Solar photovoltaic electricity could be competitive with traditional grid energy sources as early as 2013 in some major European electricity markets, shows a new study by the European Photovoltaic Industry Association (EPIA). Solar PV will be competitive in all segments of Europe by 2020.
September 6, 2011 — Solar photovoltaic electricity could be competitive with traditional grid energy sources as early as 2013 in some major European electricity markets, shows a new study by the European Photovoltaic Industry Association (EPIA). Solar PV will be competitive in all segments of Europe by 2020.
The ongoing price declines in PV technology over the last 20 years have slashed PV module costs by more than 20% every time the cumulative sold volume of PV modules has doubled. Further generation cost decline will be around 50% until 2020. The real cost of PV electricity generation will therefore compare favorably with other energy sources, shows the new EPIA report.
Solar power is already “cheaper than many people think,” said EPIA president Ingmar Wilhelm. Ever-improving technology and economies of scale will drive that down further. As conventional electricity sources increase in price, solar PV will be become a fully competitive part of the energy mix, Wilhelm points out, under “the right regulatory and market conditions.” Encouraging PV development will reward European countries with reduced greenhouse gases and safe and local energy supply, creating jobs and social cohesion.
EPIA analyzed markets in France, Germany, Italy, Spain and the United Kingdom (UK), carried out with the support of the strategic consulting firm A.T. Kearney.
By determining the full generation cost of PV electricity and comparing it to market trends over the coming decade, the study reached conclusions on dynamic grid parity and generation value competitiveness: Dynamic grid parity – the point at which, in a particular market segment in a specific country, the present value of the long-term electricity revenues from a PV installation equals the long-term cost of receiving traditionally produced and supplied power over the grid – could occur as early as 2013 in the commercial segment in Italy and then spread out in Europe to reach all types of installations considered in all the selected countries by 2020. Generation value competitiveness – the point at which, in a specific country, adding PV to the generation portfolio becomes equally attractive from an investor’s point of view to investing in a traditional and normally fossil-fuel based technology – could be reached as early as 2014 in the ground-mounted segment in Italy and then spread out in Europe to all the selected countries by 2020.
The smart deployment of support mechanisms, such as feed-in tariffs (FiTs), has helped PV gain a market foothold in many countries, compensating for the difference in cost competitiveness between PV electricity and that of conventional sources. As that competitiveness gap narrows for the PV sector, due to technology development and parallel decrease of generation cost, PV will be able to rely progressively less on dedicated financial support, leading to the phasing out of such support schemes. This will happen even quicker if internalization of external effects is implemented for all technologies and subsidies to other energy sources are also phased out, leading to a truly level playing field.
The full study “Solar Photovoltaics Competing in the Energy Sector – On The Road to Competitiveness” was released at the 8th EU PV Industry Summit, part of the 26th European Photovoltaic Solar Energy Conference and Exhibition (EU PVSEC).
European Photovoltaic Industry Association (EPIA) members come from silicon, cells and module production to systems development and PV electricity generation as well as marketing and sales. Learn more at http://www.epia.org/.