European solar power to be competitive by 2020, says lobby

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European solar module-generated power may take until the end of the decade to compete with conventional forms of energy across Europe for cost, the world's biggest solar association said yesterday (5 September).

But that 'grid parity' could be reached sooner in some regions, the report added.

Based on a study looking at five major solar markets – Germany, Italy, France, Spain and Britain – the European Photovoltaic Industry Association (EPIA) said competitiveness could be reached by 2020.

The photovoltaic (PV) industry still depends on government support, so-called feed-in tariffs, giving incentives to producers of solar power that are then put on the consumers' energy bill.

Governments have been scaling back this support to force the industry to lower its costs more quickly, but that process has hurt solar companies including Germany's Conergy, Q-Cells and Solon.

"The cost of PV electricity generation in Europe could decrease from a range of 0.16-0.35 euros ($0.23-0.50) per kilowatt hour (kWh) in 2010 to a range of 0.08-0.18 euros per kWh in 2020 depending on system size and irradiance level," EPIA said in a report released on Monday.

This compares, for instance, with generation costs of about 0.9 euros for coal in Germany in 2010, according to data from the Organisation for Economic Cooperation and Development.

EPIA said competitiveness could be reached in as little as two or three years in some countries, such as Italy, depending on the industry's current nature and size.  

"Under the right policy and market conditions, PV competitiveness with grid electricity can be achieved in some markets as early as 2013, and then spread across the continent in the different market segments by 2020," it said.

EPIA's more than 240 members include US-based First Solar, the world's biggest solar company by market value, Germany's No.1 solar company SMA Solar and China's Suntech Power Holdings , the world's top maker of solar cells.

The EU is aiming for a 20% rise in the share of renewables in the energy mix by 2020.

Germany, which is targeting a share of 35% by 2020, already derived more than a fifth of its total power requirement from renewable sources in the first six months of the year, data from the energy industry association (BDEW) showed last week.

EURACTIV with Reuters

Despite its huge promise, solar energy currently provides less than 1% of energy sold globally, mainly due to its intermittent nature and low intensity. The main reason for this has been difficulties exploiting the resource on a large scale at a competitive price.

Solar electricity will become attractive when it falls below so-called 'grid parity', the point at which renewable energies become cost-competitive with conventional energy sources like fossil fuels.

Favourable regulatory regimes and rapid technological evolution in the industry helped the sector to get onto its feet quickly. But many in the industry now fear that the sudden removal of tariffs, often retroactively as seen in Spain, is damaging future growth prospects, particularly in Europe.

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