Here comes the sun. No, this isn't a hippie greeting for celebrators of Earth Day. It's what industry analysts are saying about the evolving significance of solar energy generation, which is maturing into a force that could transform the global economy.
The importance of solar – what you see depends on where you stand
There are lots of places in Canada where hailing the game-changing potential of solar energy seems a dubious proposition.
For example, Ontario is Canada's largest consumer of energy. The province has ambitious plans to tilt its energy supply mix toward more renewable sources. But solar power currently accounts for less than 2 per cent of electricity requirements.
But around the world, the story is quite different.
Germany has been investing heavily in solar for the past decade, installing solar panels on rooftops of public buildings and subsidizing residential construction and retrofits. A year ago, on a sunny weekend in May, solar provided 40 per cent of Germany's energy needs. Every year, the record gets broken.
Some energy experts in the rainy United Kingdom forecast that in six years, 40 per cent of the country's energy needs will be met by solar in the summer months, reaching 10 million homes. (That target may be delayed, as the current government has suddenly fallen in love with the possibilities of extracting gas from shale rock.)
Solar energy was the second-biggest source of new energy electricity generation in the U.S. last year (after natural gas).
Calgary's city-owned energy utility, Enmax, uses solar to power a third of its computer needs at its headquarters, and a company objective in 2014 is to expand rooftop installation of solar systems on commercial and business rooftops.
That may seem ironic; after all, Calgary's economy is fuelled by oil. But it makes business sense. As oil and gas extraction requires increasingly expensive processes, fossil fuel prices keep rising, but solar energy prices are moving in the opposite direction.
Cost savings come from near-zero distribution and transmission requirements. Solar is consumed as it is produced. Storage remains a problem, but new methods require shockingly little direct sun to produce energy. That's a game-changer for solar.
Moore's Law and the fall of solar energy prices
A solar revolution bears a striking resemblance to the computer revolution.
It's known as Moore's Law: Every 18 months, the amount of computing power you can buy for a dollar doubles. That's how a smartphone became more powerful than a Cray computer that took up acreage in the 1980s – and it's in your hand at a tiny fraction of the price.
Here's the parallel in solar: According to the U.S. Department of Energy, the production cost per watt of solar module dropped from $22 (U.S.) in 1980 to under $3 in 2011.
The fall in prices since 2011 has been exponential, not linear. The production cost per watt of photovoltaic cell is projected to fall to 50 cents by 2016. China is already there – although that's an artificial price, underwritten by large government subsidies. But it's precisely that scale of investment that could make China the biggest change agent in solar and renewables.
China: Transforming humanity's energy consumption?
Because of its sheer size and pace of growth, how China travels down the energy path will affect the energy industry worldwide.
Right now China is the world's biggest importer of liquid fuels (petroleum), and coal is the source of 80 per cent of its energy needs.
Known for its long-game strategies, China knows it has to shift this mix. It is heavily subsidizing solar to achieve those goals.
At current rates of development, one forecast says, China will see 80 per cent of its energy production come from renewable sources by 2050.
Put simply, China is leading the international race to find the next cheap energy source. Solar energy is poised on the cusp of becoming that source.
That's a geopolitical game changer. It will affect Canada's economic prowess, and place in doubt our reliance on a fossil-fuel-based export strategy for growth.
Future tense: Do we have time for the oil and gas vs. solar contest?
Right now, hydraulic fracturing and liquefied natural gas are the new oil in many advanced industrial nations. But the plunging costs of solar could soon turn traditional fossil fuels into second-best investment options.
Changing metrics may not arrive before irrevocable environmental damage is done. But the shift is happening sooner than you think.
If current rates of evolution hold, in another decade, solar will be as cheap a source of electricity as coal (the world's cheapest energy source) – with zero carbon emissions.
In two decades, at currently foreseen rates of development, solar power for electricity will be available at half the price of coal.
As the saying goes, nothing's new under the sun. Except, maybe, the power of the sun to run our businesses and homes and transform our world.
Armine Yalnizyan is senior economist at the Canadian Centre for Policy Alternatives. You can follow her on Twitter @ArmineYalnizyan.