Less than 2 years ago, a feed-in tariff scheme was launched in UK, allowing people to put excess electricity generated by their solar systems back to the grid for profit. This of course is a major factor when it comes to if solar is affordable or not, which has lead to a massive growth: In 22 months, the total solar output in UK has gone from 26 MW to 1,066 MW, in other words, a growth of 41000 %.
Solves the Issue of Energy Storage
One of the major downsides of solar power is the fact that the availability is unstable and unpredictable. We often do not have the amount of sunlight required to cover the demand during peak hours, and sometimes, we generate an excess during off-peak. How can we store the electricity to better match demand? We could always install batteries, but this is inefficient and expensive.
A feed-in tariff scheme, allows owners of solar panels to send excess electricity back to the grid, spinning the power meter in the other direction. The electrical grid now acts as a huge battery, leading to cost-competitive solar power.
The Importance of Politics
Most people think that the amount of sun in a particular area is responsible for whether or not solar is going to be affordable. This is certainly true to some extent, but incentives and financial rebates that the government has in place usually the determining factor.
UK is certainly not the sunniest place. Below is an overview of insolation across the world (amount and intensity of sunlight):
Germany Reduces Their Subsidies
The number one reason for Germany being on top when it comes to solar power is the fact that the government has had incentives and financial rebates in place for decades. In fact, the market has politically been skewed too much in the favor of private solar systems, resulting in financial problems for the utility companies.
This is why a 30% reduction of subsidies for solar power in Germany has now been proposed (March 2012).
My goal with this article was to illustrate how important financial rebates/incentives/feed-in tariffs are when it comes to solar power. If you want to learn more about other key factors, check out http://energyinformative.org/solar-energy-pros-and-cons/.