PV solar cells directly convert sunlight into electricity, using the photovoltaic effect. Photons in sunlight hit the solar panel and are absorbed by a semiconducting substance (usually silicon). An Inverter is used to convert Direct Current into an amount of usable electricity referred as Alternative Current (AC).
Assembled into modules to build PV systems, PV cells generate electricity in both grid-connected and off-grid applications, such as industrial facilities, residential and commercial buildings, remote and rural areas and power plants. (Irena Technology Brief 2013).
Essentially two types of PV technology are commonly used: crystalline and thin-film. Their conversion efficiency is determined by the ratio of the electrical power to the incident solar power.
Crystalline can be broken down into two types:
Thin film PV uses a very thin layer of semiconductor in place of traditional silicon wafer. Even though thin-film photovoltaic technology has experienced rapid growth and achieved significant technological advances, they only represent 20% of the global PV market with an approximate 4 to 12% conversion ratio (source EPIA).
A photovoltaic system that is properly designed, installed, and maintained has a typical lifespan of 20-25 years and it usually comes with a performance warranty.
Even if bad weather conditions affect the maximum power output of the PV system, it will still continue to produce electricity with the diffused light that is available on cloudy days.
The amount of electricity generated through PV solar depends on a number of factors, such as the location, the system size, the solar irradiation and the orientation of the solar panels.
PV power has an enormous energy potential and is widely seen as an environmentally-friendly technology. Solar PV is now a mature and mainstream technology, with more than 128 Giga Watt solar capacity installed globally at the end of the 2013 (Source: IEA). In 1977, the global PV production capacity exceeded 500 kW. In 2002, the total installed solar PV capacity exceeded 2 GW, while 10 years later in 2012 it surpassed 100 GW (Source: IRENA). Its costs are continuously declining, which makes it increasingly attractive for project developers and small-scale residential or commercial consumers who want to lock in fixed, long term electricity costs.
Unlike other alternative investment vehicles, PV solar is a real asset and has the potential to deliver stable, long-term return cash flows from power purchase contracts with investment-grade counterparties. PV solar projects are not exposed to the volatility of input prices as sunshine is free; they provide low correlation to traditional financial markets. The security of the fossil fuel supply remains an issue of strategic importance for every country. Reserves are depleting and to a large extent located in politically-challenging regions. Moreover, they are not environmentally friendly.
Governments, companies and investors are actively supporting and acting on environmental issues such as climate change to promote carbon emissions reduction by changing and adapting their policies and investment strategies accordingly.
PV Plants became economically competitive due to PV Solar cost reductions and overcapacity production; not only in niche markets such as off-grid installations, but also for on-grid applications. (IRENA January 2013). As a consequence, PV Solar systems are expanding rapidly in many countries, even though governmental support policies and incentives are being reduced. In countries with good solar resources and high electricity tariffs, e.g. Italy, Spain, Germany (EPIA 2013), residential solar PV systems have already reached parity with electricity retail prices (EPIA 2013), whilst in general PV is now fully competitive with power generated from diesel-based on- and off-grid systems.
The PV Solar technology sector has demonstrated a strong resilience to difficult market conditions in 2011 and 2012 due to its decentralised nature. PV solar continues to outperform all growth forecasts. At the end of 2009, the world’s cumulative installed PV capacity was more than 23 GW. One year later, it was 40.3 GW and by the end of 2011 it was 70.5 GW. The sector reached 138.9 GW of installed PV capacity in 2013 – an amount capable of producing at least 160 terawatt hours (TWh) of electricity every year. (EPIA Global Market Outlook 2014-2018).
Unlike traditional asset classes, there is no capital appreciation of an asset that is required or planned for. Renewables are uncorrelated to property and/or equities and benefit by simply selling a valuable commodity: electricity in the case of PV solar. The world and its population will always need electricity.
PV Solar modules are made up of interconnected solar cells that are generating a current from the energy of the sun. Depending on the used technology, the PV solar panels have different ways to handle weak light.