The World's #1 Renewable Energy Network for News, Information, and Companies.
Untitled Document

Off-grid Solar Applications, Where Grid Parity Is Truly Meaningless

As profit margins for demand-side solar participants in the multi-megawatt grid-connected sector begin feeling the strain of low power purchase agreements (PPAs), tenders and other compensation for solar generated electricity that are set by bid, the off-grid segment of the market has become more interesting, in particular, the use of solar for off-grid applications such as village mini-grids and facilities.

In large part this interest has partly been encouraged by aggressive forecasts of multi-gigawatt demand into these sub-segments of the remote habitation application segment. The primary flaw to the assumption of multi-gigawatt growth into this application includes the assumption that the size and demonstrative need of the available population correlates directly to the deployment of off-grid solar. Aggressive forecasts tend to ignore the affordability gap (ability to pay, system maintenance) among the target population(s).

Typically there are few incentives available for off-grid installations as well as a high degree of administrative roadblocks in the path of deployment.  The last point, administrative roadblocks, includes the fact that these concerns are significantly different in developing countries from the industrialized nations. Even though the remote habitation application (which includes village grids, water pumping, remote facilities and remote homes) experienced 28 percent growth in 2012 over 2011, primarily due to strong demand in China and India as well as other countries in Asia and Latin America, there is no indication that a wholesale and accelerated replacement of diesel by PV is in the offing.  

Figure 1 presents the growth behavior of the remote applications from 2007 through 2012.

The off-grid applications grew at a compound annual rate of 3 percent from 2007 through 2012.  Off-grid applications are projected to grow at a CAGR of 2 percent to 9 percent for the 2012 through 2017 period. For most of the terrestrial solar industry’s ~40-year history, the off-grid applications dominated demand for photovoltaic technologies and systems.  In the late 1990s driven by incentives in the US state California, Germany and Japan, demand for grid-connected solar systems began accelerating. 

Figure 2 presents solar remote (off-grid) and grid connection application growth from 1986 through 2000, the cross over point at which grid connected applications became the driver for solar industry growth. 

Table 1 provides data on application trends from 1997 to 2012.  Off-grid applications remained 1 percent of total MW in 2012 and experienced growth of 15 percent.

The basic application segments, off-grid (industrial, habitation, consumer power), grid-connected (residential, commercial, utility), and consumer indoor remain unchanged. However, the allocation of megawatts has undergone a definite shift from off-grid to grid-connected.  In 1990, with total demand of 42.7-MWp, off-grid industrial and habitation applications were (together) 83 percent of total market demand, grid-connected was 8 percent of total shipments and consumer indoor was 9 percent of total shipments.  In 2012, the grid-connected application consumed 99 percent of photovoltaic products.

The Europe feed-in-tariff (FIT) incentive model stimulated accelerated growth into the grid-connected application as well as a significant increase in manufacturing capacity.  Rapid changes in FIT programs, as well as the ending of programs in formerly strong markets (Italy) have left a void in many strategic plans and re-trained interest on the off-grid applications.  Whereas previously, achieving grid-parity was assumed as the tipping point for photovoltaic deployment globally, off-grid deployment is garnering interest because of a) current low prices for technology and b) the absence of utility subsidized electricity as a competitive force.  Of course, off-grid applications compete with entrenched diesel generators and other polluting sources of energy, which are also not easily displaced.

Currently, as previously noted, the photovoltaic industry finds itself moving from a high-incentive environment to a low-incentive environment where payment for electricity is set by bid.  This is leading to (often overly optimistic) expectations of accelerated growth for off grid applications. There is not historic basis for these expectations.  Though the growth rates for the remote markets, in general, seem low, it is worth remembering that industries other than solar would celebrate these growth rates and consider them strong. 

During the recent period of strong growth (2004 through 2011) and the abbreviated period of profit that accompanied it, many participants believed that there was nothing off grid deployment could teach grid connected participants.  This was incorrect.  Off-grid participants can teach how to survive and thrive without incentives.

Read more solar energy news here.

Lead image: Solar on roof via Shutterstock

Untitled Document


Sunrise in Pakistan as the Country Delves into Solar PV

Robert Harker Pakistan has joined the list of countries that are exploring solar power as a means to bridge critical energy generat...

Global Renewable Energy Roundup: China, Kenya, Turkey, India Seeking More Renewables

Bloomberg News Editors China is being encouraged by three industry groups to double the nation’s solar-power goal for 2020 to make up for sh...

Why Smarter Grids Demand Smarter Communications Networks

Mark Madden

Historically, utility networks and communications networks have had little in common.

The Importance of “Switching Costs” to the US Residential Solar Industry

Paula Mints The DoE and numerous organizations and governments globally are focused on driving down the cost of solar convinced t...


20 days to GRC Annual Meeting & GEA Geothermal Energy Expo

The Geothermal Resources Council (GRC) has announced that it is only 20 days to go to t...

AWS Truepower Announces Major Expansion of its Due Diligence Team in Response to Growing Market Demand

AWS Truepower, an international leader in wind and solar energy consulting and engineer...

Array Technologies’ DuraTrack HZ v3 Continues to (R)evolutionize at SPI

Array Technologies, Inc. (ATI) prepares to showcase its recently launched tracking syst...

Appalachian's Energy Center assists counties with landfill gas to energy projects

The Appalachian Energy Center at Appalachian State University recently completed a proj...


How To Get People To Do Stuff

It’s no secret that psychology and sales go hand in hand. If you understand the principles of human psychology ...

Get In The Groove

When we talk about strategies for boosting productivity, we often overlook the fact certain projects lend themselves ...

Transitioning to Net-Zero Living

Judith and Jeffrey adore living in Belfast, Maine – a quaint harbor town of Belfast, Maine. They previously res...

The True Cost of Electric Vehicles in Australia

In order to avoid increased congestion, further greenhouse warming and lessen Australia’s reliance on imported ...



Volume 18, Issue 4


To register for our free
e-Newsletters, subscribe today:


Tweet the Editors! @jennrunyon



Intersolar North America 2016

Exhibition: July 12 - 14, 2016; Conference: July 11 - 13, 2016 Intersola...

Intersolar South America 2015

Exhibition and Conference: September 1-3, 2015 Intersolar South America ...

Intersolar Europe 2016

Exhibition: June 22-24, 2016; Conference: June 21-22, 2016 Intersolar Eu...


Less Is More

When you’re giving a presentation, one of the easiest things to do...


One of the biggest challenges we face as efficiency sales professionals ...

How To Optimize Your Meeting Schedule

Do you spend more time in meetings than you do actually working? While m...


Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now