NEW YORK (TheStreet) -- From the standpoint of building out the solar energy industry, the final quarter of 2013 was huge, topping off its best year ever, according to an industry group report.
While still a decidedly small piece of the U.S. energy puzzle, solar is starting to close in on significant market share, claiming a full 29% all new electricity generation capacity in 2013, up from 10% in 2012, according to a Solar Energy Industries Association report released Tuesday, making new installations of solar second only to natural gas.
Wind power, by contrast, hit a speed bump with the expiration of a federal tax credit at the end of 2012. Wind power dropped to 7% of new energy installations in 2013, vs. 41% in 2012. New wind power installations are set to rise again in 2014, but at a more subdued rate.
In solar, one of the big headline grabbers of 2013 actually came online in the first quarter of 2014: BrightSource Energy and NRG Energy's $2.2 billion Ivanpah plant, touted as the world's largest solar power plant. It now has a capacity of 392 megawatts. The plant uses concentrated solar thermal power, where mirrors reflect sunlight to centrally located steam turbines that generate electricity from the heat. A significant number of other CSP facilities are being completed and are scheduled to come online in 2014, but many are saying that CSP technology is on the way out before it can be fully phased in.
In contrast to CSPs, photovoltaics generate electricity directly from contact with the solar radiation. The PV panels offer a lot of flexibility, as they can be installed directly on site or used in centralized distribution facilities.
Historically, cost has been a big issue for PV panels, but that is changing rapidly. According to SEIA, average system prices for solar continued to drop steeply to $2.59 a watt in the fourth quarter of 2013, down over 14% from a year earlier and vs. $8 in 2009. For utilities, average system prices nationwide fell below $2 a watt, to $1.96 in the fourth quarter.
Cost aside, PV panels still lose to CSPs on two key points. First, PV panels typically have efficiency ratings of well less than 20%, while efficiency for CSPs is upward of 30%. Second, current CSP plants can store thermal energy for up to 16 hours, even after sunset. Improving battery technology and steadily increasing efficiency in solar cells and solar panels should bring those aspects of PVs more in line with CSPs in coming years.