Storage

The FIT Debate: Making Solar PV Competitive in Europe

The 2nd European Photovoltaic Industry Association (EPIA) round table held this past week in Brussels, Belgium, opened up the debate on the future of support mechanisms for renewable energies in Europe — and solar photovoltaic (PV) electricity in particular.

The 2nd in a series of debates running through December 2007, the EPIA round table stressed that correctly designed feed-in tariffs (FITs) are needed to promote PV electricity, but warned that European Union (EU) harmonization could have adverse negative effects.

Intervening in the debate, Claude Turmes, Vice-President of the European Parliament, and strong promoter of renewable energies, confirmed that feed-in tariffs are the cheapest and most effective option to promote solar photovoltaic electricity. Alternatives such as green certificates give no guarantee to investors, as a well designed feed-in scheme does.

Cornelia Viertl, senior adviser on renewable energies at the German Ministry for the Environment (BMU) and main speaker at the debate, said that the feed-in tariff has proved to be the most effective mechanism to promote solar PV. She underlined however, that other countries should not copy the German model as a whole but adopt the general principles of it.

France, Spain, Italy and Greece have already chosen to promote solar PV through FIT schemes. However, administrative barriers in terms of paper work or request of permits considerably slow down the process in several countries and increase the price of installed systems compared to Germany.

According to the EPIA, Germany’s successful experience with feed-in tariffs shows that appropriate feed-in tariffs stimulates the PV sector in various ways:

• Guarantees the price of PV solar electricity without depending on the State budget. It is indirectly paid by all electricity customers and enables every consumer to promote the development of renewable energies through its monthly electricity bill.
• Secures financing for PV system; a feed-in tariff established by law will serve as a guarantee for individuals willing to purchase a PV system.
• Encourages cost reduction; the constant reduction of the feed-in tariff for new systems connected to the grid will put pressure on the PV-industry to bring down costs.
• Forces the industry to significantly improve performance; the return on investment depends on the performance of the system and customers will opt for systems with highest return.