have an upfront cost, the fuel is free and is not controlled by another country.

PV costs are falling rapidly and will continue to do so as the efficiency of panels improve and installation costs drop. Moreover, the price of silicon - which can be 70% of panel costs - is also likely to fall as new production technology becomes available.

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