[SOUND] Welcome to this lesson on photovoltaics. By the end of this lesson, you should be able to describe the discovery of the photovoltaic effect. Explain the history of photovoltaic development, identify world leaders in photovoltaic capacity. And identify and explain the current growth rate of photovoltaics in the world. We'll begin by looking at the photovoltaic effect. Photovoltaics, or solar cells, work with what's called the photovoltaic effect. This is similar to photosynthesis, but instead of light coming in to work with chlorophyll to produce chemical energy, photovoltaics absorb sunlight energy and produce electricity. This was first discovered by Alexandre Bacquerel in 1839, when he took some metals, put them in solution, shone light upon them, and then he measured electron movement, which is electricity. The photovoltaic effect was a curiosity from this point until about the 1950s, when Bell Labs, which is now AT&T Labs, accidentally produced the first silicon solar cell. It was an accident because they were actually trying to improve transistor technology. But in the process, they discovered that the transistor material, which contains silicon, acted as a photovoltaic. So really, transistors and photovoltaics have similar backgrounds. These photovoltaics were briefly considered for rural United States electricity production, but were cost prohibitive. Later in the 1950s, the US defense programs looked at photovoltaics for energy in orbiting satellites in the space program. NASA evolved out of these Air Force military programs, and the first commercial use of the photovoltaic was in space exploration, with the Vanguard 1 satellite in 1958. By the early 1970s, there were over 1000 solar powered satellites. While there were a lot of space-based uses of photovoltaics, there was a limited use on earth due to the prohibitive cost of these devices. The cost started at over around $100 per watt. For perspective, solar cells currently cost less than $2 a watt. There's been a large improvement in efficiency, as well as a decrease in cost that we'll discuss later on. Going into the 1970s, cost decreased slightly, but the photovoltaics found their use in remote operations, like railroad crossings and road signs, where there might not be grid electricity. Then the later 1970s, the US oil crisis spurred some increased research and attention on alternate forms of energy, mainly photovoltaics. In 1979, the first photovoltaics were installed on the White House by Jimmy Carter, which were then removed a few years later and just recently reinstalled. The 1980s found use for small, low-powered solar cells in calculators and watches. Larger utility level solar farms also began to emerge. Prices continued to go down as production increased in the United States. California led the way, and then internationally Germany and Japan also led the adoption of large scale photovoltaics from the 1990s onwards. National and NGO programs tend to incentivize these photovoltaic installations and trainings, meaning that there are usually some financial support that allow photovoltaics to become more affordable. Major supply increases, like raw materials of silicon in the mid 2000s, has led to a sharp decrease in the cost of manufacturing from the early 2000s through today. Today the industry estimates about 300 gigawatts of photovoltaic panels are installed as of early 2017. Using an average amount of sunlight and external efficiency numbers, this places us conservatively around 400 terawatt hours per year of solar electricity. Globally, we use about 21,000 terawatt hours of electrical energy, so this is only about 2% of total electricity production in use. China, Japan, and the US are the current market leaders of photovoltaic installations. Germany, which has been a leader of installations, has start to lose its standing as they approach their maximum capacity, as well as limitations on economic affordability. Solar photovoltaics are approaching around 10% of the total electricity use in at least three countries, Honduras, Italy, and Greece. This is significantly higher than the global solar electricity use, but these countries have also much lower populations than countries like the United States, China, and Japan. Looking at some individual countries, however, we see that China is the new leader in photovoltaic capacity. As of 2015, there were around 45 gigawatts installed, and then in 2016, another 34.5 gigawatts on top of that, almost doubling their total solar photovoltaic installations in just one year. Japan has also added a lot onto their existing base in one year. But Germany did not add a lot, as they were already ahead of the curve years ago, and began major installations as early as 20 years ago. So by itself, China had almost 50% of the total new global capacity in 2016. That's pretty impressive. Annual photovoltaic growth is also exponentially growing year by year from 2006, when we were at less than 10 gigawatts, and now over 300 gigawatts. Solar is considered a growth industry at this point. While there was a global recession in 2009 through 2011, solar was increasing both its installations and capacities year over year. Additionally, while most companies were losing employees, solar was increasing employment and total installations have increased by over 20% by year. From a nationwide perspective, if we just look at the United States, capacity is increasing more and more each quarter. There have been very large fourth quarter changes each year, with the largest growth in the utility sector. These are what we would consider solar farms, utility-based installations for large distributed, sorry large centralized generation. Growth by state keeps staying with California being number one year after year, whereas other states begin to move around the map. For example, legislation and other financial metrics can cause growth, and states can jump spots pretty quickly. Just by one example, Minnesota, which was the 28th spot in 2015, was then the 14th and is now the 4th spot in the first quarter of 2017. The financial and legislative changes could be new net metering rules, state, local incentives, or private development. For Minnesota, it's been a combination of requiring utilities to have a minimum of 1.5% solar energy on the grid, as well as some state incentives that have led to some very large utility-scale installations. So what are the drivers for growth? Well there are a few reasons why individuals, as well as nations, will increase their photovoltaic use. One is the increased need, with limited traditional energy sources. One of the main drives for China's increase is their need for energy, but the inability to continue to use the fossil fuels, because there's a limit to those fossil resources. Plus, there is the ability to put these photovoltaic resources in more remote areas that have not necessarily grid-connected utilities. So rural electrification, especially in developing and third world countries, tend to drive solar over some of the traditional fuels. Where countries like the United States, which started with oil, coal, and gas, are now moving towards solar energy. So many rural and developing areas that never had electricity, instead of stepping through that same pathway, start with solar instead of putting in large, centralized fossil production. Solar has also become cost competitive with traditional energy sources, meaning that the levelized costs are lower, so photovoltaics are now equal, or have what's known as grid parity, compared to fossil fuels. Currently, there are over 30 countries around the world where photovoltaic technologies are already less expensive than traditional electrical technologies, and can be profitable without additional financial incentive support. These tend to be countries where traditional electricity production is very expensive because of fuel or distribution. There's also an increased awareness of carbon dioxide emissions these days. So from among global health perspectives, as well as environmental perspectives, people are aware of the CO2 emissions and smog emissions associated with fossil fuel combustion. Knowledge and awareness of climate change is also one of the drivers for increased photovoltaics. Going back to this term levelized cost, we can look at the unsubsidized costs of installation and operation of electrical production technologies. This levelized cost figure comes out of the Lazard Group, and if we focus on just the solar photovoltaic crystalline and thin film utility scale systems, the levelized cost is less than virtually any conventional electricity technology. Levelized cost takes into the account the cost of maintenance and operation, as well as the fuel and the technology. Conventional energy sources, like natural gas and coal and nuclear, have significant operation and maintenance costs, as well as fuel costs. When we discuss photovoltaics, the fuel is free because it's sunlight, so there are no costs there, and there's limited operation or maintenance costs. They still may have a higher installation cost per energy unit. However, if we look at the lifetime of the technology, photovoltaics become a clear winner, as well as some other technologies, renewable technologies, like onshore wind, which comes in as a close second. Now that we've reviewed some of the historical and market factors for photovoltaics, you should be able to describe the discovery of the photovoltaic effect. Explain the history of photovoltaic development over the last century or so. Identify the world leaders and US state leaders in photovoltaics. As well as what drivers exist to move those entities forward. You should also be able to identify why there's been such an increased growth rate of photovoltaics in the world, and why solar is now considered an inexpensive and profitable energy technology. In the next section, we'll look at what are some of the markets for photovoltaics, and the financial incentives that are available for those groups.