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  • 1. Set for 2020 Solar Photovoltaic Electricity: A mainstream power source in Europe by 2020 ExEcutivE summary
  • 2. Solar Photovoltaic (PV) Electricity is poised to become a significant and competitive supplier to the European electricity market, concludes a comprehensive study conducted by the European Photovoltaic Industry Association (EPIA) with the strategic management consultancy A.T. Kearney. While boosting the share of PV will yield huge benefits to European society and economy, it requires the active support of policy makers, regulators and the energy sector at large. Contents 1. Context and rationale 1 2. What the study shows 2 3. Variables and different paths to full competitiveness 5 4. Recommendations to stakeholders 8 Time has come for PV • The economic, financial and energetic world is changing: this fluid situation creates a perfect window of opportunity to create the basis for the Paradigm Shift. These difficult times need to be seen as an opportunity to start a new wave of decentralised energy generation. Oil is a finite resource, PV is renewable and sustainable • There is a now a widespread awareness of the finiteness of the traditional hydrocarbon fuels and of their negative impact on the environment. This awareness facilitates communicating the advantages of renewable power generation. Solar energy is de facto an infinite resource • No technological or physical limitations to PV growth have been identified. This de facto infiniteness sets PV apart from most other electricity sources. PV can grow faster than other sources • PV is already demonstrating quick ramp up capability, outperforming most optimistic previsions: in 2008, about 4.5 GW have been installed in Europe, representing about 19% of new installed capacity in Europe (however, it should be noted that the operating hours of PV plants are lower than those of conventional plants). PV is the fastest growing renewable energy technology. PV prices can decrease faster than other sources • PV system and its components are technology driven products and prices will decrease quickly based on the rapid technological development. With the current technological advancements and volume installations, a 8% price decrease year-on-year can be expected. This price decrease progression is not expected by any other electricity source. PV can grow well above 12% once Paradigm Shift is enabled • The SET For 2020 study considers different scenarios for PV deployment in Europe. The Paradigm Shift Scenario demonstrates that PV electricity could provide up to 12% of the EU electricity demand by 2020, provided the right conditions are created. Once the Paradigm Shift has been enabled, the 12% target by 2020 is just an intermediary stage to a higher penetration rate.
  • 3. SET FOR 2020 Solar Photovoltaic ElEctricity: a mainStrEam PowEr SourcE in EuroPE by 2020 1 1. CONTEXT AND RATIONALE In March 2007, the European Union adopted an integrated climate and energy policy, putting forth ambitious quantita- tive policy goals for implementation by 2020. These goals are to: • Reduce greenhouse gas emissions unilaterally by 20% from 1990 levels; • nsure that renewable energy represents a 20% share of total energy use. This implies a share of as much as 35% E of electricity consumption; • Reduce overall energy consumption by 20%. The so-called “20/20/20” goals are underpinned by a broader EU policy rationale to: • Promote environmental sustainability and combat Climate Change; • Increase the security of energy supply; • Support the EU economic competitiveness and the availability of affordable energy. Dramatically increasing the share of PV in the European electricity market will support all of these objectives and help the EU meet its 20/20/20 targets. Achieving the 20/20/20 targets, however, requires decisive action. Current projections from the European Environment Agency indicate that, even taking into account the positive effects of the current national measures and policies and including the additional planned actions under discussion, the EU would reach 12% emission reduction, i.e. 8% short of its unilateral 20% reduction target (relative to 1990). EU 27 Greenhouse gas emission trends and projections until 2020 110 105 100 95 Index 100 = 1990 emissions 90 85 80 75 70 65 60 EU 27 GHG emissions 55 EU 27 GHG emissions with existing measures 50 45 EU 27 GHG emissions with additional measures 40 -20% unilateral 2020 EU target 35 30 1990 1995 2000 2005 2010 2015 2020 Source: EEA “Greenhouse gas emission trends and projections in Europe”, 2008. The “SET For 2020” study, conducted by EPIA with the strategic management consultancy A.T. Kearney, is based on interviews with nearly 100 key people in industry, research institutes, utilities, regulatory agencies and governments across Europe and other parts of the world, backed up by the firm’s global expert network. It delves deeper and is more comprehensive than other existing studies on PV in Europe. This study was commissioned by EPIA for the following fundamental reasons: • he global environmental, economic and energy landscape is changing. These are challenging times, but T they provide a unique opportunity to reconsider some of the fundamentals of the current, dominant model of centralised energy production and distribution. • idespread awareness of the limited nature of hydrocarbon resources and their impact on the environment W is creating growing consensus on the urgent need for renewable power generation. • V has a unique advantage in that there are virtually no technological or physical growth limitations. P • V is technology-driven and the industry has consistently demonstrated its ability to cut costs. Based on the P current pace of progression in technology and installation volumes, the cost of PV electricity is expected to decline 8% each year, halving the generation cost every 8 years. © EPia. all rights reserved www.setfor2020.eu
  • 4. 2 SET FOR 2020 Solar Photovoltaic ElEctricity: a mainStrEam PowEr SourcE in EuroPE by 2020 • he PV industry has been demonstrating quick ramp-up capability. In 2008, PV accounted for about 19% of all T new installed power capacity in the EU. • V power generation will be competitive in parts of southern Europe as early as 2010 and is poised to become P Baseline Scenario Accelerated Growth Scenario Paradigm Shift Scenario progressively competitive in the entire European region. 462 Providing a unique, wide-ranging combination of facts, figures and analysis, “SET For 2020” is indispensable for anyone with an interest in the future of the European energy market and the now upcoming National Action Plans for renewable energy in EU Member States. 230 154 2. WHAT THE STUDY SHOWS 164 99 80 The SET For 2020 study considers different scenarios for PV deployment in Europe, concluding that the most ambi- 36 38 43 tious scenario is not only achievable, but also the most desirable. 5 5 5 2008 2012 2016 2020 2008 2012 2016 2020 2008 2012 2016 2020 Ambitious 12% market share The study demonstrates that PV electricity could provide up to 12% of the EU electricity demand by 2020, from less 5 30 70 130 5 30 85 195 5 35 140 390 than 1% today, provided the right conditions are created by EU policy makers, national governments and energy industry~4% of PV penetration onincluding the 2020 sector.of PV penetration on electricity demand by 2020 stakeholders, electricity demand by PV ~6% ~12% of PV penetration on electricity demand by 2020 TWh Cumulative GW A 12% market share for PV is a demanding, but achievable and desirable objective. The 12% PV target is a necessary objective if the EU is to generate sufficient renewable energy to meet its 20/20/20 objectives. EU 27 policy target for total final energy consumption vs. likely RES Scenario 20% of the Final Gap 3,500 Energy Consumption 1,244 3,000 Potential PV share at 12% 462 TWh from RES 2,500 Other 782 renewables 2,000 3,205 1,500 1,000 1,961 500 1,225 0 Status 2005 Projection based on Reference EU Target 2020 Gap case 2020 EU Energy and Transport* * These projections include 75 TWh or “Solar and other RES” which make up a portion of the overall PV share. Sources: EREC “Renewable Energy Technology Roadmap” - EU DG TREN “European Energy and Transport: trends to 2030 - update 2007”. PV can supply a significant share of the 1,244 TWh gap in renewable energy production required by 2020. With a 12% market share, PV will yield more than a third of the additional renewable production required, with the remainder supplied by wind, biomass, concentrated solar power, geothermal, hydro, tidal, wave and other forms of renewable energy. high case 05 3.1 Major net05 benefits -1.0 The study demonstrates that the development of PV has important and wide-ranging benefits for European society. 04 high case Supporting the development of PV now and for the coming few years is an investment that will yield hugely 04 -0.6 3.2 positive 03 returns for European society. ct/kWh low case 03 1.5 Environmental benefits 02 PV directly reduces rising CO2 emissions by replacing CO2 power generation, such as, for example, gas-fired power 02 0.5 plants. With a 12% penetration by 2020, PV would cut as much as 196 million tons in CO2 emissions per year. 01 low case 01 1.2 1.6 00 Reduced CO2 Reduced Grid Losses Hedging Value Operating Reserve Utility Lost margins Added PV Value © EPia. all rights reserved www.setfor2020.eu
  • 5. 1,000 1,961 500 1,225 3 0 SET FOR 2020 Solar Photovoltaic ElEctricity: a mainStrEam PowEr SourcE in EuroPE by 2020 Status 2005 Projection based on Reference Target 2020 Gap case 2020 EU DG TREN1 110 105 100 95 Index 100 = 1990 emissions 90 85 80 75 Economic benefits 70 EU 27 GHG emissions 65 PV deployment will bring overall net economic benefits 60 EU 27 GHG emissions with existing measures to the EU. The higher the penetration of PV is, the greater the net benefits are. 27 GHG emissions with additional measures 55 EU 50 -20% unilateral 2020 EU target 45 40 -30% multilateral 2020 EU target Net present benefit from PV deployment 35 30 1990 1995 2000 2005 2010 2015 2020 300 Low Case High Case 291 250 200 Bn 191 150 100 95 50 5 39 44 0 Baseline 4% Accelerated Growth 6% Paradigm Shift 12% Energy efficiency in industry 1.4% Energy Carbon1.7% & storage capture Hydrogen cars 2.2% (without CHP in industry) efficiency in transport Concentrated solar power 155 182 Wave 235 Challenge for implementation Fission % Average percentage of the present value of Feed-in Tariff investment needed Fusion Biofuels Solar photovoltaics Feed-in Tariff investment needed in absolute values Bn Geothermal power as share of total electricity prices in Europe during the feed-in period Hydro power Geothermal heating Sources: LBBW “PV Sector, Valuing the invaluable”, 2008 - A.T. Kearney analysis. Solar heating & cooling The net benefit calculation takes into account avoided CO2 emissions, reduced volatility of energy prices and Wind reduced grid losses, among other factors. The required temporary investment in the form of Feed-in Tariffs is Cogeneration relatively modest as it does not exceed 2.2% of the total value of electricity consumption. Solar Supply side technologies photovoltaics Demand side technologies Mass penetration of PV will support European competitiveness and employment. It will underpin Europe’s global Energy efficiency in buildings Transport industrial leadership in a competitive, high-tech industry sector and support the creation of quality employment firmly anchored in Europe. Baseline Scenario Accelerated Growth horizon Time Scenario Paradigm Shift Scenario The mainstream integration of PV will promote energy efficiency and sustainability across the board. It will 2,920 reduce network losses and promote the emergence of smart, decentralised electricity distribution systems that are needed for most forms of renewable energy and also beneficial to traditional utility markets. 2,194 2,258 844 547 547 Social benefits By transforming sunlight into electricity, PV uses a resource that has virtually unlimited potential. PV therefore has 1,081 854 870 a direct, positive effect on Europe’s energy independence and security of supply. Energy independence is an 847 620 651 increasingly important factor for economic stability and political security. 211 188 0 0 188 0 995 802 108 108 841 108 236 236 185 185 236 185 78 78 227 78 400 195 The physical potential of renewable 2020 2008 2012 2016 energies 2008 2012 2016 2020 2008 2012 2016 2020 0% 5% 17% 57% 0% 5% 18% 59% 0% 5% 24% 76% Current annual Global Primary Energy Consumption (GPEC) Industrial Commercial Residential % Investment competitive market in % of(continents, 1,800 x GPEC) Solar power total electricity consumption Wind energy (200 x GPEC) Biomass (20 x GPEC) Geothermal energy (10 x GPEC) Ocean and wave energy (2 x GPEC) Hydro energy (1 x GPEC) Source: Nitsch F. “Technologische und energiewirtschaftliche Perspektiven erneuerbarer Energien, Deutsches Zentrum für Luft- und Raumfahrt (DLR)”, 2007. © EPia. all rights reserved 80 www.setfor2020.eu 2020 PV 55 60 40 389 Installed 22 20 Rest of Europe 88
  • 6. PV R&D 600 Paradigm Shift 12% Community 550 500 450 400 Possible evolution GW 350 after Paradigm Shift 4 SET FOR 2020 Solar Photovoltaic ElEctricity: a mainStrEam PowEr SourcE in EuroPE by 2020 300 Asymptote without Paradigm Shift 250 200 150 Accelerated Growth 6% Utilities Building 100 50 Baseline 4% Industry EPIA 0 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 Power Generators National PV National Powergrid Associations Operators Because PV power can be produced virtually anywhere and on a small scale, it supports energy independence at national, regional, local and individual levels, and allows for local communities and households to become energy self-sufficient. PV is already a responsible profitable investment for many homeowners, farmers, and communities in Europe. By bringing secure, renewable power to society in a decentralised way, PV is an enabling technology for a secure, prosperous and sustainable European society. PV can make an important contribution to meeting the EU’s policy objectives and provides many additional benefits 10 Electricity plants Deforestation 9 Industry (excl. cement) Other Road transport Refineries etc. Environmental 8 Protection Residential and service sectors International transport 7 6 Gt CO2 yr 5 PV 4 Economic social 3 Development responsibility 2 1 Source: A.T. Kearney analysis. 0 1970 1980 1990 2000 Price-driven growth potential The many benefits of PV explain why the technology is experiencing rapid growth in the EU and in the world. Cumulative installed PV capacity in EU 27 and in the world EU 27 Global 14,730 2003 - 2008 +39% MW 9,162 9,405 6,770 1998 - 2003 +24% 5,167 4,765 3,847 2,795 2,971 2,201 1,981 1,428 1,762 948 1,150 1,089 286 394 605 108 139 189 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Sources: EPIA « Global Market Outlook for Photovoltaics until 2013 », 2009 - A.T. Kearney analysis. Cost is the only major factor that, so far, has limited the growth of PV and prevented it from joining the energy mainstream. The PV industry, however, has consistently demonstrated its capability to achieve fast price reduction. Energy efficiency in industry Energy Carbon capture & storage Hydrogen cars (without CHP in industry) efficiency © EPia. all rights reserved in transport Concentrated www.setfor2020.eu solar power n
  • 7. Cogeneration C Solar Supply side technologies photovoltaics SET FOR 2020 Solar Photovoltaic ElEctricity: a mainStrEam PowEr SourcE in EuroPE by 2020 Energy efficiency in buildings Demand side technologies Transport 5 Time horizon Photovoltaic module price experience curve since 1976 ($/W) 100 1980 PV Modules prices $/W 1990 10 Historical Price 2000 Current annual Global Primary Energy Consumption (GPEC) Experience Curve: Doubling of cumulative Solar power (continents, 1,800 x GPEC) 2006 production reduces Wind energy (200 x GPEC) prices by 22% Biomass (20 x GPEC) Geothermal energy (10 x GPEC) 0 Ocean and wave energy (2 x GPEC) 0 1 10 100 1,000 10,000 100,000 Hydro energy (1 x GPEC) Sources: EU Joint Research Centre - EIA - National Cumulative Module Production (MW) Renewable Energy Laboratory - A.T. Kearney analysis. Technological progress will enable further substantial PV cost reductions, while fossil fuel-based electricity prices are expected to continue their long-term increase. 3. VARIAbLES AND DIFFERENT PATHS TO FULL COMPETITIVENESS Three scenarios Automotive Policy Makers Industry PV Sector The SET For 2020 study has identified three possible PV deployment scenarios, which are determined by a series of & Regulators conditions. Only the more ambitious scenario will yield the full benefits described above. PV Industry PV deployment Scenarios in Europe 27, Norway and Turkey EU Companies 700 650 Indicative Paradigm Shift National 600 Paradigm Shift 12% Scenario 550 700 Governments 12% of electricity demand by 2020 PV R&D 650 600 Indicative 500 Community 550 Paradigm Shift 12% 500 450 450 400 400 Possible evolutionShift Possible evolution Accelerated Growth GW 350 after Paradigm GW 350 300 250 Asymptote without Paradigm Shift after Paradigm Shift Scenario 300 Asymptote without Paradigm Shift 200 150 Accelerated Growth 6% 6% of electricity Utilities2020 demand by 250 Building 100 50 Baseline 4% 200 Accelerated Growth 6% EPIA Industry 0 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 150 BaselinePower Generators 100 Baseline 4% Scenario 50 4% of electricity demand by 2020 0 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 National PV National Powergrid Sources: EPIA - EU DG TREN “European Energy and Transport: trends to 2030 - update 2007” - Eurostat Data Portal - EU Joint Research Centre Photovoltaic Geographical Associations Operators Information System - A.T. Kearney analysis. The Baseline Scenario foresees 4% penetration of PV by 2020. This is the “business as usual” case. The scenario does not require changes to the existing electricity system, but it does require full dedication from the PV industry to achieve cost reductions, marketing efforts and wider policy support of PV in Europe. The Accelerated Growth Scenario aims for 6% of the market, largely within the current infrastructure limits. In addition to the baseline requirements, accelerated growth requires minor changes to the existing electricity system, optimised PV supply chains, greater cooperation with utilities and a compelling product and service offering. 1 10 Electricity plants Deforestation The Paradigm Shift Scenario sets a target of 12%. In addition to the20% of the Final conditions above, this requires the rapid and wide- Gap spread 3,500 Industry (excl. cement) Other Energy Consumption adoption of power storage and smart grid technologies, and further improvements in the supply1,244 operations and 9 chain, marketing 8strategies transport PV industry. EPIA’s vision goes beyond 2020, with PV penetration well above this 12% target. 3,000 Road of the Refineries etc. Potential PV 462 Residential and service sectors International transport share at 12% tTWh yr RES 7 2,500 782 CO2 from 2,000 6 © EPia. all rights reserved 3,205 www.setfor2020.eu 1,500 5
  • 8. 200 B 191 150 100 6 50 SET FOR 2020 Solar Photovoltaic ElEctricity: a mainStrEam PowEr SourcE in EuroPE by 2020 95 5 39 44 0 Baseline 4% Accelerated Growth 6% Paradigm Shift 12% 1.4% 1.7% 2.2% Investment competitiveness155 182 235 An important concept explored in the study is that of “investment competitiveness”. % Average percentage of the present value of Feed-in Tariff investment needed Bn Feed-in Tariff investment needed in absolute values as share of total electricity prices in Europe during the feed-in period Investment competitiveness describes the moment when the business case to invest in a PV installation that will de- liver electricity for 20 years is profitable compared to the price of a grid contract for 20 years, in the absence of any form of external price support or subsidy. The study shows that investment competitiveness will be reached in some regions of Europe as soon as 2010. By the end of 2020, PV can be competitive in as much as 76% of the European electricity market. The faster the penetration of PV, the greater the accessible market, as costs will decline more rapidly. Size of the accessible end-user market for PV (TWh of final energy consumption in Europe) Baseline Scenario Accelerated Growth Scenario Paradigm Shift Scenario 2,920 2,194 2,258 844 547 547 1,081 854 870 847 620 651 211 0 188 0 188 0 995 108 802 108 841 108 236 185 236 185 236 185 78 78 227 78 400 195 2008 2012 2016 2020 2008 2012 2016 2020 2008 2012 2016 2020 0% 5% 17% 57% 0% 5% 18% 59% 0% 5% 24% 76% Industrial Commercial Residential % Investment competitive market in % of total electricity consumption Sources: EPIA “Solar Generation V”, 2008 - A.T. Kearney analysis. Framework conditions The potential of PV deployment depends on six different framework conditions: • System integration • Cost competitiveness • Market deployment • Policy framework • Interaction with other renewable energy sources • Supply chain 80 2020 PV 55 60 40 389 These framework conditions are interdependent. They are shaped by numerous stakeholdersofranging from the PV Installed 22 20 Rest Europe 88 6 7 4 6 industry Capacity makers, regulators, the R&D community, utilities and grid operators, among others. 301 to policy Focus countries GW Italy Germany Spain France United Turkey Portugal Romania Bulgaria Greece Kingdom Europe System Integration 78 79 73 62 462 The evolutionPV the generation mix in place as well as the “smartening” and strengthening of distribution and transmission 2020 of Rest of Europe 87 Electricity determine the technical limits to the penetration of PV (and of other renewable energy sources). infrastructure will 30 Production 21 10 9 5 9 Focus countries 375 TWh Italy Germany Spain France United Turkey Portugal Romania Bulgaria Greece The daily and seasonal variations of PV generation Kingdom geographic regions also require across increased flexibility in grid Europe management and in the generation mix, as well as grid-integrated power storage capacity. Increased flexibility in the PV generation mix will only be possible through better coordinated long-term planning of investments in new generation Penetration on total capacities (additional and replacement) across the European electricity market. 13% electricity 18% 13% 18% 14% 5% 16% 14% 13% 13% 12.0% consumption Cost Competitiveness in 2020 Increased global deployment of PV will quickly fuel fast price reductions towards investment competitiveness across Europe, thus enabling, in the near to mid-term, market-driven growth without Feed-in Tariffs. © EPia. all rights reserved www.setfor2020.eu
  • 9. SET FOR09 7 June 2020 Solar Photovoltaic ElEctricity: a mainStrEam PowEr SourcE in 2012 June 10 EuroPE by 2020 2018 EC to present EC to report to EC to present EC to present National Action EC a forecast an analysis report on progress EP and Council a report and action for post 2020 plan on RES use of RES progress reports period Technological progress will enable substantial price reduction at system level. Price declines require extensive R&D investment as well as continued support of PV market development to secure economies of scale. Market Deployment The development of the right value proposition for final customers will be key to a successful PV deployment. This means innovative products that fit the different customers requirements, certification for safety and reliability, but also availability of appropriate financing solutions, from banks or suppliers, customised for the specific cash flow profiles of PV installations. Cost improvements must be passed on to consumers as pricing is clearly a key success factor. Society Utilities are in a very good position to market PV to their final customers, but PV deployment could benefit from active promotion via installers and building material wholesalers. Finally, various business models will emerge involving tra- PV Owners Electricity Users Utilities Externalities ditional stakeholders (Utilities, PV distributors and installers) and new players to combine a broad range of customer services (installation, maintenance, optimisation of electricity flows) -and develop growing capabilities toValue + Feed-in Tariff - Feed-in Tariff Lost Margin 3 + Hedging directly oper- ate in the electricity markets. - PV LCOE 2 + Price of Grid Electricity + Reduced Grid Losses + CO2 Reduction Policy Framework - Operating Reserve 4 The implementation of temporary support policies including lean and transparent administrative procedures is needed to ensure sustained PV penetration. Feed-in Tariffs are the best support scheme for successful PV deployment, but the level of support must be sustainable and not unduly generous. Support schemes must evolve with the growing share of PV. High administrative barriers Net Benefit for 1 kWh of PV electricity and slow or costly grid connections will hamper PV deployment despite appropriate Feed-in Tariffs. Price of Electricity – PV LCOE + CO2 Reduction+ Reduced Grid Losses + Hedging Value – Operating Reserve – Lost Margins Interaction with other renewable energy sources Current projections indicate that the EU’s 20/20/20 objectives can be Characteristicswith a combined effort, and PV is an Net Economic Value Net Value Adding met only essential component of the solution. Wind and PV have common interests, such as grid development, CO2 aware- 2 Levelised Cost of Energy, as described in the Cost Competitiveness Section. Positive ness, smart grids3andMargins from producing and selling electricity. Lost metering, financing needs, resource mapping and forecasting, and proving the feasibility of the Negative “Virtual Power Plant” concept (ability of PV utilities for compensate for lack Wind andpredictability. to deliver baseload power). 4 Additional balancing cost incurred by in combination with of production Biomass Supply Chain The PV supply chain is expected to deliver and sustain production at a multi-gigawatt level in the coming years to support a market between 80 GW and 160 GW worldwide.The supply chain will need to address four key challenges: the avail- ability of polysilicon, the availability of commodity materials, cell and module capacities, and the availability of qualified professionals. Education and training is an important condition to maintaining a leading PV industry base in Europe. PV framework conditions map Drives cost 6 Supply Chain 2 Cost Competiveness 3 Market Deployment & pricing strategy R&D support & pricing strategy 1 System Integration 4 Policy Framework constraints 5 Interaction with Alternatives Alternatives offers Source: A.T. Kearney analysis. © EPia. all rights reserved www.setfor2020.eu
  • 10. 8 SET FOR 2020 Solar Photovoltaic ElEctricity: a mainStrEam PowEr SourcE in EuroPE by 2020 100 1980 PV Modules prices $/W 4. RECOMMENDATIONS TO STAkEHOLDERS 1990 10 Achieving a significant penetration of PV in the European electricity market requires the active involvement of 2000 EU policy makers, governments and energy industry stakeholders, including the PV sector. Historical Price Experience Curve: Doubling of cumulative 2006 The need for a comprehensive approach production reduces prices by 22% Policy makers, regulators and industry need to collaborate to support PV’s mass-market penetration by fostering technological progress and cost reductions, as well as by creating an appropriate financial and regulatory environment. 0 0 1 10 100 1,000 10,000 100,000 While PV moves towards the mainstream and plays an increasingly significant role in supporting EU policy objectives, Cumulative Module Production (MW) it will require temporary support of policy makers to bridge the competitiveness gap. Public support can only be justified if the PV industry commits its own resources to this goal. The EPIA membership strongly believes in seeking a sustainable, long-term development of the industry that will deliver the full benefits of PV to society. The PV stakeholders’ interaction Automotive Policy Makers Industry PV Sector & Regulators PV Industry EU Companies National 700 Governments PV R&D 650 600 Paradigm Shift 12% Indicative Community 550 500 450 400 Possible evolution GW 350 after Paradigm Shift 300 Asymptote without Paradigm Shift 250 200 150 Accelerated Growth 6% Utilities Building 100 50 Baseline 4% Industry EPIA 0 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 Power Generators National PV National Powergrid Associations Operators Source: A.T. Kearney analysis. Recommendations to the PV industry PV Industry companies must maintain their strong R&D commitment to continue the dynamic PV cost reduction momentum. Technology research can lead to efficiency improvements of 30% by 2020 and to electricity generation costs being cut by half every 8 years. The PV industry is committed to reaching a target cost of below 10 €ct per kWh of electricity by 2020 for industrial size systems and well below 15 €ct per kWh for residential systems. 10 Electricity plants Deforestation 9 Industry (excl. cement) Other The competitiveness of PV investment vs. grid purchase will be reached by 2010 in some southern regions of the Road transport Refineries etc. 8 EU. But attaining this competitive level will not, by itself, necessarily lead to a rapid market uptake. Therefore, the PV Residential and service sectors International transport industry must direct increased efforts at developing and marketing innovative PV applications to final consumers. 7 6 Gt CO2 yr 5 4 3 2 1 © EPia. all rights reserved www.setfor2020.eu 0 1970 1980 1990 2000
  • 11. SET FOR 2020 Solar Photovoltaic ElEctricity: a mainStrEam PowEr SourcE in EuroPE by 2020 9 The PV R&D Community must further accelerate its progress on delivering research results in line with the focus areas defined by the PV Technology Platform in its Strategic Research Agenda. These focus areas are to: • Enhance performance by higher device outputs and improved systems performance; • Improve manufacturability and reduce process costs; • nsure the sustainability aspects of the technology through the entire life cycle, from manufacture to use and E recycling; • Address applicability by developing products and technologies to meet specific market needs. PV industry companies will continue to collaborate closely with R&D institutes to ensure the ready uptake of innovation in the end product. They will seek to fully leverage the research support granted by EU and national governments to this end. EPIA will help to increase market transparency in Europe and provide support to policy makers to define sustainable support schemes and manage the policy transition to competitive PV markets. For this purpose, a “PV observatory” will provide an annual overview of the policy status, including comparisons of the internal rate of returns based on a European reference price for various systems. Such a PV observatory will also measure administrative and connection lead times and formulate country-specific recommendations. National PV Associations must be proactive in supporting national industry and governments in their task while maintaining a long-term perspective on sustainable PV market development. EPIA will support and strengthen na- tional associations where needed, and seek to organise national PV stakeholders to establish national PV associations in countries where they do not yet exist. Recommendations to policy makers, regulators and utilities The EU must increase its support for PV R&D efforts and large demonstration projects, with a focus on accelerated cost reduction and integrated approaches to make the necessary changes in the power distribution system. Decisive action must be taken on PV integration and facilitating investment in EU-based production capacities to boost the European export potential of PV technology. Regarding energy sector regulation, the EU must promote time-of-use electricity billing and net metering to facilitate the penetration of renewable energy sources. The EU must further promote PV market deployment by supporting high and certified European quality standards which will help lower the investment barrier. National governments must act swiftly to de-bottleneck administrative procedures and ensure sustainable lev- els of temporary financial support by means of well-designed Feed-in Tariffs to ensure continuous PV deployment. In addition, national governments must be proactive in facilitating domestic investment in PV production capacity and supplying the required skilled workforce through adapted education and training programmes. Utility sector companies with generation assets and established end-user relationships must consider PV develop- ment as an opportunity and become proactive PV investors and marketers to maintain and expand their market share by meeting client demand and offering them advanced customer services. Grid operators must help decentralise the infrastructure and become actively involved in implementing the necessary smart grid technology such as improved measurement, communication and control technologies. They also need to help develop and install storage technologies to increase the absorption of distributed power in grids, while collabo- rating with the renewable energy sector to ensure that regulators reflect the necessary investments in their distribution tariffs. By seizing the opportunity offered by fast PV growth, DSOs will be able to quickly internalise related high-tech evolutions and create new sources of value for their customers and their employees. THE COURSE OF THE SOLAR AGE IS bEING SET TODAY. © EPia. all rights reserved www.setfor2020.eu
  • 12. Set for 2020 Solar Photovoltaic Electricity: A mainstream power source in Europe by 2020 Order your copy of the report now! The full report can be ordered on the report website www.setfor2020.eu or by returning this order form. I would lIke to order: q 1 copy – unit price 4,950 €* q 2 copies – unit price: 4,207.50 €* (-15%) q 5 copies and more – indicate number: (-30%) – unit price: 3,465 €* q I am an EPIA member (special price for EPIA members, please contact Emmanuelle Lenain: e.lenain@epia.org for more information). * VAT excluded Reports will be sent by express delivery upon reception of payment. Reports are not available under electronic form. Company: ........................................................................................................................................................................................................................................................................................................ Activity: ............................................................................................................................................................................................................................................................................................................... Title (Mr., Mrs, Ms.): ....................... First name: ................................................................................. Last name: ................................................................................... Position: ............................................................................................................................................................................................................................................................................................................. Phone: ................................................................................................................................................................................................................................................................................................................. Fax: .................................................................................................................................................. Mobile: ........................................................................................................................................... Email: ............................................................................................................................................. Website: ....................................................................................................................................... Shipping address: .............................................................................................................................................................................................................................................................................. Zipcode: ...................................................... City: .................................................................................................... Country: .......................................................................................... Billing address: ...................................................................................................................................................................................................................................................................................... Zipcode: ...................................................... City: .................................................................................................... Country: .......................................................................................... VAT number: ................................................................................................................................................................................................................................................................................................. Please send back to Emmanuelle Lenain by fax: +32 2 400 10 10 or email: e.lenain@epia.org For more information: European Photovoltaic Industry Association Renewable Energy House Rue d’Arlon 63-67 1040 Brussels - Belgium Tel.: +32 2 465 38 84 Fax: +32 2 400 10 10 E-mail: setfor2020@epia.org www.epia.org www.setfor2020.eu
  • 13. First Solar, Photowatt Technologies, Schott Solar, Würth Solar - Design: www.landmarks.be © EPIA a.i.s.b.l. All rights reserved - Photo credits: Conergy A.G., ErSol Solar Energy A.G., About EPIA With over 200 members active along the whole value chain, the European Photovoltaic Industry Association (EPIA) is the world’s largest industry association devoted to the solar photovoltaic electricity market. EPIA’s mission is to deliver a distinct and valuable service driven from the strength of a single photovoltaic voice. The association aims to promote PV at national, European and worldwide levels and to assist its members in their business development in both the European Union and export markets. For more information: European Photovoltaic Industry Association Renewable Energy House Rue d’Arlon 63-67 1040 Brussels - Belgium Tel.: +32 2 465 38 84 Fax: +32 2 400 10 10 E-mail: setfor2020@epia.org Order the report: www.epia.org www.setfor2020.eu