Renewables outpace nuclear in 2014 European power generation

SolarPower Europe, formerly the European Photovoltaic Industry Association (EPIA) has released its "Global Market Outlook for Solar Power 2015-2019." In the report, the association notes the "key" role solar has played in helping the renewable energy industry overtake nuclear power for the first time in Europe.

Solar is said to cover more than 1% of current world electricity demand. Specifically, says SolarPower Europe, it is meeting over 7% of demand in Germany, Italy and Greece. Across Europe, solar accounts for 3.5%, while a total of 13 countries are said to be meeting 1% of their energy needs with the renewable energy. For the last five years solar PV, along with wind and gas has been the most installed source of electricity in Europe.

Overall, the association estimates that between 396 and 540 GW of solar could be installed across the world by 2020, up from a cumulative capacity of 178 GW at the end of 2014, which saw a record 40 GW connected. In Europe, specifically, solar power could grow by up to 80% in this timeframe, from 88 GW to 158 GW.

SolarPower Europe cautions, however, that to foster this growth, the right frameworks and market design need to be in place. If not, the market could stumble, with just 40 to 50 GW being installed. This is not expected, but could prove a reality, if support is not there. "Being now one of the lowest-cost power sources, solar needs the right market design so that it can continue to contribute its strong support for Europe to reach its clean energy targets," states Michael Schmela, SolarPower Europe’s executive advisor.

Stagnation, if not careful

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SolarPower Europe says China’s 2015 installation levels will "frame" global solar growth. Having missed its solar installation targets for two years running, the government has raised its 2015 target to 17.8 GW. Although it installed 5 GW in Q1, compared to 1.3 GW in the U.S., the association says achieving this is contingent on a number of factors, chiefly "unlocking" the distributed market.

It adds that 2017 could be a year of "stagnation," following the expiration of the U.S. Federal 30% ITC and "the end of the market boom in Japan." Such instances serve to illustrate the uncertainties in the solar energy market, it says.

Not all is doom and gloom, however, with resumed growth predicted in 2018, which is expected to see dozens of countries attracted by competitive PV, including India.

Price declines

The "massive" price declines have help solar become a cost-competitive energy source, including a 75% drop in PV system prices in the past decade. As such, it should be viewed as a "low risk investment" by the financial community, says SolarPower Europe.

The report goes on to add that in several European countries, PV system prices of €1/Wp for installations over one MW below are common, while for competitive tenders, prices of around US$1/Wp are not unusual. Declining module prices outside of Europe have helped to lower costs – minimum import prices on Chinese modules to the EU "have maintained prices at a higher than market level" – as have falling prices for inverters.

The price declines are also helping to produce "highly competitive" levelised costs of electricity (LCOE). Although considered "best of class" examples, PV power prices of between $67 and $80/MWh have been seen in tender calls. They are serving to show how quickly cost competitiveness in solar can progress.

While large-scale PV generation costs are already comparable with today’s conventional energy production, continues SolarPower Europe, distributed solar power is becoming competitive with retail prices in many countries.

Geographical spread

Marking a significant change from just three years ago, China (10.6 GW in 2014), Japan (9.7 GW) and the U.S. (over 6.5 GW) are leading current solar industry growth, with the U.K. forging Europe’s onward path. Of the 40 GW installed in 2014, Europe accounted for just 7 GW, 2.4 of which were deployed in Britain, while Germany added just 1.9 GW and France 927 MW. Despite this, Europe still leads in terms of cumulative installed capacity, at 88 GW.

The U.K. is set to keep the European solar crown for another year – something no one would have believed just a couple of years ago. "The success of the U.K., set to be the largest European market again in 2015, reinforces the evidence that solar power is a versatile and cost-efficient energy source in any climate," continues Schmela.

Also of note is Korea, whose solar market doubled to see a cumulative capacity of 900 MW at the end of 2014 – similar to that of Australia. South Africa, which has seen an enormous amount of activity recently, also boasts a capacity of 800 MW. Canada, Taiwan, Thailand, the Netherlands and Chile also added nearly 500 MW, respectively.

Interestingly, there is a "perfect balance" between utility-scale and distributed solar installations globally, said SolarPower Europe, at around 20 GW each in 2014. However, when you look at individual markets, like Denmark, Austria, Belgium and Switzerland, for example, they are comprised almost entirely of residential and commercial installations.

Overall, utility-scale solar is expected to drive growth, due to its increased cost competitiveness. In the rooftop sector, self-consumption is said to be becoming the "backbone" of distributed PV development.

Technological innovation

Crystalline silicon-based PV has continued to be the dominant solar technology, says SolarPower Europe, although the thin film sector has "remained stable" on the back of continued work in CdTe and CIGS technology.

While cost reduction has been the primary focus of equipment manufacturers, innovation is starting to come to the fore again, with the association noting that several manufacturers have announced orders for innovative equipment to upgrade or replace production lines. Parallel to this, a number of new module factories have been opening up in emerging markets, while others have closed in Europe.

"The market growth has brought production capacities closer to a sustainable utilization rate and therefore, with profitable companies, a new cycle of investment can start in the PV sector," write the reports’ authors.

Read the full SolarPower Europe report.