By Dave Elliott
A new book ‘The Switch’ (Profile Books) by Chris Goodall suggests that the combination of cheap solar photovoltaics and cheap batteries will be a global winner. It is certainly true that the cost of PV solar has been falling rapidly, outstripping predictions, and even confounding most of the PV optimists, as the technology has improved and markets for it have built. Goodall sees this as a continuing process, at maybe up to a 40% annual growth rate, with PV soon becoming the dominant energy source globally, a view that he notes even some conservative oil companies now share. Lithium ion battery costs have also fallen significantly. So, with wind also providing inputs when there is no sun, we are all set! A similar line was taken in Tony Seba’s book ‘Clean Disruption of Energy and Transportation’. PV and batteries are going to boom worldwide, and electric vehicles too.
In a report on the prospects for solar photovoltaics (PV) in the UK, consultants Ernst and Young suggests that falling solar costs and rising fossil fuel prices could make large-scale solar PV installations cost-competitive without government support within a decade. And with support, for example under the Renewables Obligation Certificate (ROCs) scheme or the Feed In Tariff (FiT) scheme, ‘if the UK were to adopt net metering, large scale building connected projects could be generating 5% real pre-tax returns with 2 ROCs between 2013 and 2014. Without net metering and ROC or FiT support, our analysis indicates that solar PV is likely generate this level of return by 2017. Grid parity with retail prices is expected to be achieved in the UK by 2020 without subsidy for non-domestic, on-site installations’. They add ‘Projects at high irradiation locations may become economic with 2 ROCs by 2012, and reach parity with retail power by 2017.’ They define ‘high irradiation’ as 1323kWh/m2 yielding 1032kWh/kWp.
The report was produced for the Solar Trade Association (STA), who clearly see a case for interim subsidies to get PV to full market competitiveness rapidly- after which they would not need support. The STA commented ‘With solar, no new expensive infrastructure is required. It is a ‘plug in’ technology, easily deployable now. By investing in it, Britain’s solar revolution could pay for a breakthrough into inflation-free, safe, green power. Done at scale, it could then grow without further subsidy and lead the research that will make costs of solar panels fall even faster.’
It went on ‘Solar PV has the potential to meet more than 30% of UK electricity needs before 2040. It is deployable now to meet UK carbon reduction targets. It is accessible and popular, and the industry has been growing rapidly, with decreasing costs, and stimulating employment and growth prospects for the UK economy’.
So you would think that it would feature strongly is government thinking. Unfortunately no. The STA notes that ‘Solar has been excluded from DECC assessments of technology costs and it’s role is barely mentioned in the Electricity Market Reform proposals’ DECCs Renewables Roadmap also excludes it from its top eight chosen technologies for future rapid development. http://environmentalresearchweb.org/blog/2011/07/emr-white-paper-all-change.html(http://environmentalresearchweb.org/blog/2011/07/emr-white-paper-all-change.html) And worse still, the ‘Clean Energy Cashback’ FiT for PV projects over 50kW has just been cut back dramatically. http://environmentalresearchweb.org/blog/2011/08/solar-cuts.html
Unsurprisingly, Howard Johns, STA Chair, said ‘The Government has got it wrong on solar. We are on the cusp of a global solar revolution, major markets all over the world recognize that solar energy is critical to our future. Germany plans to generate 50% of its day time electricity from solar by 2020- their targets are for 52 GW of solar energy compared to 2.7 GW for the UK by 2020.’ Large projects are more cost effective and supporting them helps build capacity fast. As the UK Solar Trade Association has pointed out, 50kW, the new UK ceiling, is hardly large compared to many projects in Germany, or the USA.
Certainly its booming elsewhere- with over 40GW installed globally and expanding fast. The UK reached a pitiful 122MW in June. Basically, under the impact of premium fixed price FiT schemes in Germany, Spain France and Italy, volume and markets have been building rapidly and prices are falling significantly. Technology has also been improving. HSBC calculates that the cost of solar cells – the key component in panels – has fallen by about 70% since Sept 2008. The USA’s GE says its new PV cells should be able to generate power at $150/MWh by 2013, similar to the cost of conventional power. Bloomberg noted that in some sunny locations in the US, Italy and Turkey, PV is already cheaper than grid power.
The boom have been so large that Germany, Spain, Italy and France have reduced FiT tariff levels more than the planned annual price ‘degression’ rates, to avoid passing on what some saw as too much extra cost to electricity consumers. Not everyone was happy with that- some say they should have, stayed the course to get prices down rapidly.
However it’s clear that, despite this slow down, the global market will continue to boom. It could reach 130-200 GW by 2015, according to the European Photovoltaic Industry Association. But this won’t be just a European expansion. Japan should soon be back in the race- at one time it was a PV leader. Following Fukushima, Prime Minister Natoto Kan told the G8 Summit ‘We will do everything we can to make renewable energy our base form of power, overcoming hurdles of technology and cost’, with PV, along with wind, a main focus. China too is pushing PV use domestically harder now- it’s aiming for 10GW by 2015. It is already a major global PV exporter.
Will the UK miss out? There has been talk of letting others get prices down before we adopted/supported the technology seriously. However, Energy Minister Greg Barker has admitted that ‘historically, DEC has underestimated the contribution that solar can make’, so maybe DECC will now compensate. Not by a U-turn on the existing FiT for large projects perhaps- too embarrassing. And the proposed new ‘Contract for a Difference’ FiTs won’t be in play for several years. But, the Renewables Obligation system will continue to take in new projects until 2017, and a ROC boost for PV would be good, if nothing else.
Otherwise we may be missing out on a key option. The ‘received wisdom’ is that solar is expensive and not very sensible in the UK. Well both of those views now clearly need revising. Cost are falling and, with proper grid integration, PV solar, large and small, can make a major contribution. Perhaps surprisingly, in the maximal indicative trajectory explored by DECC in its 2050 Pathways analysis last year, PV potentially expands to deliver 140 TWh by 2050. That is more than their maximum estimates for wave and tidal stream (139 TWh) and for on land wind (132 TWh). An option worth checking out?
STA led solar campaign: http://www.oursolarfuture.org.uk