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The worldwide solar industry is alive and well. As one of the simplest forms of electricity generation, the growth in solar energy has been nothing short of phenomenal. In Asia-Pacific, the UK and across Europe, the solar market has started to mature. This has led to some significant changes in the industry, notably a secondary market for alternative investments related to the solar industry. In other continents, the solar industry is only beginning to take root. Latin America, Asia and Africa are now rapidly growing markets. The solar industry gained traction in the early 2000s, with Spain, Germany, Italy and Asia-Pacific adopting the technology early on. China was close in tow, but Africa was slow on the uptake and comprised only a small percentage of global growth.
Global Trends in Renewable Energy
According to the United Nations Environment Programme Collaborating Centre report, commissioned by the Frankfurt School, renewable energy achieved record levels in 2015 in terms of dollar investment. Additionally, a large volume of new capacity was added. What is particularly notable about this is that developing countries such as South Africa, Nigeria, Botswana, Argentina, Brazil and others are increasingly important in the net growth rate taking place. In 2015, capital funds committed to renewable energy sources increased to $285.9 billion, up 5%. The previous record was set in 2011 of $278.5 billion.
The Global Trends in Renewable Energy report was particularly significant in that these record levels were achieved in spite of depreciating dollar investments across currency zones. Additionally, the Chinese economic slowdown had a negative impact on commodities prices towards the end of 2015 and into 2016. The prices of crude oil, natural gas and coal all headed south. Renewable energy sources such as hydroelectric power comprised 53.6% of all GW capacity of technologies that were installed during 2015. In 2010, the amount of solar-powered energy amounted to 50 GW, but now it is 300 GW+.
Why Is Solar Power Growing so Rapidly?
Europe is enjoying long-term subsidies for solar-related energy. And there are various feed-in tariffs and tremendous political support for this type of energy. In South Africa, the Renewable Energy Independent Power Producer Procurement Programme is a big money-spinner for solar-powered products. In the United Kingdom, there is equal interest in the provision of solar power as a renewable energy source. Thanks to the tremendous interest in solar energy, the costs have come down dramatically in recent years.
It is now entirely possible to save with solar energy owing to the sharp reduction in installation costs, and the costs of the solar panels themselves. Not only have raw materials prices dropped, the industry has grown so much that it has become an economy of scale. A huge influx of capital is now making renewable sources of energy like solar highly lucrative. The money is coming in foreign direct investment (FDI) as well as investment funds.
What Makes Solar Energy Such a Cash Cow?
For starters, solar energy is one of the most predictable forms of renewable energy in the market. Is also highly reliable. Given that the sun shines daily, there is always going to be a huge demand for solar energy supply. An interesting statistic about the United Kingdom is that there is just 4% variability per annum with solar radiation. This is lower than the variability with wind-powered energy. Operators of solar power know precisely how much to expect per MW/hour. These types of investments are generating long-term cash flows and stable revenues. South Africa is an emerging market country with a developed capital market. Analysts foresee tremendous upside growth in this industry especially with battery storage saving on electrical costs during peak pricing periods with electricity.