Deutsche Bank says unsubsidised rooftop solar electricity costs anywhere between $US0.13 and $US0.23/kWh today, which is well below retail price of electricity in many markets globally.

“The economics of solar have improved significantly due to the reduction in solar panel costs, financing costs and balance of system costs,” it notes. And further cost falls over coming years will come from improved panel efficiencies, and falls in balance of system costs due to scale and competition.”

The cost of finance will also fall, partly due to the development of new business models and partly because customer acquisition costs will fall as more consumers turn to solar and from the adoption of energy storage.

Shah says it is clear that solar is becoming an increasingly important component of the world energy market. This graph shows its rapidly rising share of new generation.

And while short term policy fluctuations and uncertainty – in particular in Japan and UK – have caused it to revise down total uptake in 2014 and 2015, Deutsche Bank says demand for solar in the world’s two biggest economies is about to “take off”.

In the US, solar demand is expected to jump five fold to 16,000MW in 2016, making it the biggest market in the world ahead of China (which is expected to be about 13,000MW a year).

The US market will be underpinned by a sharp rise in rooftop solar demand and the expansion of solar leasing, as well as new sources of financing.

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