With the closing of the unsubsidized price gap between solar, wind and conventional power sources, photovoltaic (PV) solar is set to attract an increasingly dominant share of renewable power uptake. For the first time that uptake will be market driven with commercial, manufacturing, and large-scale residential buildings likely to figure prominently in this uptake. There is equally the prospect of a growing number of small- and medium-scale hybrid PV, wind, and concentrated solar power (CSP) plants located on city fringes and beyond where high grid infrastructure costs make dependence on renewable energy and storage competitive.

The current increasingly rapid uptake of solar—albeit from a low base of a little over 1% of global power generation—is being driven by the continuing and substantial fall in the cost of PV and storage installations. This is illustrated by the comparative analysis from the recent MIT Energy Initiative (2015) study on the future of solar energy (Table 19.1).

What has been less clearly articulated, however, is the likely nature of the accelerated uptake of PV-derived energy in terms of how companies interface with their power grids and power utilities. Bodies, such as the Solar Energy Industry Association (SEIA) in the United States, are betting that utilities will take the lion’s share of the uptake, as indicated in their projections (Fig. 19.2). However, much depends on the nature and size of the commercial enterprises. A recent 2016 survey of large US-based corporations by PWC² showed some three-fourth were actively planning further PV renewable uptake and 85% intending to so in the next 18 months. Reasons for doing so were roughly evenly split between a desire to meet sustainability goals, reduce greenhouse gas emissions, generate an attractive return on investment (ROI) (three-fourth of recipients) and to a lesser, but still substantial extent, to limit exposure to energy price variability (almost two-thirds). Key attractions of PV for commercial uses are clearly its scalability, locational versatility, and usability. The latter advantage relates to the fact that the period of greatest power demand of corporates generally matches the period when PV’s generating capacity is at its most productive.

With the rise of businesses’ and particularly commercial establishments’ uptake of PV solar, the range of grid edge agreements has inevitably grown. A PWC (2016) survey shows PPAs being chosen by two-third of those surveyed with slightly less than half choosing on-site PPAs.³ Of the off-site PPAs, 30% are in the form of virtual PPAs.⁴ However, it should be noted four-fifths of the companies surveyed are planning to build out their renewables portfolio with multiple types of transactions (e.g., an off-site PPA and an on-site financial investment). These choices indicate that large companies with high levels of power usage (in the PWC survey an average of $100 million/annum) clearly have an incentive to directly manage the on-site or off-site generation, given the advantage of being able to take advantage of the Federal Government’s tax credit and lock-in long-term supply at an assured price. In this way, lower costs can be derived from avoiding the expected increase in grid-supplied power which, in the past decade, has been rising at an annual average of over 10% for commercial customers in the United States (Energy Information Administration, 2016).

In countries such as Australia, while residential solar panels have in the past been heavily subsidized, such subsidies have not generally been extended to commercial apartment block complexes. Equally the uptake of commercial-scale solar has been constrained by the absence of ZNE requirements prescribed for commercial buildings and the lack of a tax credit for renewable energy generation of the type available in the United States. Thus the uptake of PV by Australian commercial power consumers—now that PV-derived solar prices are reaching and are set to fall below grid prices— is likely to become a major part of the renewable power uptake.

In California the commercial sector is considerably larger and the mining sector considerably smaller although their combined energy consumption is very similar to that of Australia (Figs.  19.6 and  19.7). Given the high utilization of electricity by these sectors, there is a corresponding wider scope for PV installations.

As the uptake of PV-derived power has gained momentum, the changing grid interface is creating a greater variety of financing and management instruments. Large corporations, such as Wal-Mart and Target, with exceptional on-site PV potential have chosen to outsource their financing to third parties. Thus in Wal-Mart’s case a third party, SolarCity, has provided the finance and responsibility for the installation of PV store solar. Wal-Mart then purchases back from SolarCity the power generated at an agreed prices on a long-term contract. Target has similar arrangements in place. In this way large retail enterprises indirectly derive benefits from the US Federal Government’s tax breakthrough, lowering its effect on the contracted power supply price with the third party. Importantly the retailer derives the key benefit from this arrangement in the form of a long-term assured price for power. Such an arrangement will, therefore, be an increasingly attractive proposition for enterprises with economically large enough adjacent space or rooftops to justify PV installation. In addition the relatively new variation in the form of virtual PPAs provides a means of price hedging the cost of renewables.

For most countries that are in the process of rapid uptake of renewables and in particular PV, a critical point will be reached where the associated process of intermittent and increasingly distributed power generation creates a base load capacity problem. Analysts indicate that will be the case for Australia and California around 2030 when renewables will account for 30%–40% of generated power. Such problems are already showing up in South Australia, where statewide blackouts have occurred due to a coincidence of storm damage to renewable installations and failure of grid backup. Similarly there are signs of strain already in the Californian energy network.

A further evolving development from the falling cost of renewable energy is its increasing capability to provide reliable energy for the edge of urban and remote communities, where extension of and additions to grid-supplied power has become excessive.

There is sufficient evidence to indicate a watershed has arrived in terms of pricing of renewable energy. The unprecedented recent and continuing decline in the costs of PV—and to a lesser extent, wind and CSP—are, for the first time in history, making renewables cheaper than carbon-based power. These are rates and speed of price declines, which very few advocates of solar, and certainly not policy decision-makers, anticipated.