The EPIA report, released Wednesday (17 October), predicted photovoltaics would account for 15% Europe’s electricity production by 2030, or 25% “under a paradigm shift scenario”.
But the industry has had to deflect claims it cannot support peaks and troughs in both electricity demand and production, and that it is overly reliant on the estimated €60 billion in annual subsidies.
Philippe Vermeulen, general manager at energy investors EnerVest Belgium, told EurActiv that the varying subsidy systems in different countries was the main obstacle towards a competitive PV market.
He said these were a “disaster for investment strategy and market confidence”.
The market for solar energy had encountered significant difficulties with many renewables firms declaring bankruptcy due to overcapacity, a resultant drop in prices, and a fall in government subsidies.
Where the sun shines and the wind blows
Tom Howes, deputy head of unit for renewables at the European Commission, said some in the industry had been calling for an approach to renewable energy based on “where the sun shines and the wind blows”, proposing to put PV only in the south of Europe and wind farms in the North.
But EPIA Policy Director Frauke Thies said this was not proving to be the most efficient approach.
“If we take a more distributed approach overall, the additional PV capacity we would need would be 10%, but this would reduce grid congestion by 75%”, she said, adding “sometimes what seems the most obvious solution is not the most cost-effective.”
Thies said the study showed it was more important to put PVs near consumption than where there was the most light, due to shifting weather patterns.
Solar energy also has a fast dissipation rate and hence is notoriously difficult to store. A more evenly spread distribution of solar panels would provide towns and cities with a directly usable source of energy, analysts said.
“When you are thinking about where to place PV, look at where you need energy-related services, because PV is very flexible in this regard”, said Simon Müller, a renewables analyst at the International Energy Agency.
Müller also said developments in technology had meant that the cost differential between areas of high solar resources and low resources had dropped significantly.
“The levelised cost is less and less of a defining factor”, he said.
More competitive market
The IEA analyst remarked that the definition of ‘competitiveness’ for renewable energies was changing.
Before, he said, it was defined merely in terms of kilowatts produced per hour of production, which was not favourable due to fluctuations.
But now improvements in efficiency mean that PV costs have steadily been dropping - currently sitting at €2.31 per watt. EPIA estimates these will fall further still to as low as €1.30 per watt in 2022.
Müller said the PV industry was evolving to cope with dark periods and to make a more efficient use of surplus energy. But he said market mechanisms were needed to reap the benefits of increased efficiency.
Vermeulen, responsible for wind and solar power in Western Europe at EnerVest, told EurActiv that such market mechanisms already existed in Belgium and Scandinavia.
Companies such as ETRIM and Dansk Commodities buy surplus electricity on the international market and sell it on at a local level, including a ‘green’ certificate if it had come from renewables.
But Vermeulen said more interconnection was needed to open up a Europe-wide market. This in turn would make pricing more predictable and make it easier to create an electricity value, thereby buffering the PV market from price drops.
The EPIA report said the price of storage would also have to be cut, with costs below €0.10 per kilowatt to achieve competitiveness before 2020 in France and the United Kingdom. It predicted this would already be the case in Germany in 2014.