Share

Tag Cloud

Bloggers

Blog

Solar energy: what cost, what outlook and what’s going on in Hawaii?

So cumulative solar PV power installations worldwide shot past the 100GW mark in 2012, the European Photovoltaic Industry Association (EPIA) announced this month. In fact, the figure by end 2012 was just over 101GW. A major milestone indeed. 

While the global industry still grapples with some controversy – be it anti-dumping tariffs, incentive and subsidy cuts, or the daily cost and efficiency drive issues relating to an oversaturated solar PV market – there can be no denying that solar power has firmly arrived as a key player in the energy supply world. 

30GW added last year alone

“The surpassing of the 100GW mark occurred in yet another year of strong global PV development, with an estimated 30GW connected to the grid and made operational in 2012 – roughly the same as the record-setting level of 2011,” the EPIA notes.

Moreover, the results are preliminary. “The 30GW figure could be increased by an additional 1 or 2 GW when final numbers come in,” the association says. [Final results will be published in May, the EPIA says.]

So the PV market at least is flourishing. But in these tough economic times, there is no easy path to success for those involved in the sector.

Just look at Spain, where the government has suddenly pulled the rug out from under green investment plans in the country, leaving renewable energy investors reeling.

In some countries, the subsidy slashing has been justified by the dramatic fall in solar PV system costs in recent years and in truth few can argue with that. The incentives put in place in countries like Germany back in the day and the US did their job – creating a market and in tandem a huge influx of module manufacturers to the sector, and with that an oversupply in capacity available to developers. The latter, of course, has been a critical factor in driving down PV costs significantly.

Solar pricing truths

In some countries though, like Luxembourg, cuts or a refusal to implement incentives have been made on the basis that solar is too expensive for the energy return generated. Such as these have obviously not heard the news that solar PV is fast approaching grid parity and indeed has in some cases.

While some technologies like concentrated solar are still on the high side, the same is not true for PV – check out this recent analysis by Luis de Sousa on solar PV pricing, where he counters the argument put forth by Luxembourg’s legislators very effectively as asks the question, what is the price of solar power in present market conditions?

Significantly, after his thorough analysis looking at three key scenarios, de Sousa concludes that “reducing electricity prices to the consumer is not exactly what motivates governments”. Really? I’m shocked.

He suggests that instead: “The actions recently taken in Europe against solar power are not a sign of failure but rather a consequence of the highly successful progress of PV technologies. Governments are simply trying to defend large electricity suppliers and the electricity markets they created in the last decade. With marginal generation costs close to zero, technologies like solar power wreck havoc on the open market once they reach a critical volume and threaten to steal away revenues from traditional base load suppliers.”

He stresses:

“Governments should be working towards the complete integration of solar systems into the grid, not to their exclusion…A fundamental shift in the way the grid is managed and prices are set is required”

I couldn’t agree more with this last point in particular.

Meantime, I gather there’s been a lot of confusion about the current state of play in the Hawaii solar power market following changes to the state solar tax rules introduced in November. The new rules, which came into effect on Jan 1st, limit the ability of homeowners to claim multiple tax credits for the installation of solar photovoltaic systems. But, as often occurs, consumers have been left confused.

Helping hand in Hawaii

Fear not. The good folk at Alternative Energy Inc. have produced a fantastic graphic to explain all. It breaks down all of the major tax credits and incentives available to Hawaii residents for photovoltaic solar electric systems, solar hot water systems, and solar attic fans, as well as some statistics on the current state of electricity in Hawaii.

As the company notes, Hawaii has the highest cost of electricity in any US state – over 112% higher than in New York (which is the second most expensive state for electricity in the US). So to anyone questioning why invest in solar PV, Alternative Energy Inc says this:

“A typical photovoltaic system in Hawaii will take 3-5 years to pay off when compared to what you would have paid in utility bills. After that, you get free electricity for the life of the system.”

The future

So what outlook for a solar sector facing a barrage of subsidy cuts or reviews? Well in the US, there are certainly some issues to be resolved as the sector seeks to move towards grid parity, as Felicity Carus reports in her article Can the US solve its solar puzzle?

But generally, “There is massive potential,” says Paul Nightingale from the UK division of Enphase Energy, a supplier of microinverter technology for solar PV systems. Paul Nahi, director of the company, agrees, but warns like so many others, that for the potential to be exploited, policy stability has to reign.

I interviewed both recently for the upcoming March/April issue of Renewable Energy Focus (make sure you subscribe here to get your copy) and they agree that generally, the brakes are now firmly off the rooftop market, even in the UK where subsidy support has been cut.

“It’s not about what the amount of the subsidy is – it’s about the stability of the subsidy. We fully expect and would want subsidies to decrease over time. We want to get to a point where we don’t need subsidies,” Nahi says. “Once the playing field is stable, then I think the industry will take care of itself.”

A final word on “Public energy number one”

However, Nahi does add: “It’d be certainly nice if the fossil fuel industry stopped receiving subsidies as well.” Here, here. It’s a point echoed by the European Wind Energy Association’s outgoing CEO Christian Kjaer in our January/February 2013 issue and highlighted in my editorial leader (An inconvenient truth) for that issue:

global subsidies to the fossil fuel sector totaled $523bn in 2011, compared to $88bn for renewables.

In other words – and to quote the International Energy Agency’s chief economist, Faith Birol in his speech to delegates at the recent European Wind Energy Association conference in Vienna - that’s over half a trillion dollars in subsidies for fossil fuels. Far from a level playing field indeed.

So the overriding message, again to quote Birol, is that “Subsidies to fossil fuels are public enemy number one”. [See the March/April issue of Renewable Energy Focus for a full EWEA 2013 conference report, including key messages delivered and product launches].

One final note. While Birol’s comments may have hit the headlines of the renewables press, they did not seem to reach the mainstream media at all, as a recent blog post by Richard Fogg of PR firm CC Group highlighted. This has to change.

The renewables industry must start speaking up for itself better – communicating clearly, rationally, and without a hint of defensiveness in its tone when grilled under the traditional media spotlight.

The facts speak for themselves. $523bn vs $88bn.

Isn’t it about time consumers stopped being deceived that renewables is the heavily subsidised burden hitting their pockets when it comes to our energy supplies? I certainly think so.

As Richard says, it’s a numbers game – so let’s start playing.

Posted 20/02/2013 by Gail Rajgor

Tagged under: Solar , PV , subsidies , renewable energy , EWEA , solar energy , photovoltaics

Comment on this blog

You must be registered and logged in to leave a comment about this blog.