When will household solar power generation say goodbye to “polarization”?

Recently, there have been frequent news reports of power outages in various provinces. In addition, solar panels are mentioned in many families' emergency material reserve lists, so the business of household solar power generation has once again been discussed by many netizens.

Those who are optimistic think that: under the background of carbon neutrality and carbon peak, the cost of coal-fired power generation has increased, and the demand for new energy alternatives has increased; the price of solar power generation equipment has continued to fall, which can not only ensure the power supply of their own homes, but also make money by selling to power companies. Isn't there more room for the development of home solar energy?

Those who are bearish believe that: the payback period is long, the return on investment is relatively low, and there is no motivation without subsidies; there are certain requirements for the deployment environment, and it is troublesome to install it on the roof during renovation; regular maintenance and inspection are required, which brings additional costs...

Both sides' words sound reasonable and sparked my curiosity. After studying the progress of the domestic solar energy industry at home and abroad, I found that the polarization in this field is quite obvious:

Both old and new - as early as 1860, scientists believed that fossil fuels would become scarce, and equipment such as photovoltaic panels and solar collectors began to become popular; however, to this day, solar energy is still regarded as an emerging new energy and new industry. Industry data at the seminar on the review of the development of the photovoltaic industry in the first half of 2019 and the outlook for the second half of the year showed that the proportion of power generation from renewable energy such as solar energy in the total power generation was only 20%.

Both foreign and rural - Looking at the global market, the first group of people who are enthusiastic about supporting home solar energy to solve electricity demand are residents of modern Western countries such as Europe, America and Australia. In 2015, the total installed capacity of photovoltaic power generation in the world exceeded 40 million kilowatts, with the main markets in Germany, Spain, Japan and Italy. Among them, Germany alone added 7 million kilowatts of installed capacity in 2015. The second group is rural areas in China, which are the main driving force of home solar power generation. Many central and western regions have taken the photovoltaic industry as one of the important poverty alleviation measures. The common feature is that they are mainly single-family buildings, and the roofs are easy to dismantle and modify.

Both more and less - solar energy resources and solar power generation industry are not necessarily positively correlated. For example, Africa is the continent with the most concentrated sunlight in the world and has abundant solar energy resources, but in reality, South Africa is the only country in Africa with more than 50 megawatts of photovoltaic power stations. California, the United States, has more solar power stations than the entire Africa, and the installed solar power generation capacity is twice the total power generation capacity of Nigeria. Europe's solar energy resources are only a small part of Africa's, but it has more solar energy equipment.

This polarization has given the home solar industry a "dumbbell-shaped" structure, mainly concentrated in developed and underdeveloped regions.

As we know, the urban and town consumer markets often have "income effect", "demonstration effect", "linkage effect" and "cumulative effect", which means that more money comes in, faster money comes in, and longer money comes in. Therefore, a stable market structure is often a "spindle-shaped" one with mid-end consumers as the main force.

This also shows a basic fact about the development of the home solar industry: to achieve leapfrog growth, it is necessary to accelerate the optimization from "dumbbell type" to "spindle type", actively embrace the urban and town markets, and end the current "polarization" situation.

So, is it possible to cover cities with solar panels?

It is difficult to convince the vast majority of urban and town residents to invest real money, manpower and material resources in transformation simply by relying on sentiments such as protecting the environment.

Therefore, when implementing sustainable energy strategies, many countries will design a series of incentives and subsidies. For example, in 2006, the California State Council launched the "California Solar Initiative" plan, which set off a wave of installing home solar power generation systems.

Policies alone are not enough. Household consumers in the middle of the market need to overcome three obstacles to embrace solar power generation.

First level: Is the business model reasonable?

It is generally believed that a home solar power system is a typical long-term value investment with “one-time investment and 25-year payback”.

We can do some calculations. Generally, a 1kW photovoltaic power generation system can be used for household lighting, television, and computer use; a 3kW photovoltaic power generation system can meet the living electricity needs of a family of three, especially kitchen electricity; and a 5kW photovoltaic power generation system can meet the needs of a family of five.

Home users tend to prefer 5kW capacity, which requires an investment of 40,000 to 100,000 yuan. In 2017, a well-known Chinese company's 5KW home solar power generation system cost 40,000 yuan for one-stop installation. After subsidies in Arizona, the United States, a 5KW solar power generation system costs about 10,000 US dollars. A survey of 2,200 homeowners showed that the investment cost is too high to be considered.

(Actual return on investment of a certain netizen)

In addition, through models such as "self-generation for own use, surplus electricity to the grid" and "full grid access", the electricity consumption can be returned, and the payback period often takes 5-7 years before entering the profit period.

At present, the subsidies for green energy in various countries are generally around 20-30%, and the United States will provide 26% of the installation cost for solar power generation systems in 2020. Once large-scale deployment is carried out and subsidies are cancelled, the profit cycle will continue to be extended.

Therefore, if rural residents lack safe and reliable investment channels, it is understandable that they invest their spare money in home photovoltaic power generation. However, urban and town residents with high digitalization and rich financial products and services may feel that it is a bit tasteless to make money from this.

The most feasible solution is probably to place a photovoltaic panel outside the window to meet the emergency charging needs of home computers, mobile phones and other devices. But how big is the market space in this case?

Second level: Does long-term security exist?

Of course, there may be people who are willing to support green energy unconditionally, or who are willing to install solar power generation systems at home to quench their thirst for electricity, even if the returns are small, but "even a little bit counts". We certainly support this spirit. However, before choosing relevant equipment, you must think carefully about the later operation and maintenance issues.

As mentioned before, it takes more than five years for household solar power generation to break even/make a profit, and the maintenance of photovoltaic panels, battery aging, attenuation of related components, etc. will bring about the need for long-term cleaning and care, otherwise it will affect the efficiency of light energy conversion and reduce power generation.

In Australia and other places, the construction of solar home power generation systems began thirty years ago, and a relatively mature market mechanism and service system has been formed. Consumers do not have to worry too much about the equipment manufacturers running away/going bankrupt, not being able to find after-sales service, or the safety risks of random repairs by makeshift teams.

In addition, the cost recovery period of household solar energy is relatively long, and the sustainability of the policy also needs to be taken into consideration. Otherwise, if there is any change, it will become "generating electricity out of love."

For example, in 2015, Nigeria spent $16 billion to develop solar power, but ultimately failed due to government problems. This is why the report of the global industry forum Gridovate believes that Africa's solar energy development potential is the best in the world, but the actual industrial development is far from enough.

A sustainable, predictable and long-term guarantee mechanism is the key to the competitiveness of the solar industry.

The third level: Is urban development allowed?

In addition to the hard conditions of solar energy resources, household solar power generation also needs to be close to the main power grid to reduce the investment in new transmission lines. At the same time, it must be close to the power load center to reduce transmission losses.

Compared with rural users with small and scattered electricity loads, it seems that the development of household solar energy in cities has more economic value. At present, China's urbanization rate has reached 56% in statistics, which seems to have brought huge market space, but it should be noted that the construction of modern cities in Europe and the United States, which "drives urbanization with industrialization", has also caused a lot of problems while cities are expanding. For example, the concentration of financial capital has led to high asset prices. The per capita living area in first-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen is lower than the national average. At this time, what kind of family needs to find a sunny, open, south-facing roof of 20-30 square meters to install photovoltaic panels? In economically developed places such as Jiangsu, it is generally foreign-style houses or villas that will be installed on the roof. Asset barriers further limit the scale of users.

For example, the rapid development of large and medium-sized cities in China in the past has left many defects in infrastructure, public spaces, etc. In recent years, many cities have started upgrading and beautification in order to improve the living environment and enhance the residents' happiness index. The installation of photovoltaic panels in residential areas will naturally affect the aesthetics of the community and cause certain light pollution. It is hard to imagine that cities on the road to "beautification" will strongly encourage Blue Wawawa's photovoltaic panels.

The middle of the market is difficult to pry open. Does that mean that household solar power generation will not be able to continue? Not really. Today, China is vigorously promoting urbanization and rural revitalization, which may bring new opportunities to the household solar industry. The "spindle-shaped" market does not necessarily mean that the middle rises, but can also flow from the tail to the middle, right?

Perhaps, the future of household solar energy, like many industries, lies in green villages and ecological China.