News of a new insolvency, rumors of an EU trade dispute and changeable weather all helped influence a somewhat uncertain mood that greeted attendees to the first day of the Intersolar Munich conference. However despite this, some conference speakers were firmly focused on photovoltaics role and capabilities in a post-FIT market.
Paul Kreutzkamp, senior project manager Renewables with 3E in Belgium gave an address regarding the selling of photovoltaic-generated electricity on the spot market. In current changes to the German renewable energy legislation – the EEG – currently being debated, there are proposed measures, which would require operators of photovoltaic systems to market a percentage of their output on the electricity spot market.
In a technical presentation, Kreutzkamp concluded that the mechanisms currently in place for rewarding the accurate prediction of renewable energy generation were not fully developed. At present, argued Kreutzkamp, the penalties for over estimates for generation were not yet sufficient to encourage more-accurate predictions.
However, while he admitted this was not for companies trying to develop and sell better forecasting technologies and systems, this was bound to change in coming years. The analyst was so bold as to predict electricity market regulators in Germany would likely refine the system to rectify this situation within twelve months.
Development in Spain
In another presentation at the conference, EuPD analyst Markus Hoehner investigated the merits of Spain as a post-FIT market. FITs for photovoltaics were suspended at the start of the year in Spain.
Hoehner argued that while there are multi-year installed capacity pipelines of around nine gigawatts (GW) in Spain at present, the cost-per-watt installed cost of photovoltaics will have to fall significantly for a robust business case for this pipeline to be made. Risks of a falling price of electricity on the wholesale market and resistance from the major Spanish utilities were set out by Hoehner as threatening such a large project pipeline.
Setting out the numbers, he concluded that an levelized cost of electricity (LCOE) of under 100 would have to be achieved by photovoltaic plants for these installations to be a viable proposition in the future. Hoehner added that with lagging demand in key markets like Italy and Germany, these prices are foreseeable in the near future. However, noted Hoehner, at this price point, "no-one on the production side will be making money."
Hoehner said that the regions of Extremadura and Murcia have the greatest potential for utility-scale photovoltaic power plants in Spain. He reported that government agencies in the regions are facilitating approvals and organizing timely grid connection. He added however, that developers will "have to be really fast" to make the most of current opportunities. Addressing the elephant in the room, when any discussion of Spain is raised, Hoehner noted that obtaining finance in Spain will continue to pose serious challenges to developers.
The final conclusion of this discussion of post-FIT developments, was that Europe may not be the place for the development of such a market for photovoltaics in the short term, as power demand is not expected to increase significantly. However, he added, Spain will make an initial "lighthouse market" for the development of photovoltaics as a truly competitive power source.
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