Why utilities should fear the next boom in solar PV by Giles Parkinson

The global solar PV market is giving all the impressions of an industry in crisis – reduced incentives, a glut of panels, bankruptcies of manufacturers and installers, closures of plants and plunging share prices. But are these the death throes of solar, a classic boom/bust cycle, or just natural growing pains? Definitely the latter, says global consultancy group McKinsey & Co.

And when the solar PV industry does bounce back – and McKinsey expects it to do so in phenomenal fashion, and without subsidies in coming years, generating what it calls "economic demand" of one terawatt (1,000 gigawatts) by 2020 – then dramatic changes can be expected for the energy industry across the globe.

This website has already documented the threat posed by solar PV on the conventional generation sector – Why generators are terrified of solar – which gained a huge amount of interest in Australia and overseas.

The McKinsey report, “Solar Power, darkest before Dawn,” adds another interesting element because it says the rapid growth of distributed generation is likely to disrupt the regulated utility industry as well, particularly in OECD countries. In non-OECD countries, the combination of distributed generation and inexpensive storage solutions could bring electricity to millions of poor people living in rural areas, greatly improving their standard of living, as Bloomberg described earlier this month in this fascinating article.