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What is Solar Power


Solar power is the conversion of sunlight into electricity, either directly using photovoltaics (PV) or indirectly using concentrated solar power (CSP). Concentrated solar power systems use lenses or mirrors and tracking systems to focus a large area of sunlight into a small beam. Photovoltaics convert light into electric current using the photoelectric effect. EnFin is ready to assist your firm with any PV deployment regardless of the size or complicity

A solar cell or photovoltaic cell (PV) is a device that converts light into electric current using the photoelectric effect. The first solar cell was constructed by Charles Fritts in the 1880s, yes the 1880's. In 1931 a German engineer, Dr. Bruno Lange, developed a photo cell using silver selenide in place of copper oxide. Although the prototype selenium cells converted less than 1% of incident light into electricity, both Ernst Werner Von Siemens and James Clerk Maxwell recognized the importance of this discovery. Following the work of Russell Ohl in the 1940s, researchers Gerald Pearson, Calvin Fuller, and Daryl Chapin created the silicon solar cell in 1954. These early solar cells cost 286 USD/watt and reached efficiencies of 4.5–6%.

Photovoltaic power systems

Solar cells produce direct current (DC) power which fluctuates with the intensity of the irradiated light. This usually requires conversion to certain desired voltages or alternating current (AC) which requires the use of an inverter(s). Multiple solar cells are connected inside the modules. Modules are wired together to form arrays, then tied to an inverter(s) which produces power at the desired voltage, and for the AC frequency/phase.  

Development and deployment  

The early development of solar technologies, starting in the 1860s, was driven by an expectation that coal would soon become scarce. However, development of solar technologies stagnated in the early 20th century in the face of the increasing availability, economy, and utility of coal and petroleum. In 1974, it was estimated that only six private homes in all of North America were entirely heated or cooled by functional solar power systems. The 1973 oil embargo and 1979 energy crisis caused a reorganization of energy policies around the world and brought renewed attention to developing solar technologies. Deployment strategies focused on incentive programs such as the Federal Photovoltaic Utilization Program in the U.S. and the Sunshine Program in Japan.

Between 1970 and 1983, photovoltaic installations grew rapidly, but falling oil prices in the early 1980s moderated the growth of PV from 1984 to 1996. Since 1997, PV development has accelerated due to supply issues with oil and natural gas, global warming concerns, nuclear releases into our atmosphere, and the improving economic position of PV relative to other energy technologies. Photovoltaic production growth has averaged 50% per year since 2000 and installed capacity reached 39.8 GW at the end of 2010, of them 17.4 GW in Germany.

In December 2008, the Oregon Department of Transportation placed in service the nation’s first solar photovoltaic system in a U.S. highway right-of-way. The 104-kilowatt (kW) array produces enough electricity to offset approximately one-third of the electricity needed to light the Interstate highway interchange where it is located.

A 45 mi (72 km) section of roadway in Idaho is being used to test the possibility of installing solar panels into the road surface, as roads are generally unobstructed to the sun, and represent about the percentage of land area needed to replace other energy sources with solar power.


The 89 PW of sunlight reaching the Earth's surface is plentiful – almost 6,000 times more than the 15 TW equivalent of average power consumed by humans. Additionally, solar electric generation has the highest power density (global mean of 170 W/m2) among renewable energies.

Solar power is pollution-free during use. Production end-wastes and emissions are manageable using existing pollution controls. End-of-use recycling technologies are now available, and policies are being produced that encourage recycling from producers. Additional options for recycling will only increase. PV installations can operate for many years with little maintenance or intervention after their initial set-up, so after the initial capital cost of building any solar power plant, operating costs are extremely low compared to existing power technologies.

Grid-connected solar electricity can be used locally thus reducing transmission/distribution  losses (transmission  losses in the U.S.were approximately 7.2% in 1995). Compared to fossil and nuclear energy sources, very little research money has been invested in the development of solar cells, so there is considerable room for improvement. Nevertheless, experimental high efficiency solar cells already have efficiencies of over 40% in case of concentrating photovoltaic cells, and efficiencies are rapidly rising while mass-production costs are rapidly falling.

Despite the overwhelming availability of solar power, little was installed compared to other power generation, prior to 2012, due to the high installation cost. This cost has declined as more systems have been installed and has followed a typical learning curve.

Photovoltaic systems use no fuel, and modules typically last 25 to 40 years. The cost of installation is almost the only cost as there is very little maintenance required. Installation cost is measured in $/watt. The electricity generated is sold for ¢/kWh. 1 watt of installed photovoltaics generates roughly 1 to 2 kWh/year as a result of the local insulation. The product of the local cost of electricity and the insulation determines the break even point for solar power. Since 2006, it has been economical for investors to install photovoltaics for free in return for a long term lease or power purchase agreement. Fifty percent of commercial systems were installed in this manner in 2007 and over 90% by 2012.

As of 2015, the cost of PV has fallen well below that of nuclear power and is set to fall further. The average retail price of solar cells, as monitored by the Solarbuzz group, fell from $3.50/watt to $0.90/watt over the course of 2015.


A U.S. study of the amount of economic installations agrees closely with the actual installations. In some locations, PV has reached grid parity, the cost at which it is competitive with coal, nuclear, or gas-fired generation. More generally, it is now evident that, given a carbon price of $50/ton, which would raise the price of coal-fired power by 5c/kWh, solar PV will be cost-competitive in most locations. The declining price of PV has been reflected in rapidly growing installations. Strong growth seems likely to continue for the rest of the decade. Already, by one estimate, total investment in renewables for 2015 exceeded investment in carbon-based electricity generation.

Additionally, governments have created various financial incentives to encourage the use of solar power, such as feed-in tariff programs. Also, Renewable portfolio standards impose a government mandate that utilities generate or acquire a certain percentage of renewable power regardless of increased energy procurement costs. In most states, RPS goals can be achieved by any combination of solar, wind, biomass, landfill gas, ocean, geothermal, municipal solid waste, hydroelectric, hydrogen, or fuel cell technologies.

Solar power is already competitive with fossil fuels in many locations. We are at a tipping point. No longer are renewable power sources like solar and wind a luxury of the rich. They are now starting to compete in the real world. Solar power will be able to compete without subsidies against conventional power sources in half the world by 2016.

Energy payback time and energy returned on energy invested

The energy payback time of a power generating system is the time required to generate as much energy as was consumed during production of the system.

Another economic measure is the energy returned on energy invested (EROEI) or energy return on investment (EROI), which is the ratio of electricity generated divided by the energy required to build and maintain the equipment. (This is not the same as the economic return on investment (ROI), which varies according to local energy prices, subsidies available and metering techniques.) With lifetimes of at least 30 years, the EROEI of PV systems are in the range of 10 to 30, thus generating enough energy over their lifetimes to reproduce themselves many times (6-31 reproductions) depending on what type of material, balance of system (BOS), and the geographic location of the system.

Grid parity

Grid parity, the point at which photovoltaic electricity is equal to or cheaper than grid power, is achieved first in areas with abundant sun and high costs for electricity such as in California. Most of the US is expected to reach grid parity by 2015.

Net metering

Net metering, unlike a feed-in tariff, requires only one meter, but it must be bi-directional. Net metering, and potentially virtual net metering, is particularly important because it can be done with no changes to standard electricity meters, which accurately measure power in both directions and automatically report the difference, and because it allows businesses to generate electricity at a different time from consumption, effectively using the grid as a giant storage battery.

As more photovoltaics are used ultimately additional transmission and storage will need to be provided, normally in the form of pumped hydro-storage. With net metering, deficits are billed each month while surpluses are rolled over to the following month. Best practices call for perpetual rollover of kWh credits. Excess credits upon termination of service are either lost, or paid for at a rate ranging from wholesale to retail rate or above, as can be excess annual credits. In New Jersey, annual excess credits are paid at the wholesale rate, as are left over credits when a customer terminates service.

Financial incentives

The political purpose of incentive policies for PV is to facilitate an initial small-scale deployment to begin to grow the industry, even where the cost of PV is significantly above grid parity, to allow the industry to achieve the economies of scale necessary to reach grid parity. The policies are implemented  to promote national energy independence, high tech job creation and reduction of CO emission.

Three incentive mechanisms are used (often in combination):

•Investment subsidies: the authorities refund part of the cost of installation of the system (ITC)

•Feed-in Tariffs (FIT): the electricity utility buys PV electricity from the producer under a multi-year contract at a guaranteed rate.
•Solar Renewable Energy Certificates ("SRECs")

With investment subsidies, the financial burden falls upon the taxpayer, while with feed-in tariffs the extra cost is distributed across the utilities' customer bases. While the investment subsidy may be simpler to administer, the main argument in favor of feed-in tariffs is the encouragement of quality.

Feed-in Tariffs (FiT)

With feed-in tariffs, the financial burden falls upon the consumer. They reward the number of kilowatt-hours produced over a long period of time, but because the rate is set by the authorities, it may result in perceived over payment. The price paid per kilowatt-hour under a feed-in tariff exceeds the price of grid electricity. Net metering refers to the case where the price paid by the utility is the same as the price charged.

Solar Renewable Energy Credits (SRECs)
Alternatively, SRECs allow for a market mechanism to set the price of the solar generated electricity subsidy. In this mechanism, a renewable energy production or consumption target is set, and the utility (more technically the Load Serving Entity) is obliged to purchase renewable energy or face a fine (Alternative Compliance Payment or ACP). The producer is credited for an SREC for every 1,000 kWh of electricity produced. If the utility buys this SREC and retires it, they avoid paying the ACP.

In principle this system delivers the cheapest renewable energy, since the all solar facilities are eligible and can be installed in the most economic locations. Uncertainties about the future value of SRECs have led to long-term SREC contract markets to give clarity to their prices and allow solar developers to pre-sell/hedge their SRECs.

The price per kilowatt hour or per peak kilowatt of the FIT or investment subsidies is only one of three factors that stimulate the installation of PV. The other two factors are insolation (the more sunshine, the less capital is needed for a given power output) and administrative ease of obtaining permits and contracts.
Environmental impacts
Unlike fossil fuel based technologies, solar power does not lead to any harmful emissions during operation.