Challenges and opportunities

Solar power currently makes up a small part of Canada’s energy pie, but its use is growing, as it is applied in new and innovative ways to heat buildings and generate electricity in remote areas. Future growth of solar power in Canada will be shaped by different challenges and opportunities:

• costs of solar energy dropping but still a barrier
  Costs for solar energy have been declining, as technology improves. For example, production costs for PV cells have come down steadily over the last decade to between 50 cents to 30 cents per kilowatt-hour, and lower for some applications. Based on this progress, Industry Canada predicts that industry could further reduce generation costs to between eight and 14 cents per kilowatt-hour between 2010 and 2020. Even so, much of the solar power industry’s future will depend on improving economics. PV cells are expensive to produce because of the high cost of semi-conducting materials. Cost reductions can be achieved over time by reducing manufacturing costs through economies of scale and increased public acceptance. Currently, concentrating solar power systems are the least expensive solar technology for large-scale power generation. In the United States, government, industry and utilities have formed partnerships to reduce the manufacturing costs of concentrating solar power technologies.
  
  
• government incentives needed
  Active solar power systems usually require several years of operations to recover their initial capitals cost in fuel savings. Similarly, PV cell technology is well developed but the capital costs of installing PV cells remain high. Solar power companies, therefore, are lobbying the government to increase incentives and funding to support research, development, demonstration and commercialization of solar technologies. They say that increased regulatory and financial incentives, such as tax credits, low interest loans, grants and utility rebates, are needed to encourage the installation of PV cells and other solar energy technologies in Canada.
  
  
• variable source of supply
  Solar is a variable energy resource, providing electricity only when the sun is shining. This has prompted researchers in Canada and elsewhere to work on the development of experimental hybrid solar systems that can run on solar energy (PV cells, hybrid power towers) and other fuels such as natural gas. The advantage of these hybrid systems is that they can run continuously.
  
  
• new engineering standards required
  Inconsistent standards and interconnection guidelines continue to be a challenge to implementing distributed generation systems such as solar PV cells in Canada. Work to standardize interconnection rules for distributed generation is under way in Canada. In 2003, Natural Resources Canada and Industry Canada partnered with industry to develop a set of guidelines for distributed generation and submitted them to the Canadian Standards Association. These standards could help to facilitate the installation of PV cells.