Distributed Solar Power

Brief Analyses | Energy and Natural Resources

No. 748
Wednesday, July 13, 2011
by Olufemi Olarewaju and H. Sterling Burnett

Producing electricity close to the point of use — called distributed generation — eliminates the need for long-distance transmission lines. Solar photovoltaic technology (“solar”) generates power using panels of semiconducting cells that convert sunlight into electricity. Solar is one of the most widely used distributed generating sources.

Solar is typically more expensive than other electric power sources. It is not a steady source of power because it produces much less power on cloudy days and none at night. However, alone or with other distributed power sources, solar power is the best or only practical option in some cases.

Current Uses of Distributed Solar Power. A key challenge to widespread solar power use is high equipment and installation costs. In the United States, solar power costs two to three times as much as the average cost of electric power in many states. However, unlike a centralized power grid — power plants linked to distant consumers through transmission lines and transformers — distributed generation does not require an extensive infrastructure. This makes solar preferable for certain applications. For example, solar powers street lights and traffic signs, outdoor accent lights and small digital calculators, and is increasingly used in homes and businesses.

In some situations distributed solar power is the only practical energy source; indeed, the majority of geostationary satellites are powered by solar panels. In developed countries, solar is often used with other power sources in locations far from the nearest power plant or transmission lines, such as hunting camps, resorts and ranches.

Solar Power Cost - Percent of Annual Income - Sub-Saharan AfricaThe Use of Distributed Solar in Developing Countries. Many developing countries lack modern electrical grids outside of major cities. In rural sub-Saharan Africa, for example, 95 percent of the population has no access to electricity. In regions far from central power stations, distributed solar can meet some of the increasing demand for electricity.

Governments and private donors have promoted solar rural electrification. For instance, in Kenya, between 1998 and 2001, no money was invested to bring conventionally generated power to rural areas, but more than $10 million was invested in solar power. This investment created additional electric power for 2 percent of rural areas.

Barriers to the Widespread Use of Solar. Cost is one of the greatest barriers to the spread of solar power in sub-Saharan Africa. Fortunately, in most of these countries, solar prices have declined, the efficiency of solar systems has improved and income has increased. Consider:

  • A decade ago, a solar system capable of powering a few light bulbs and maybe a small television or radio cost the equivalent of 100 percent to 300 percent of the annual income of a rural household.
  • Today, the cost of a comparable solar system ranges from half the annual income of an average household to approximately 150 percent. [See the figure.]

There are other factors that often make solar power uneconomic or impractical in developing countries, including little capital investment due to political instability and corrupt politicians siphoning money intended for rural electrification into personal accounts.

In addition:

  • The climate and geography in some locations are unfavorable to solar power — such as tropical forests with an abundance of fast growing vegetation and high rainfall.
  • The capacity to store power in batteries or through other means is inadequate.
  • Support personnel (installers, repairmen and so forth) and spare parts, equipment and tools are not readily available.

Solar and Diesel Power. Diesel-generated power is commonly used in remote areas. Solar power can be used in hybrid systems with multiple power sources, such as a solar system combined with diesel generators or micro wind turbines and batteries. For example, the Arizona Public Service Commission uses solar to power communications equipment in remote locations to support cellular telephones, cable television and microwave repeaters. However, each solar array is supported by two diesel-powered generators.

In remote regions, distributed solar is becoming competitive with diesel generators due to transportation and diesel fuel costs. Indeed, solar power has a slight cost advantage compared to diesel-generated power in remote locations, according to a 2010 report by the Institute of Electrical and Electronics Engineers (IEEE). The IEEE concluded that a hybrid solar/diesel system is the most economical approach for distributed generation in remote locations. However, solar power is not competitive with grid-based conventional generation in major metropolitan areas or along travel corridors.

Conclusion. Solar power may not be the best choice for many uses, but it does have a role to play for a growing number of people. Developing countries, especially, can benefit from the increased use of distributed solar power.

Olufemi Olarewaju is a junior fellow and H. Sterling Burnett is a senior fellow with the National Center for Policy Analysis.

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