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BUILDING ON THE PV EXPERIENCE OF EUROPEAN MARKETS

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PV Market Status in 2010 and prospects for 2011
Market Outlook until 2015
Policy recommendations to sustainably develop a market
PV on the road to competitiveness

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BUILDING ON THE PV EXPERIENCE OF EUROPEAN MARKETS

  1. 1. BUILDING ON THE EXPERIENCE OF EUROPEAN MARKETS<br />… to successfully develop PV markets <br />in the long term<br />Marie Latour, National Policy Advisor 22 September 2011<br />
  2. 2. Content<br />PV MarketStatus in 2010 and prospects for 2011<br />Market Outlook until 2015<br />Policy recommendations to sustainablydevelop a market<br />PV on the road to competitiveness<br />
  3. 3. Whois EPIA?<br />EPIA is the world's largest industry association devoted to the solar PV electricity market<br /><ul><li>Represents 90% of the EU market
  4. 4. More than 240 members
  5. 5. Represents the whole value chain from Silicon feedstock to system developers, equipment suppliers, utilities, research centers, etc.
  6. 6. More than 26 years experience (created in 1985)
  7. 7. Established in Brussels, close to EU institutions</li></li></ul><li>
  8. 8. Whatis PV…<br />
  9. 9. Evolution of the Global PV Market 2000 - 2010<br />+132%<br />+17%<br />+145%<br />+59%<br />
  10. 10. The PV market in 2010<br />
  11. 11. The PV market in 2010 – Europe and the rest of the World<br />Europe: 81 %<br />Rest of the World: 19 %<br />
  12. 12. EU: PV installations Compared to other technologies<br />
  13. 13. Market in 2010 in Europe (EU27 + CH, NO…)<br />Germany: 7.4 GW<br />Italy: 2.3 GW<br />Rest of Europe: 98 MW<br />Bulgaria: 11 MW<br />CzechRep: 1.5 GW<br />France: 0.7 GW<br />Portugal: 16 MW<br />Belgium: 424 MW<br />UK: 45 MW<br />Spain: 369 MW<br />Austria: 50 MW<br />Greece: 150 MW<br />Slovakia: 145 MW<br />
  14. 14. Cumulative installed capacity in EU: leading countries<br />In W / habitant: <br />Germany leads (210), CZ (191), Spain (80), Italy (60), France (15)<br />
  15. 15. Market segmentation<br />
  16. 16. Global Cumulatedinstalledcapacityuntil 2010<br />39.6 GW <br />
  17. 17. Cumulative installedcapacity 2010<br />
  18. 18. The global top 10 in 2009 and 2010 (MW installed)<br />
  19. 19. 2011 SO FAR… (in MW)<br />India (600-800)<br />Thailand (100?)<br />Israel (100?)<br />Canada…<br />UK (300-400)<br />Greece (300)<br />Solvakia (350)<br />Austria (100)<br />…<br />25 GW produces 35 TWh (world)<br />35 TWh relates to five 1000 MW Nuclearreactors.<br />EU: 15-17 GW<br />World: 22-25 GW<br />
  20. 20. Short termMarketdevelopments<br />
  21. 21. Two short term scenarios<br />A Moderate scenario (“Business-as-usual” market )<br />no major reinforcement of existing support mechanisms, <br />reasonable continuation of current FiTs aligned with PV systems prices.<br />Policy-Driven scenario: <br />continuation or introduction of support mechanisms, namely FiTs, <br />strong political will to consider PV as a major power source in the coming years.<br />removal of non-necessary administrative barriers and the streamlining of grid connection procedures.<br />
  22. 22. EU forecastsuntil 2015<br />
  23. 23. World forecastsuntil 2015<br />
  24. 24. Unlocking new markets, stabilizingothers<br />In Europe: <br />Need to consolidate/furtherexpandexistingmarkets<br />Germany, Italy, France, Belgium, Spain, Greece, Portugal, UK, Bulgaria<br />Need to unlock/develop medium size markets<br />Hungary, Romania, Turkey, Poland?<br />WeKeepfaith: Grid parityiswithinreach (2013-2020)<br />
  25. 25. PHOtovoltaic observatory<br />Policy Recommendations<br />Ensuring a long term development of national markets<br />
  26. 26. Photovoltaic ObservatoryPolicy Recommendations<br />Aim:<br /><ul><li>Identify best practices among existing support policies in Europe
  27. 27. Promote market transparency and PV deployment in the energy sector across Europe
  28. 28. Advisenational decision makers on the successful implementation oftheir support policies
  29. 29. Ensure the accelerated development of the market and the industry in a sustainableway</li></li></ul><li>Policy recommendations: 3 pillars<br />Implementingsustainable support mechanisms<br />Streamlining administrative procedures<br />Guaranteeing efficient gridconnectionprocesses<br />
  30. 30. Pilar 1: Implementingsustainable support mechanisms<br />Use Feed-in Tariffs or similar mechanisms<br />Ensure transparent electricity costs for consumers<br />Encourage the development of a sustainable market<br />Guarantee a gradual market development with the corridor concept<br />Develop a national roadmap to PV competitiveness<br />
  31. 31. Implementingsustainable support mechanisms1. Use Feed-in Tariffs or similar mechanisms<br />17,183<br />Overview of EU Support schemes in EU<br /><ul><li>FITsfixprice
  32. 32. Green Certificatesfix volume:
  33. 33. Exclude non yetcostcompetitive technologies</li></ul>803<br />66<br />1<br />1.953<br />1,025<br />145<br />103<br />0<br />3,784<br />1<br />3,494<br />130<br />18<br />206<br />AND 2010<br />
  34. 34. Implementingsustainable support mechanisms2. Ensure transparent electricity costs for consumers<br />PV and all RES cost is fully transparent (Levy on electricity bills)<br />Conventional electricity cost are not as transparent (Benefit from public support through state budget, collected via taxes, not reflected in electricity bills) <br />  Unfair competition between energy sources<br />
  35. 35. Implementingsustainable support mechanisms3. Encourage the development of a sustainable market <br />Evaluation of IRR sustainability levels (example)<br /><ul><li>by assessing profitability (IRR) on a regular basis and adapting support levels accordingly</li></ul>PV market development under different support strategies<br />MarketGWp<br /><ul><li>Internal Rate of Return (IRR) of PV investment
  36. 36. FiT structure and level
  37. 37. Other incentives: Tax rebates, investment subsidies
  38. 38. PV system prices
  39. 39. Solar Irradiation
  40. 40. IRR of PV investment should represent a reasonable incentive compared with IRR of investments with similar risk level
  41. 41. Higher IRR may lead to unsustainable growth, lower to market stand still
  42. 42. No unique solution; balanced combination of policy / financial instruments  country risk must be considered</li></li></ul><li>Spanish Case<br />
  43. 43. Czech Case<br />10!<br />
  44. 44. Slovak case<br />
  45. 45. German case<br />
  46. 46. Implementingsustainable support mechanisms4. Guarantee a gradual market development with the corridor concept<br />Support structure :<br /><ul><li>Basic support : Feed-in Tariffs weighted on the market development -> « corridor »</li></ul>Rationale and advantages:<br /><ul><li>Market > upper limit, degression rate
  47. 47. Market < lower limit, degression rate
  48. 48. Transparent control and predictable market
  49. 49. Ensures sustainable growth of market</li></ul>“Corridor” market cap rationale<br />MarketGWp<br />Upper limit reached -> degression increase<br />Lower limit reached -> degression decrease<br />
  50. 50. Implementingsustainable support mechanisms5. Develop a national roadmap to PV competitiveness<br />Support scheme are temporary<br />Untilwhen are theyneeded<br />How shouldtheybeshapeduntilgridparityisreached?<br />FiTs, FiPs, self-consumption, net metering ?<br />Whatwillhappenafterreachinggridparity<br />Whatkind of support willbeneeded<br /><ul><li>No definitiveanswernow, but one thingisclear, gridparityiswithinreach and we must getprepared!
  51. 51. National roadmaps</li></li></ul><li>September 2011<br />Competing in the EnergySector<br />
  52. 52. PV competitiveness<br /><ul><li>PV’sgenerationcostisdecreasingfasterthanmanyexpect
  53. 53. A competitive solution before 2020
  54. 54. Policy recommendations</li></li></ul><li>WHAT IS A PV SYSTEM?<br />PV modules<br />PV inverter<br />Balance of system<br />Installation<br />2010 situation (industryaverages)<br />
  55. 55. PV SYSTEM PRICE EVOLUTION<br /><ul><li>The price of PV modules and systems has been going down for more than 30 years.
  56. 56. This will continue thanks to further technological improvements and economies of scale.
  57. 57. A 36-51% decrease could be achieved on average by 2020.</li></ul>Market anomalies <br />will disappear as <br />the market matures<br />> 50%<br />Evolution of the PV system price in Europe<br />
  58. 58. HOW MUCH DOES IT COST TO PRODUCE 1KWH FROM PV ?<br /><ul><li>Generation cost of PV electricity  LCOE: Levelised Cost of Electricity
  59. 59. Used widely to compare electricity from different energy sources</li></ul>European PV LCOE range projection 2010-2020<br /><ul><li>5 countries: </li></ul>France, Germany, Italy, Spain, UK<br /><ul><li>4 market segments:
  60. 60. residential rooftop (3 kW),
  61. 61. commercial rooftop (100 kW),
  62. 62. industrial rooftop (500 kW),
  63. 63. utility-scale ground-mounted (2.5 MW)
  64. 64. Crystalline Silicon and Thin Film technologies</li></ul>- 50 %<br />PV’sgenerationcostcould go down by 50% duringthisdecade<br />
  65. 65. OUTLINE<br /><ul><li>PV’sgenerationcostisdecreasingfasterthanmanyexpect
  66. 66. A competitive solution before 2020
  67. 67. Policy recommendations</li></li></ul><li>COMPETITIVENESS: TWO PERSPECTIVES<br />DynamicGridParity for electricityconsumers:<br />The moment at which, in a particular market<br />segment in a specific country, the present value of the long-term revenues from a PV installation is equal to the long-term<br />cost of installing, financing, operating and maintaining the PV system. <br />Cheaperthan…<br />PV installed on rooftops<br />Generation Value Competitivenessfor utilities:<br />The moment at which, in a specific country, adding PV to the generation portfolio becomes as equally attractive from an investor’s point of view as a traditional and normally fossil-fuel based technology. <br />Cheaperthan…<br />Large installations (rooftops or groundmounted)<br />
  68. 68. WHAT IS DYNAMIC GRID PARITY?<br />Electricity consumer point of view<br />Prosumer<br />Usual consumer<br />Self-consumptionassumptions: 30-75%<br />Electricity bill<br />Cost of PV electricity<br /> Trend<br />><br />Reduced bill<br />Electricity bill<br />Trend<br /> Trend<br /> Trend<br />Sales of excesselectricity<br />Additional <br />revenue<br />
  69. 69. DYNAMIC GRID PARITY: THE 3 ROOFTOP SEGMENTS<br />Based on the averageirradiance per country.<br />
  70. 70. DIFFUSION OF DYNAMIC GRID PARITY <br />ACROSS THE POPULATION<br />Residential segment<br />2018<br />2019<br />2020<br />2015<br />2016<br />2017<br />100%<br />0%<br />0%<br />0%<br />0%<br />46%<br />100%<br />100%<br />0%<br />6%<br />48%<br />85%<br />38%<br />46%<br />85%<br />100%<br />100%<br />42%<br />58%<br />100%<br />100%<br />51%<br />0%<br />26%<br />82%<br />89%<br />Real irradiancelevelscan change time whencompetitivenessisreached.<br />
  71. 71. GENERATION VALUE COMPETITIVENESS<br />PV vs Gas CCGT<br />Based on the averageirradiance per country.<br />
  72. 72. SENSITIVITY ANALYSIS: <br />DELAYING OR ACCELERATING?<br /><ul><li>Higher LCOE:
  73. 73. Market anomalies(eg. admin. costs)
  74. 74. Specific applications:
  75. 75. e.g. BIPV on existing buildings is more expensive
  76. 76. Investors requesting a “green premium” above real investor’s risk
  77. 77. An unexpected surge in fossil fuel prices
  78. 78. Any scheme rewarding higher electricity injected to the grid (self-consumption or net-metering)
  79. 79. Specific applications:e.g. BIPV on new or renovated roofs </li></ul>The generation cost (LCOE). The one used is achievable (based on real data) but local administrative costs still keep the prices artificially high in some countries. <br />An unexpected surge in fossil fuel prices could lead to a rapid increase of electricity prices.<br />Whatcouldaccelerate<br />Whatcoulddelay<br />The self-consumption case used for “prosumers” is rather conservative. All other net-metering schemes or systems that would pay a higher price for electricity injected in the grid or that could allow for a partial refund of grid costs (as it exists today in Italy) would increase the revenues from PV.<br />Specific applications such as BIPV on existing buildings could be more expensive and delay the parity moment.<br />Some investors are today asking for a “green premium” above the real investor’s risk. This could delay parity by, on average, one year in most market segments.<br />BIPV applications on new or renovated roofs can reduce the price of systems.<br />Competitivenesscanhappenevenquicker!<br />
  80. 80. OUTLINE<br /><ul><li>PV’sgenerationcostisdecreasingfasterthanmanyexpect
  81. 81. A competitive solution before 2020
  82. 82. Policy recommendations</li></li></ul><li>THE ROAD TO COMPETITIVENESS<br /><ul><li>Sustainable market growth will contribute to price decrease
  83. 83. This market development must occurin all countries and all market segments.
  84. 84. Support schemes (including FiTs) need to be adapted on a regular basis to avoid market disturbance.
  85. 85. Administrative barriers must be removed and procedures streamlined so that additional costs do not increase the total price of a PV system.
  86. 86. Grid connections must be simple and easily authorised, and priority access to the grid for PV electricity should be ensured.
  87. 87. Political commitment to continuous research and development must be assured, so that PV technology continues to develop.
  88. 88. PV should be considered a low-risk investment; therefore reasonable profits should be taken in line with that risk level. </li></li></ul><li>REACHING COMPETITIVENESS AND BEYOND<br />For electricity consumers (rooftops): <br /><ul><li>Allow final customers to sell the electricity produced on the market.
  89. 89. Maximise savings on the electricity bill. Regulatory frameworks should therefore promote net-metering and self-consumption schemes.</li></ul>For utilities:<br /><ul><li>Facilitate access to capital by lowering the perceived risk. </li></ul>After competitiveness is reached:<br /><ul><li>Some specific incentives might still be needed in order to ensure PV competitiveness in Northern regions of a country.
  90. 90. Dedicated support mechanisms could be required on a temporary basis for more specific technologies, such as residential and commercial BIPV, or innovative current and upcoming technologies such as concentrated solar PV, organic PV or dyesensitised solar cells.
  91. 91. Grid stability could be favoured through new incentives for decentralised storage, demand side management, or to provide additional network services contributing to grid stability.</li></li></ul><li>CONCLUSIONS<br /> Switching to solar photovoltaic electricity is not just a desirable option for achieving our energy and environmental goals. It is also a realistic and competitive one.<br />PV isalreadycheaperthanmany people think<br />PV canbecompetitivebefore 2020 across the EU<br />The PV industry is committed to lowering costs. Policymakers should act accordingly.<br />
  92. 92. Marie Latour<br />National Policy Advisor<br />m.latour@epia.org<br />

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