The Remarkable Rise of Solar Energy: Implications of Photovoltaics for the Energy Transition and the Left
This brief survey describes the dramatic expansion in the development and deployment of solar photovoltaic technology, as well as underlying factors including cost dynamics and policy supports. A further task is to identify the implications of this expansion for left-wing projects and the constituencies they typically represent. Given the scale and pace of the deployment in widely different national contexts, the Left urgently needs to establish its relevance and influence over the process lest these technologies are used to reinforce existing relations of power.
The Rise of Solar Energy
Global adoption of solar photovoltaic (PV) technology, as in the solar panels that are seen on roofs and in long arrays in open fields, is on a path of growth that is nothing less than meteoric. In the year 2000, there was less than 1.5 gigawatts (GW) of solar PV producing electricity globally, which if aggregated would have a peak output roughly equivalent to 1½ standard-sized nuclear reactors.1 However, the lower output of solar over a 24-hour period meant that the actual electricity produced by this solar was far less than a single nuclear reactor.
For the first ten years of the 21st century, deployment grew around 40% annually, which meant that the market doubled in size roughly every two years (see figure 1, below). Even though the annual growth-rate of deployed solar slowed to around 20% starting in 2012, around 58 GW of solar was installed globally in 2015, leading to a cumulative capacity of over 200 GW - more than 100 times the capacity that was online in the year 2000.2 In 2015, solar produced around 1% of global electricity, and met 6-8% of electric demand in the nations of Italy, Germany and Greece, as well as more than 5% in the states of California, Arizona and Hawaii.3
Figure 1: Evolution of Photovoltaic Installations, 2000 – 2015
International Energy Agency, PhotoVoltaic Power Systems Program (IEA PVPS)
There are other solar technologies, such as solar water and space heating (solar thermal), and a form of solar electric generation that uses large mirrors to concentrate sunlight to make steam to drive turbines, called concentrating solar power (CSP) or solar thermal electric. And while an impressive amount of solar water heating has been installed in China, to date these technologies have not seen the massive, sustained uptake that solar PV has on a global scale.
As exponentially larger amounts of solar have been deployed, costs have fallen. The price of solar panels fell from $77 per watt in 1977 to $3 per watt in 2000, to around $0.74 per watt in 2013 – a factor of more than 100 over 36 years.4 The cost of installed solar systems has not fallen as fast, and at this time the majority of PV system costs come not from the solar panels, but from a combination of other hardware and software as well as non-hardware “soft costs” including installation labor.
Figure 2: The Swanson Effect, Price per watt.
Many observers have stated that falling costs have driven deployment, but evidence suggests that in the beginning of the 21st century causation worked in the other direction: deployment drove down costs. Since the passage of the German feed-in tariff in 2003, the majority of PV installed globally has been under “feed-in tariff” policies, which set the price that utilities have to pay producers for the electricity they generate. Feed-in tariffs were highly successful in driving mass deployment, and this allowed for greater economies of scale in manufacturing and enhanced the financial incentive for technical improvements, both of which drove costs down. Additionally, economies of scale and experience allowed installers to reduce soft costs.
And while these price-setting policies have played the largest role in deployment, in the past few years the nation of Chile has installed significant volumes of solar PV without any incentives or subsidies. The cost of electricity from large solar farms has fallen to the point that power contracts have been signed at below four US cents per kilowatt-hour in the United States, Latin America and the Middle East, a price competitive with the lowest-cost forms of new generation on the wholesale market globally. This point – where solar is cheap enough to beat even new gas plants on price – is widely understood as the turning point for solar to be deployed at much larger scales without the need for incentives or subsidies.
The Energy Transition
To understand the context of solar energy, it is important to understand how solar fits into the global transition to renewable energy. In the electricity sector this transition has been underway for decades, and began with the large-scale deployment of wind in California, Denmark, Germany and Spain at the end of the 20th century.5
In Denmark and Germany, this began as a grassroots political movement, and the German vision of the Energiewende (Energy Turn or Energy Transition) has since become official government policy, although it has been subject to challenge from recent national administrations. In addition to Western Europe, the transition to renewable energy has reached an advanced stage in California, Central America, Uruguay, and a number of islands including the state of Hawaii, whose levels of renewable energy deployment are similar to those of Germany.
To date nearly twice the capacity of wind has been deployed globally as solar, and with the exception of Italy and Japan, all of the nations that lead solar deployment get more electricity on an annual basis from wind than they do from solar. Nations that commit to deploying wind often commit to solar as well, both technologies are typically supported under similar policy regimes, and in many nations wind and solar complement each other in terms of output on a 24-hour basis.
Biomass and geothermal have also been important, and biomass currently generates around 3x as much electricity as is produced by solar.6 For biomass and geothermal, there are important limitations to be considered. The global potential for biomass is limited by the amount of available forestland and cropland (which is diverted from food crops for some but not all forms of biomass), and produces pollution that can have adverse impacts on human health. Geothermal power is only practical in certain geographies at present.
As for hydropower, while it has been useful in balancing out the fluctuations in wind output in many regions, large-scale hydro is generally not considered part of the Energy Transition. More importantly, none of these other renewable sources of power – including wind – are seeing deployment increase as quickly as solar PV, and none have seen such rapid cost declines.
Solar and Workers
The global increase in solar energy generates numerous and diverse jobs, in everything from producing the equipment and materials for solar panels to manufacturing solar wafers, cells and modules to sales, design, engineering and installation (see table in Figure 3). The number of workers employed per unit of power delivered by solar PV is much greater than the number employed in fossil fuel or nuclear generation.7
Figure 3: Solar Industry Employment by Sector (The Solar Foundation) As early as 2007 China became the world's largest producer of solar PV cells, and has since come to dominate PV module (also called solar panel) and silicon wafer production. The nation is moving towards dominance of polysilicon production and inverter manufacturing, and is even making progress in producing the equipment used to make solar cells and modules.
Chinese plans to dominate solar manufacturing can be seen as early as a 2005 renewable energy law and the 11th five-year plan for the years 2006-2010. The Chinese government named PV manufacturing as a key export industry, set goals for manufacturing and R&D, and deployed a wide range of financial support including low-interest loans, tax benefits, and cheap prices for land, with support at every level -- national, provincial and municipal.8 Until 2009 the Chinese solar market was so small as to be irrelevant on the global scale, meaning that virtually all of these products were intended for export.
Following the lead of the government, Chinese entrepreneurs set up massive factories. These companies became the world's largest solar panel brands, including Suntech, Yingli Green Energy, Trina Solar and JinkoSolar. These and dozens of other companies built far more manufacturing capacity than the global market could bear, and beginning in 2011 a global oversupply of solar panels was driving prices below the cost of production.
The resulting impact on Western solar panel makers was harsh, and without the low costs and credit from state-run banks that Chinese producers received, most European and American solar panel makers went out of business over the next three years.
This prompted a series of trade actions from the United States and the European Union, with the US levying import duties on solar PV products from China in 2012 and China and Taiwan in 2014. The EU has regulated the import of Chinese solar panels through an agreement which guarantees minimum prices and maximum export volumes. These actions came too late to save most US and European solar manufacturers, although there has been a limited return of US manufacturing since import duties were implemented.
Much of the US and European solar industry that was not involved in manufacturing, particularly solar project developers, opposed these import restrictions. These companies argued that trade action would drive up prices and result in less solar being deployed. As a core part of their argument, those opposed to trade action pointed out that less than 20% of the jobs in the US solar industry are in manufacturing, with the vast majority instead in installation, sales, distribution, engineering, project development and related activities.
This points to a key aspect of solar: while Western PV manufacturing is usually highly automated and requires few workers, a large portion of the jobs in solar and wind are related to deployment and installation and cannot be offshored. In short, if a state or a nation wants to create jobs through deployment of renewable energy, they will have greater results from policies that support accelerated deployment than with protectionist trade actions.
In the United States, solar jobs typically pay above median wages, with a median rate of $21 per hour for solar installers.9 Additionally, these jobs typically do not require bachelors or other advanced degrees.
It is also true that as renewable energy replaces fossil fuels and nuclear power on the grid these industries and the jobs they represent are affected. But while coal miners and nuclear power plant workers will be laid off, generation via renewable energy creates far more jobs per unit of energy produced than either fossil fuels or nuclear power.
This means that even without considering manufacturing, deployment of solar and other forms of renewable energy could serve as a means to increase blue-collar employment in Western nations, which have been struggling with the impacts of deindustrialization and offshoring of manufacturing for decades.
Deindustrialization has particularly been a challenge to labor and Leftist movements in the United States and Europe, which have seen the basis of their power disappear as their members are pushed out of the industrial workforce. In the United States, this has led to collapses and mergers of entire unions, during decades when the percent of union workers in the overall workforce has plummeted. Renewable energy offers an opportunity to reverse this trend, as greater deployment of renewables brings with it new concrete opportunities for worker power in the blue-collar jobs that will inevitably be created.
However, the greatest opportunities for economic empowerment that are offered by solar power are not for workers, but for the owners of solar and other renewable energy systems.
More than any other form of renewable energy, solar has been deployed on a distributed scale, meaning small installations which are often on the roofs of homes. This distributed scale inherently lends itself to distributed ownership, and in Europe many of these systems are the property of homeowners, farmers and small business owners. This has changed these individuals’ relationship with electricity generation, where they have moved from being consumers to “producer-consumers”, or “prosumers” for short.
Much of the large-scale solar that has been deployed in Europe is also owned by citizens, not power companies. In 2011 the German Renewable Energy Agency found that private individuals, including farmers, owned 51% of Germany's renewable energy capacity, whereas energy suppliers owned only 13.5%, with the balance owned mostly by project firms, investment funds, banks and industry.10 In Germany and other nations that have deployed large amounts of renewable energy, the prosumers who own these installations are a political constituency that is literally invested in renewable energy.
This is not to say that the benefits of owning solar PV have been spread evenly across the socio-economic spectrum. Particularly in the United States, PV ownership is concentrated among high-income individuals and in high-income neighborhoods.
However there are some hopeful trends. In the United States “community solar” arrangements, whereby individuals and families buy a share in solar panels in a remote location and receive a credit for the power generated, are becoming more popular. And while electricity typically represents a relatively small share of a family budget, these arrangements can allow renters and low-income families to also invest in the Energy Transition.
The kinds of policies which are deployed have a big impact on who will own the solar that gets installed. In Europe feed-in tariffs made it easy for homeowners, farmers and energy cooperatives to deploy renewables, whereas in the United States the policy environment, including the federal investment tax credit, favors institutional investors and wealthy individuals with tax liability.
For champions of more distributed ownership, it should be a concern that the dominant business model in the US residential market has become third-party-owned solar, in which a company installs a PV system that it owns on the roof of a customer’s home or business. This customer then pays a monthly bill to the supplier. In essence, what these companies are doing is re-creating a system of centralized ownership of electricity generation on a decentralized scale and in competition with the utilities.
In both the United States and Europe a movement has emerged for Energy Democracy, and is pushing for policies that support greater distributed ownership of renewable energy. In the United States this movement has clashed with the third-party solar providers, some of whom openly advocate against any policies for deployment that do not favor their business model, even if these polices have a stronger track record of overall market growth.
The Role of the Left
Socialist, Social Democratic and Green parties have played a strong role in accelerating the Energy Transition. In Denmark and Germany such parties set up the first standard offer and feed-in tariff policies which drove mass deployment of renewable energy, and Nicaragua under a Leftist government has become one of the leading nations for penetration of wind in its electricity mix.11
Unfortunately, many American leftists are unconnected to, or worse ignorant of, the Energy Transition and its implications. Some are attached to outdated, centralized models of power generation through alliances with the nuclear industry.12
The organized Left did not create the Energy Transition. Superior forms of technology, policy and financial innovation and an urgent need to get off of fossil fuels did. However, Social Democratic and Green Parties, backed by a broader cultural and social movement Left, helped set up the policies that nursed renewable energy in its infancy to the dynamic, growing industries that it represents today. Socialists and other Leftists can play an important role in fighting for the maximum degree of Energy Democracy and decentralization of ownership, as well as ensuring that new opportunities for worker power are maximized.
Solar and other forms of renewable energy offer the creation of good jobs, concrete opportunities for worker power, a weakening of oligarchic structures and monopolies in the energy sector, and an opening for small businesses. They also offer the ability to change the social relationships around electricity, by giving an opportunity for consumers to participate more fully as citizens and producers.
This is a tremendous opportunity for the Left, but there is no guarantee that the Energy Transition will not be used to merely replicate old power structures. The American Left can help to shape the form of the Energy Transition, or it can be left behind.
1. EPIA Global Market Report 2011, European Photovoltaic Industry Association (EPIA), published 2012 2. Global Solar Installations Forecast to Reach 64.7 GW in 2016, Reports Mercom Capital Group, Mercom Capital, December 14, 2015: http://mercomcapital.com/global-solar-installations-forecast-to-reach-approximately-64.7-gw-in-2016-reports-mercom-capital-group; Global Solar Power Capacity about to Hit 200 GW, CleanTechnica, July 11, 2015: http://cleantechnica.com/2015/07/11/global-solar-power-capacity-about-to-hit-200-gw/
3. U.S. Solar Electricity Production 50% Higher than Previously Thought, Greentech Media, June 30, 2015: http://www.kwhanalytics.com/us-solar-electricity-production-50-higher-than-previously-thought/
4. Graphic by Bloomberg New Energy Finance. See: http://costofsolar.com/cost-of-solar-panels-10-charts-tell-you-everything/
5. Lessons Learned Along Europe's Road to Renewables, IEEE Spectrum, May 4, 2015: http://spectrum.ieee.org/energy/renewables/lessons-learned-along-europes-road-to-renewables
6. Biomass Power Generation Installed Capacity to Reach at least 82 Gigawatts Worldwide by 2020, Navigant Research, May 30, 2013: https://www.navigantresearch.com/newsroom/biomass-power-generation-installed-capacity-to-reach-at-least-82-gigawatts-worldwide-by-2020
7. Energy Sector Jobs to 2030: A Global Analysis, Greenpeace, 2009: http://www.greenpeace.org/brasil/PageFiles/3751/energy-sector-jobs-to-2030.pdf
8. China on Track to Become the Global Center of Solar Photovoltaic (PV) Manufacturing, Solar Server, February 2011
9. National Solar Jobs Census 2015, The Solar Foundation: http://www.thesolarfoundation.org/national, U.S. Bureau of Labor Statistics http://www.bls.gov/oes/current/oes_nat.htm#00-0000
10. Renewable Energies – A Success Story, German Renewable Energies Agency, 2011
11. Lessons Learned Along Europe's Road to Renewables, IEEE Spectrum, May 4, 2015: http://spectrum.ieee.org/energy/renewables/lessons-learned-along-europes-road-to-renewables