What are 3 of the biggest risks when investing in PV energy?

Sapphira:

Biggest risk: Intermitent and unpredictable energy output. Weather can block the sun rays for weeks or months (as in a monsoon season)

Second biggest risk: Competition from other energy sources when grid-connected. If the price of energy gets lower (due to the suddenly lower cost of an alternative energy source, such as coal, oil, gas , hydro, wind etc.) before the end of the payback period for a Solar PV installation (which might last decades), that solar PV installation might lose money for the investors who cares only about the bottom line. A corrolary of this risk is the possible end or reduction of subsidies.

Third biggest risk: Rapid advances in the PV Energy technology itself which might render an installation a dinosaur before the end of its payback period.

That is the reason I am in favour of of a combination of solar and wind. New low-speed wind turbines make this a possibility. As far as technology goes, even though solar plants are supposed to last for 25 years, advances in conversion efficiency will always take place. So strategies would have to be put into place of replacing the PV cells much before the 25-year cycle is complete. Higher conversion efficiencies would also compensate for any drop in rates.

I suppose all this will be worked out as we go along, something like moving from mainframes (on which I worked in 1969) to hand-held tablets today. We adapt.

If we take care of correct equipment, correct sun-hours and correct losses in calculations there will not be any risks. We sometimes exaggerate figures to indicate higher IRRs to justify higher cost of equipment and higher interest rates. We must be aware of the fact that solar works with sun and at most of the places it is predictable only yearly average may differ slightly. In this case best is to use hybrid systems.

Thanks Matthew. Its good article. This is precisely what will happen. In India already off-grid market is picking up fast but the reason is not Government support but the need of electricity due to energy dependency. Do you have any idea about energy storage viability. I mean if we store energy in battery and utilize in the night also. Is there any development in this direction. In future then may be we can move from hybrid concept to 100% Solar Energy.

Matthew:

You and your organization have done a good job approaching Solar Energy from the System and Policy standpoint.

You've raised a few good questions, especially about energy storage (batteries, gravity and flywheels). I didn't count energy storage as a seperate risk, but including it in:

"Biggest risk: Intermitent and unpredictable energy output."

You've also proposed some good applications for Solar Energy.

I and a couple of friends are working on similar schemes and have found some solutions. But we work as engineers, in fact as equipment designers. We don't write papers. But we can cooperate with you if we can maintain our rights and our privacy.

Contact me in the private domain

maudpham@sbcglobal.net

one addition from my point of view is the additional cost of land to put the solar

While these are excellent points from a technical perspective, here in the northeast US it has been the political unpredictability which has threatened the stability (and therefore added risk) of long term solar investments. Extreme fluctuations in energy credit pricing has given the market a "feast or famine" reputation and it's something we have to counter each time we begin the process of trying to develop a new project.