PV’s future looks pretty bright, obviously. But if it’s just now reaching grid parity in a few places, why has it boomed for the past few years? In three words: Japan and Germany. By deciding not to wait and embracing solar before it was cost competitive, those countries have turbocharged the market. Japan’s energy vulnerability—it imports all of its oil—led it, starting in the late 1980s, to aggressively diversify in two different directions. First, it built a lot of nuclear plants and now gets 35% of its electricity from this source. Second, and more interesting from a clean-tech point of view, it adopted solar. In a textbook multi-front effort dubbed the Sunshine Program, the Japanese government funded research and development, educated consumers and utilities on the how and why of solar, and set up demonstration projects with homes and businesses. And it offered generous rebates to buyers of solar panels. It worked: PV installations soared, which led panel makers to build more factories, which, in turn, lowered costs by about 10% each year. By 2005, the program had become so successful that it was phased out.

Germany, though not exactly sunny, does have a powerful environmental lobby. So embracing solar became the green equivalent of cutting taxes, easy to do and a surefire vote getter. In 2000, Germany began offering a “feed-in tariff” that obligated electric utilities to buy the power generated by rooftop solar systems at triple the going retail rate. At this price, it actually paid for homeowners and businesses to go solar, and with the economic risk removed, Germans have installed more than 300,000 PV systems, triple what the original plan envisioned and more than all other countries combined between 2004 and 2006. In 2007, fully half the world’s solar power was generated between the Baltic Sea and the Black Forest. And German PV companies, led by giants like Q-Cells, are global market leaders. See Figures 4.1 and 4.2 for a sense of today’s PV market.

Figure 4.1 Global Photovoltaic Production

Source: WorldWatch Institute

Figure 4.2 2007 Photovoltaic Installations

Source: Renewable Energy World