Solar photovoltaic, or simply photovoltaic (SPV or PV), refers to the technology of using solar cells to convert solar radiation directly into electricity. A solar cell works based on the photovoltaic effect. R&D and practical experience with photovoltaics have led to the development of three generations of solar cells: Crystalline silicon based solar cells, thin film solar cells and third generation PV. Solar PV is very likely to play a significant role in climate change mitigation in the future. However, today, inspite of significane decreases in the cost for solar PV systems, the majority of PV deployment is still driven by substantial subsidy schemes, particularly feed-in tariffs.
Solar PV has enormous energy potential and many countries have implemented policies and incentive schemes to support its growth as a source of energy. Installed capacity has therefore recently reached the milestone of 100 GW of total global operating capacity in 2012 (REN21, 2013). Another key driver is the fact that, due to a steep learning curve and increased competition, rapid cost reductions of Solar PV systems have been experienced over recent decades.
The photovoltaic effect
The photovoltaic effect can be briefly summarised as sunlight striking a semiconductor and causing electrons to be excited due to energy in the sunlight (photons). The excited electrons become free of their atomic structure and, in moving away, they leave behind ‘holes’ of relative positive charge that can also migrate throughout the material. By placing two different semiconductors together in thin layers (or wafers) the free electrons and ‘holes’ can be separated at their interface/junction, creating a difference in charge, or voltage, across two materials. Sometimes, the term “p-n junction” is used which refers to the two different types of semiconductor used. A single such arrangement, or cell, creates only a modest voltage and current, but when arranged into larger arrays the cells can produce useful amounts of electricity which is known as solar PV electricity.
On the basis of their manufacturing process, solar cells consist basically of three main components - the semiconductor, which absorbs light and converts it into electron-hole pairs, the semiconductor junction, which separates the electrons and holes, and the electrical contacts on the front and back of the cell that allow the current to flow to the external circuit. R&D and practical experience with photovoltaics have led to the development of three generations of solar cells.
Crystalline silicon based solar cells
The first generation is represented by crystalline silicon based solar cells, which may be monocrystalline or multicrystalline depending on the manufacturing technique. It is the most mature technology and represents a market share of 80 to 90 percent (IEA, 2009; IPCC, 2010). Maximum recorded efficiencies (the percentage of the incoming energy that is converted to electricity) of roughly 20 to 25 percent have been achieved for multicrystalline and monocrystalline cells respectively, representing an approximate doubling of efficiency since 1990 (IPCC, 2010). These improvements in efficiency have been mirrored by improvements in manufacturing techniques including thinner cells (lower material costs), larger wafers, increased automation and other factors that likewise contribute to the significant cost reductions seen in the past decades (these are discussed further in the finance section below).
Thin film solar cells
Second generation technologies, so called thin film solar cells are based on alternative materials such as cadmium telluride (CdTe), copper indium gallium diselenide (CIGS), amorphous silicon and micromorphous silicon set as thin films. The layer that absorbs the sunlight is only a few micrometres thick and can be deposited onto relatively large smooth surfaces such as glass, metal or plastic. This PV type has the advantage of lower labour and energy intensity compared to crystalline silicon PV but a reduced efficiency in terms of electricity generation (10 to 16% depending on the film type, IPCC, 2010). The majority of the remaining share of the PV market is taken by thin film technologies.
Third generation PV
Third generation technologies were originally developed for use in space and have multiple junctions typically using more exotic semiconductors such as gallium and indium compounds. These types of cells have already crossed the maximum theoretical efficiency of single junction solar cells, and many laboratories have reported lab scale solar cells reaching efficiencies in the excess of 40%. Third generation cells are typically considered in combination with solar concentrator systems as described below and are currently being commercialised in this context. The use of concentrators allows much smaller cells to be used which in turn reduces the cost associated with these more exotic materials.
Concentrated solar PV
Solar cells have been found to operate more efficiently under concentrated light which has led to the development of a range of approaches using mirrors or lenses to focus light on a specific point of the PV cell, called concentrator systems. Specially designed cells use heat sinks, or active cooling, to dissipate the large amount of heat that is generated. This type of concentrating configuration requires a sun tracking system using either single axis or double axis tracking to make sure that the mirrors/lenses are always pointing at the correct orientation.
Off-grid and grid connected PV
There is an obvious yet important qualification to the discussion above on efficiency, which is that solar panels are limited to only produce electricity in periods of sunlight, either direct light or diffuse sunlight on overcast days. During the night they will not produce power. This means that solar cells, if used for remote/off-grid generation purposes, need to be implemented in conjunction with some kind of storage system such as a battery or as a hybrid system with some other type of generator. Where solar cells are grid connected this is less of a problem. They can be used during the day to reduce the local demand from the grid (or even to export back to the grid) and then at night, or during periods of low incident light, the grid can supply the necessary power. The former kind of application, as a remote or off-grid generator, is most commonly observed in developing countries and isolated areas, while grid-connected solar PV is more common in industrialised countries which have a wider reaching grid.
Grid connected solar PV also can have differences in the approach used depending on the way in which customers purchase the electricity. If the solar array is distributed, for example over a larger number of residential houses, then the single installations are operated by the consumer directly. The advantage of this to the consumer is that the cost of electricity, that the consumer must compete with, is the distributed cost, i.e. the cost to purchase power at the location of demand which is normally significantly higher than the actual levelised production cost of electricity (that doesn’t account for transmission/distribution charges/losses and profit margins along the value chain). Solar installations can also be large and centralised but this demands that the power is sold into the common grid at market prices and must compete directly with other technologies (bearing in mind any subsidies that might be applicable for solar generation).
Solar Home System (SHS)
“A SHS typically includes a photovoltaic (PV) module, a battery, a charge controller, wiring, fluorescent DC (direct current) lights, and outlets for other DC appliances. A standard small SHS can operate several lights, a black-and-white television, a radio or cassette player, and a small fan. A SHS can eliminate or reduce the need for candles, kerosene, liquid propane gas, and/or battery charging, and provide increased convenience and safety, improved indoor air quality, and a higher quality of light than kerosene lamps for reading. The size of the system (typically 10 to 100Wp) determines the number of ‘light-hours’ or ‘TV-hours’ available. For example, a 35Wp SHS provides enough power for four hours of lighting from four 7W lamps each evening, as well as several hours of television.” (Source: Reiche et al. 2000) It is estimated that in 2010 there were more than 2 million such systems in use globally, the majority in Bangladesh, China, India, South Africa and Kenya (REN21, 2010).
Resource and Location
As presented in Fig 1, locations closer to the tropics tend to have higher solar irradiation and hence a higher potential for solar PV electricity generation. There is a marked difference in resource levels geographically with northern Africa, for example, being exposed to more than twice the level of solar energy as northern Europe; implying that for the same size panel the electrical output could be doubled in the former location. Having said that, Germany has the largest installed capacity in the world due to domestic incentives there, illustrating that other factors particularly relating to financial aspects and incentives greatly influence the current global distribution of solar PV installations. This is discussed further in the sections below on policy, markets and costs. [media:image:1] Typically satellite data is used to determine the average yearly radiation level at a site for a number of reasons i) local ground based measurements are expensive and equipment must be cleaned to prevent soiling ii) satellites can provide up to 20 years of data for an average which is important given the large annual variation in solar irradiation levels and iii) the accuracy of satellite data is found to be good in correlation with ground based measurements (Pitz-Paal et al., 2007).
Based on these estimates of resource and the associated time-series/seasonal-variation it is possible to estimate the power that would be generated throughout a typical year. This allows the economics of a project to be determined and also allows other aspects of the system (for example battery size if it is an off-grid application) to be calculated.
The technical requirements for the installation of solar PV vary greatly depending on the size of the system and kind of technology used. Small off-grid systems in remote/rural areas using first generation technology, such as solar home systems, can be bought in what is effectively a ‘kit’ form and installed with relatively little local expertise. Maintenance is minimal and mainly requires the cleaning of the solar panel to ensure efficiencies are maintained. Alternately the installation of grid scale concentrating solar power with third generation technology is a highly specialised field, requiring detailed calculations for the plant layout, expected yield and economics of the project. The equipment, with the required tracking mechanisms, requires maintenance and upkeep, and the power output must be forecast for export.
The legal and regulatory requirements for solar PV are relatively few compared to some other renewable technologies. They have a low local environmental impact and are not very visible (for small applications they are often mounted on the roofs of buildings) typically making public/permitting acceptance high. Grid connected systems require an appropriate licence or permit to export to the grid along with the necessary metering equipment, connected by a professional, to ensure that the level of export to the grid is measured for any subsequent compensation. Larger installations obviously require the appropriate planning permissions that would accompany any moderate to large infrastructure project.
Currently, the main policy instruments that have an impact on solar PV are incentives that subsidise its use and offset its currently uncompetitive cost; a handful of countries with strongly supportive policies account for 80% of global installed PV capacity (IEA, 2010).
While crystalline silicon based and thin film solar systems are in the early phases of rapid market deployment, third generation and concentrated solar PV are in the R&D and demonstration phase.
In the last two decades the global solar PV market has experienced rapid expansion, with an average annual growth rate of 40% (IEA, 2010) and 60% between 2004 and 2009 (REN21, 2010). Approximately 28GW of installed capacity was added in 2012, bringing total Cumulative installed capacity to approximately 100 GW worldwide. A large share of the market is concentrated in Europe, which accounts for 70 GW of total installed capacity. It can be observed that the majority of installations are in countries that have only moderate solar resource levels however their strong policy regimes and support mechanisms have allowed their domestic markets to flourish.
The largest solar PV producers, those that had an output of more than 500MW in 2009, were First Solar (USA), Q-cells (Germany), Sharp (Japan), JA Solar Holdings, Suntech and Yingli (all China). However, the market is relatively diversified with significant number of global manufacturers vying for market share and the top ten manufacturers occupying only 45 percent of production of solar cells (Hirshman, 2010). The IEA (2010) forecasts an average annual market growth rate of 17% in the next decade, leading to a global cumulative installed PV power capacity of 200 GW by 2020 and 3000GW by 2040 (with repowering of older systems). This would represent roughly 11 percent of global energy demand should this scenario play out.
In terms of the regional distribution of PV installation and cumulative installed capacity the following table shows how Europe, particularly Germany and Italy, is the frontrunner (IEA, 2012):
Solar PV systems, once manufactured, are closed systems; during operation and electricity production they require no inputs such as fuels, nor generate any outputs such as solids, liquids, or gases (apart from electricity). They are silent and vibration free and can broadly be considered, particularly when installed on brownfield sites, as environmentally benign during operation. The main environmental impacts of solar cells are related to their production and decommissioning. In regards to pollutants released during manufacturing, IPCC (2010) summarises literature that indicates that solar PV has a very low lifecycle cost of pollution per kilowatt-hour (compared to other technologies). Furthermore they predict that upwards of 80% of the bulk material in solar panels will be recyclable; recycling of solar panels is already economically viable. However, certain steps in the production chain of solar PV systems involve the use of toxic materials, e.g. the production of poly-silicon, and therefore require diligence in following environmental and safety guidelines. Careful decommissioning and recycling of PV system is especially important for cadmium telluride based thin-film solar cells as non-encapsulated Cadmium telluride is toxic if ingested or if its dust is inhaled, or in general the material is handled improperly. In terms of land use, the area required by PV is less than that of traditional fossil fuel cycles and does not involve any disturbance of the ground, fuel transport, or water contamination (IPCC, 2010).
Solar PV is very likely to play a significant role in climate change mitigation in the future. As described above it is a rapidly growing market and is forecast by the IEA (2010) to contribute more than 10 percent of global electricity supply by 2050. It has energy payback periods ranging from 2 to 5 years for good to moderate locations and lifecycle GHG emissions in the order of 30 to 70 gCO2e/kWh (IPCC, 2010) depending on panel type, solar resource, manufacturing method and installation size. This compares to emission factors for coal fired plants of more than 900 gCO2e/kWh and for gas fired power stations of more than 400 gCO2e/kWh (Sovacool, 2008) showing the large potential for solar PV to contribute to reductions in carbon emissions from the electricity sector.
There has been a large decrease in the cost of solar PV systems in recent decades; the average global PV module price dropped from about 22 USD/W in 1980 to less than 4 USD/W in 2009, while for larger grid connected applications prices have dropped to roughly 2 USD/W in 2009 (IPCC, 2010) (Fig 4). More recently,the average price of crystalline silicon solar modules decreased by in excess of 30% in 2012 and thin filmprices fell by approximately 20% (REN21, 2013). A review of the available literature on historical solar PV learning rates (the percentage reduction in price for every doubling of installed capacity) shows a range of estimates from 11 to 26 percent (IPCC, 2010). In Germany for example thelearning rate has been observed to be approximately 19.5% on average since 1980 as shown in the chart below. Thesesubstantial cost reductionshave been a key driver in solar PV systems deployment.
Using a slightly different approach (based on a study of solar PV module and consumer electricity prices, i.e. a grid-parity study) Breyer et al. (2009) estimated that the “cost of PV electricity generation in regions of high solar irradiance will decrease from 17 to 7 €ct/kWh in the EU and from 20 to 8 $ct/kWh in the US in the years 2012 to 2020, respectively”. [media:image:5] It is important to note that these prices only apply to those wishing to install large, utility scale, solar parks in industrialised countries. The costs of Solar Home Systems in developing countries have been shown to be orders of magnitude higher per kilowatt-hour.
[this information is kindly provided by the UNEP Risoe Centre Carbon Markets Group ]
Project developers of solar PV projects under the CDM mainly apply the following CDM methdologies:
ACM 2: "Consolidated baseline methodology for grid-connected electricity generation from renewable sources”  for large scale projects and AMS-I.D.: Grid connected renewable electricity generation  and AMS-I.A.: Electricity generation by the user  for small-scale projects.
As of March 2011, there are 65 solar PV projects in the CDM pipeline, out of which 26 are registered and for 2 CERs have been issued.
BP 2009, BP Solar, available from: http://bpsolar.com 
Breyer, C., A. Gerlach, J. Mueller, H. Behacker, and A. Milner, 2009. Grid-Parity Analysis for EU and US Regions and Market Segments - Dynamics of Grid-Parity and Dependence on Solar Irradiance, Local Electricity Prices and PV Progress Ratio. In: 24th European Photovoltaic Solar Energy Conference, 21-25 September 2009, Hamburg, Germany.
Fraunhofer institute for Solar Energy Systems, 2012. Photovoltaics Report. Available from http://www.ise.fraunhofer.de/de/downloads/pdf-files/aktuelles/photovolta... 
Hirshman, W. P., 2010. Surprise, surprise (cell production 2009: survey), Photon International, pp. 176-199.
IEA (International Energy Agency) 2009. Trends in photovoltaic applications. Survey report of selected IEA countries between 1992 and 2008, available from: http://www.iea-pvps.org/products/rep1_18.htm 
IEA (International Energy Agency) 2010. Technology Roadmap - Solar photovoltaic energy
IEA (International Energy Agency) 2012. PVPS Report: A Snapshot of Global PV 1992-2012.
IPCC 2010. Special Report on Renewable Energy Sources and Climate Change Mitigation, In Press.
Pitz-Paal, R., Geuder, N., Hoyer-Klick, C. and Schillings, C. 2007, How to get bankable meteo data?, available from: http://www.nrel.gov/csp/troughnet/pdfs/2007/pitz_paal_dlr_solar_resource_assessment.pdf 
Reiche, K., Covarrubias,A. and Martinot, E. 2000. Expanding Electricity Access to Remote Areas: Off-Grid Rural Electrification in Developing Countries, available from: http://users.tkk.fi/~apoudyal/Session%2020%20Reading%20Reiche_et_al_WP2000.pdf 
REN21. 2010. Renewables 2010 Global Status Report (Paris: REN21 Secretariat).
REN21. 2012. Renewables 2013 Global Status Report (Paris: REN21 Secretariat).
Sovacool, B.K. 2008. Valuing the greenhouse gas emissions from nuclear power: A critical survey. Energy Policy, Vol. 36, p. 2950.