Volume 1 photovoltaic solar energy 1 10 – vision for photovoltaics in the future Volume 1 photovoltaic solar energy 1 10 – vision for photovoltaics in the future Volume 1 photovoltaic solar energy 1 10 – vision for photovoltaics in the future Volume 1 photovoltaic solar energy 1 10 – vision for photovoltaics in the future Volume 1 photovoltaic solar energy 1 10 – vision for photovoltaics in the future Volume 1 photovoltaic solar energy 1 10 – vision for photovoltaics in the future Volume 1 photovoltaic solar energy 1 10 – vision for photovoltaics in the future Volume 1 photovoltaic solar energy 1 10 – vision for photovoltaics in the future
1.10 Vision for Photovoltaics in the Future E Despotou, Formerly of the European Photovoltaic Industry Association, Brussels, Belgium © 2012 Elsevier Ltd 1.10.1 1.10.1.1 1.10.1.2 1.10.1.3 1.10.1.3.1 1.10.1.3.2 1.10.1.4 1.10.1.5 1.10.2 1.10.2.1 1.10.2.2 1.10.2.3 1.10.2.4 1.10.2.5 1.10.3 1.10.3.1 1.10.3.2 1.10.3.3 1.10.3.3.1 1.10.3.3.2 1.10.3.3.3 1.10.3.4 1.10.4 1.10.4.1 1.10.4.2 1.10.4.3 1.10.4.4 1.10.4.5 1.10.4.6 1.10.5 1.10.6 1.10.6.1 1.10.6.2 1.10.6.3 1.10.7 1.10.7.1 1.10.7.2 1.10.8 1.10.8.1 1.10.8.1.1 1.10.8.1.2 1.10.8.1.3 1.10.8.2 1.10.8.2.1 1.10.8.2.2 1.10.8.2.3 1.10.8.2.4 1.10.8.3 1.10.8.3.1 1.10.8.3.2 1.10.8.3.3 1.10.9 References Photovoltaics Today Markets Technologies Competitiveness PV module prices PV system prices Electricity Prices Policy Support Future Market Development PV as a Mainstream Power Source in Europe by 2020 and Beyond US and Canadian Markets Slowly Taking Off Japan Has a Moderately Ambitious PV Target for 2020 The Rise of Sunbelt Countries Global PV Installed Capacity Could Reach More Than 4500 GW by 2050 The EPIA Vision for 2050 Introduction A Dynamic Vision on PV Competitiveness and Grid Development Necessary Steps to Unlocking PV Potential Ensuring the gradual competitiveness of PV Ensuring necessary infrastructure adaptations Ensuring evolution of grid management practices and innovative market design Policy Recommendations for a Bright 2050 Future Future Changes in Electricity Systems Managing Variability From Centralized to Decentralized Energy Generation Peak Load Shaving Super Smart Grid Decentralized Storage DSM Future Market Segmentation Future Share of On-Grid/Off-Grid Applications Extending the National Grid Providing Off-Grid Solutions Coupling Mini-Grids with Hybrid Power Future Technological Trends The Evolution of PV Module and System Prices Cost of Electricity Generation Recommendations Policy Recommendations Develop a long-term vision with precise milestones Set up a supportive regulatory framework Send the right signals to consumers Investments in Technology and in PV Projects The importance of a sustained PV cost reduction Delivering research results in line with focus areas already identified Financing necessary R&D investments Encourage investments in Sunbelt countries Grid Infrastructures Adaptations Making necessary changes in the power distribution system Adapting the transmission system Financing infrastructure needs Conclusion Comprehensive Renewable Energy, Volume doi:10.1016/B978-0-08-087872-0.00109-8 180 180 181 181 181 181 181 182 183 183 184 184 184 185 186 186 187 187 187 188 188 188 189 189 189 190 190 191 191 191 192 192 192 192 192 193 195 196 196 196 196 196 196 196 196 197 197 197 197 197 197 197 198 179 180 Economics and Environment 1.10.1 Photovoltaics Today 1.10.1.1 Markets Solar photovoltaic (PV) electricity is on the road to becoming a mainstream energy technology and is currently the fastest-growing renewable energy source in Europe, with a rise in installed capacity of almost 13 000 MW over the past year (see Figure 1), which is the second largest capacity increase in Europe just after gas By the end of 2010, more than 28 GW were being installed This corresponds to the electricity production of two coal-fired power plants or to the electricity consumption of 10 million households in Europe or half the current electricity demand in countries such as Greece Almost 40 GW were installed globally by the end of 2010 (see Figure 2), which corresponds to 50 TWh electricity generated While these numbers are encouraging, solar PVs have the potential to achieve more In fact, solar PV has a critical contribution to make to the three pillars of the European Union’s (EU) energy policy: competitiveness, energy security, and sustainability In the future, should the right conditions be in place, solar PV could satisfy up to 12% of the EU’s electricity needs Achieving that desirable goal would cut down emission of 192 million tons of CO2 per year, an important contribution to the EU’s climate goals Ultimately, boosting the share of PVs in the electricity market will yield huge environmental, social, and economic benefits for Europe However, to achieve a real paradigm, shift is needed Policy-makers, regulators, and industry need to work together to drive PV mass penetration, fostering technological progress, and cost reductions as well as creating a predictable regulatory environment that attracts investments in the EU 20 000 15 602 15 000 13 323 9295 10 000 Decommissioned 4056 000 573 405 208 200 149 145 −535 25 0 −245 AT W as te N Sm ucle a al lh r y dr G o eo th e Ti da rma l& l wa ve Fu el oi l ro hy d SP s La rg e C as al om d Bi Co in W PV as G −5 000 −26 −45 −107 −1550 25 PE Figure Power generation capacities added in 2010 at EU 27 Source: EPIA analysis [2] Rest of the world 5% Rest of Europe 2% Australia 1% China 2% Czech Republic 2% France 2% Belgium 2% USA 6% Spain 9% South Korea 2% Japan 10% Germany 43% Italy 10% Figure Global cumulative installed capacity 2010 Source: EPIA analysis [2] Vision for Photovoltaics in the Future 181 With the Renewable Energy Sources Directive, 2009/28/EC [1], the EU has set the goal to reach 20% of EU energy demand satisfied by renewable energy sources by 2020 PV can play a major role in achieving this objective, provided the Member States realize the potential of the technology and set ambitious targets for its deployment PV technology is no longer just a gadget, or a device for powering space satellites, or useful only for small applications in remote areas It is becoming a significant part of the energy mix In Spain and Germany, the average annual contribution from PV to electricity generation is more than 2% of the total However, with the right combination of regulatory framework, market conditions, and solar irradiation, PV can provide much more For example, in the Spanish region of Extremadura, PVs made up 15% of the electricity mix of the yearly average of 2010 (with peaks up to 25% during summer) Thus, it has been proved that PV can compete with other generation sources Figure demonstrates that Germany still represents the majority of the global market with 43% share If we add up Italy and the rest of EU countries, Europe keeps by far the market leadership Events such as the Fukushima disaster could potentially give an additional push to the PV market development for the years to come with a more important contribution 1.10.1.2 Technologies Crystalline silicon (c-Si) technologies have dominated the market for the last 30 years Amorphous silicon (a-Si) technology has been the choice most widely used for consumer applications (e.g., calculators and solar watches) due to its low manufacturing cost, while c-Si technologies have been used mainly in both stand-alone and on-grid system applications In c-Si technologies, monocrystalline and multicrystalline are produced in equal proportion, but the trend is moving toward multicrystalline technology Ribbon c-Si has a small market share that exists today less than 5% In the thin-film technologies, a-Si has lost some market share in the last decade, whereas other technologies such as CdTe have seen their market share to grow from 2% to 13% over the last years [2] Technologies such as concentrator PV, organics, and dye-sensitized solar cells are starting to enter the market and are expected to see an important growth in years to follow, with ∼6% market share expected in 2020 1.10.1.3 Competitiveness PV competitiveness will be achieved before the end of this decade both from consumer and power-generator perspectives in most European countries In addition, supported by smart, sustainable regulatory policies, PV will be an increasingly more desirable part of the energy equation and constitute a vital part of Europe’s energy mix The competitiveness of PV electricity depends on the evolution of PV modules and system prices, as well as the cost of electricity generation The following subsections explain the main drivers of the evolution of PV toward parity with conventional electricity producers and beyond 1.10.1.3.1 PV module prices Over the past 30 years, the PV industry has achieved significant and swift price reductions The price of PV modules has been reduced by 22% for every doubling of the cumulative installed capacity (see Figure 3) The decrease in manufacturing costs and retail prices of PV modules and systems (including electronics and safety devices, cabling, mounting structures, and installation cost) has been possible thanks to the achieved economies of scale and acquired experience Extensive innovation, research and development, and political support for market development have also been important drivers of cost reduction The ‘module’ price has fallen from about 75% of the total system price to between 50% and 60%, depending on the module efficiency, and is expected to further decrease down to 40% by the end of this decade 1.10.1.3.2 PV system prices The cost of solar PV is decreasing constantly across all segments: residential, commercial, and industrial installations as well as large ground-mounted power plants In Europe, the price of PV systems has dropped 65% in the last decade The inverter, which represents ∼15% of the total system price for a PV installation, has seen a decline in price similar to the one shown by PV modules Installation costs vary depending on the maturity of the market and type of application For instance, with current technical improvements from new generation mounting structures, installations can be built faster and more efficiently 1.10.1.4 Electricity Prices Generating electricity from fossil and fissile fuels such as oil, gas, coal and uranium will become more expensive as supplies of these finite resources are exhausted The growing economic and environmental costs of these energy sources will also add to cost increases However, any quantification or potential indication on the electricity price increase at that time is considered as nonwise It should be pointed out that conventional electricity prices not fully reflect actual production costs Many governments still subsidize the coal industry and promote the use of locally produced coal by utilities through specific incentives Given the strong backing of conventional energy sources over the past several decades, it should be entirely reasonable to view financial support 182 Economics and Environment 100 (US$/Wp) 2010 Price-experience factor of 22% 10 1 10 100 000 10 000 100 000 MW c-Si LOW c-Si HIGH c-Si TREND TF TF TREND Figure PV module price experience curve Navigant consultant and EPIA internal analysis [3] aimed at making renewable energy sources such as wind and solar fully competitive as appropriate, considering the strong backing of conventional sources over the past several decades Competitiveness of PV electricity (often referred to as ‘grid parity’) for consumers can be defined as the specific moment in a country when the savings in electricity cost and/or the revenues generated by the selling of electricity on the market are equal to or higher than the long-term cost of installing and financing a PV system Given the possible generation cost, “grid parity could be achieved progressively” across all market segments in Europe before the end of this decade In most European countries, PV will be accessible to everyone at affordable prices in only a couple of years The general rise in electricity prices as previously described, coupled with the reductions in the cost of generating PV electricity, is likely to abridge the time needed for PV to become competitive 1.10.1.5 Policy Support Over the years, the introduction of the feed-in tariff (FiT) support scheme has proven to be the most effective and efficient mechanism to kick off and help develop PV markets This is not just the view of the PV industry; it is also supported by key reports from the European Commission (industry surveys of 2005 and 2010) and The Stern Review on the Economics of Climate Change Globally, more than 40 countries have adopted such a mechanism; in Europe, Asia-Pacific, and North America, these countries have adjusted the system according to their regional- and national-specific needs FiT introduce the obligation by law for utilities to conclude purchase agreements for the solar electricity generated by PV systems The cost of solar electricity purchased is passed on through the electricity bill and therefore does not negatively affect government finances In markets where FiTs have been introduced as reliable and predictable market mechanisms, they have proven their ability to develop a sustainable PV industry that in return has progressively reduced costs and moved the sector toward grid parity In order to be sustainable, it is critical that FiTs be guaranteed for a significant period of time (at least 20 years), without any possibility of retroactively reducing them FiT mechanisms remain a cornerstone for promoting the uptake of solar electricity in Europe To be successful, a support mechanism should be • temporary – required only as a gap-filler until solar PV reaches full competitiveness; • paid by utilities, with costs passed on to all consumers – thus protecting the tariff from frequently changing governmental budgets and limiting the increase in consumer cost; • used to drive costs down – annual reductions in the tariffs (only for newly installed PV systems) keep pressure on the PV industry to cut costs each year; Vision for Photovoltaics in the Future 183 • used to encourage high-quality systems – by rewarding people for generating solar electricity, not just for installing it, FiTs help owners keep output high over the entire lifetime of the system; and • structured to encourage easier financing – by guaranteeing income over the lifetime of the system, a good tariff system encourages buyers to take out loans and simplifies loan structures for banks 1.10.2 Future Market Development 1.10.2.1 PV as a Mainstream Power Source in Europe by 2020 and Beyond Figure provides a comparison of different industrial scenarios and targets; more specifically, the three scenarios from the ‘SET For 2020’ study (covering 4%, 6%, and 12%, respectively, of the electricity demand in 2020) as well as the two scenarios from the Global Market Outlook [4] providing a shorter-term perspective until 2015 The cumulative target of the National Renewable Energy Action Plans (NREAPs) is also shown With only 84.38 GW in 2020 or 2.4% of the final gross electricity consumption, this target does not constitute a real lever for wide market deployment compared to the more ambitious PV industrial targets The Set For 2020 study [5] commissioned by the European Photovoltaic Industry Association (EPIA) and conducted by the strategic consultancy AT Kearney in 2008 highlights the potential for PV in Europe up to 2020 With the right regulatory frameworks in place, properly defined financial conditions and grid improvements including the introduction of smart grids, storage, and e-mobility, PV could reach up to 12% of the electricity demand in Europe by that time Even without substantial changes to the electricity distribution and transport system, scenarios in which PV provides 4% and 6% are possible Achieving the 12% scenario will require addressing the capacity to distribute PV electricity across Europe, as well as the issue of storing part of the generated electricity (locally with decentralized storage solutions and more in large storage systems such as pumped hydro storage facilities) and of using more demand response from customers But even with those three scenarios – 4% (with 130 GW installed), 6% (195 GW), and 12% (390 GW) – the full potential is not reached PV installations could rise even more in the decade following 2020, depending on the changes in the general electricity framework The conditions for overtaking the 6% threshold of penetration will remain the same before and after 2020 Without any improvements in the current production, transportation, distribution, and consumption of electricity and in market design, the 6% mark will remain a maximum value However, this 6% mark may be overtaken if electricity systems evolve toward higher shares of renewable energy, adequate demand-side management (DSM), decentralized as well as large-scale storage, and smart inverters for PV systems that are able to provide services to the network (such as short-circuit current or reactive power production), and smart network management Once the adequate technical framework is in place, and with the right political decisions, PV can continue its growth of PV in the power generation mix By 2050, the share of PV could reach between 19% [6] and 27.5% [7] in the EU In most cases, 2050 targets 200 000 180 000 160 000 140 000 120 000 100 000 80 000 60 000 40 000 20 000 EPIA policy-driven EPIA moderate SET for 2020 baseline SET for 2020 advanced SET for 2020 paradigm shift NREAP 2020 Figure Market forecasts compared to ‘SET For 2020’ targets and NREAPs Source: EPIA analysis [2] 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 MW 184 Economics and Environment take high shares of renewable energy sources in the power generation mix into account, ranging from 80% to 100% The difference between these scenarios depends on technological choices, how the evolution of electricity networks will be shaped, and how the market segmentation of PV will evolve 1.10.2.2 US and Canadian Markets Slowly Taking Off US markets remain largely untapped considering the size of the country and its potential for PV With its vast open spaces, high electricity demand, and strong correlation between demand peaks and PV production, everything is in place for rapid deployment Current PV capacity in the United States was higher than 2.5 GW at the end of 2010 – 20% Inverters (for grid-connected systems) Current price-experience factor = – 20% for decentralized inverters/medium power – 10% for central inverters/high power inverters Less cost reduction potential, but increasing the efficiency of the modules automatically means that less BOS elements are required More intensive competition between installation companies will continue to contribute to shrinking margins The rate of cost reduction depends on the maturity of the market and the type of application Linkage with BOS cost: More sophisticated mounting structures (more expensive) can save installation time; for example, DOW’s BIPV PV shingles [10] Other balance of system elements (support structures and cables) EPC (engineering, procurement, and construction) Source: A strategic research agenda for PV solar energy technology, 2011 [11] Table Future PV technological improvements PV technology state-of-the-art and major objectives/milestones for the next 10 years −1 Turn-key price large systems (€ Wp ) PV electricity generation cost in southern EU (€ kWh−1) Typical PV module efficiency range (%) Crystalline silicon Thin films Concentrators Inverter lifetime (years) Module lifetime (years) Energy pay-back time (years) Cost of PV + small-scale storage (€ kWh−1) in southern EU (grid-connected) 2007 2010 2015 2020 0.30–0.60 2.5–3.5 0.13–0.25 0.10–0.20 1.5 0.07–0.14 13–18 5–11 20 10 20–25 2–3 – 15–20 6–12 20–25 15 20–25 1–2 0.35 16–21 8–14 25–30 20 25–30 0.22 18–23 10–16 30–35 >25 35–40 0.5 25 3 5–4 0 0.5