IEA misses the point on solar

According to the New Policies Scenario in the IEA's recent World Energy Outlook, the solar energy revolution is almost finished before it really started. Following a period of more than 60 % average annual growth since 2005, IEA predicts almost no growth at all in the 23 years to come. The projected average yearly capacity addition is not more than 26 GW of Solar PV, i.e. less than the industry installed in 2011 (27.4 GW). This is in sharp contrast to McKinsey(**) and others who foresee "rapid growth" and massive uptake of distributed PV leading to "disruptive" changes to the regulated energy industry, due to the sharp fall in the costs of PV.

IEA does not publish the underlying data supporting the scenario projections, but let’s take a look at some of the assumptions that can be derived from the reading:

Item	IEA assumption	Comment
Average installation costs 2012-2015	2.6 $/W (Figure 7.7)	This is really far off. Already today leading turnkey-suppliers (including Scatec Solar) build ground-mounted PV 30-40 % cheaper than cited here, and costs will continue to fall until 2015 which this cost estimate cover. According to EPIA, the Industry’s own association, the average system cost for PV above 2.5 MW will drop from 1.55 $/W to 1.4 $/W, almost half the price cited by IEA. The IEA number is valid only for smaller residential roof-top installations of PV.
Average installation costs 2015-2035	Gradual decline from 2.6$/W to 1.6 $/W	Even from this high level IEA projects a moderate 40 % cost reduction in the 20 year period from 2015 and 2035, in sharp contrast to the drastic dwindling of costs realized so far. Only the last two years the cost of installing PV fell by approximately 50 percent. McKinsey expects installation costs to fall 40-60 percent only in this decade, whereas EPIA projects the costs of installing PV to fall 25-30 percent the same decade.