Responding to Climate Change 2007
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Development - Solar

ImageA Photovoltaic Future

Bundesverband Solarwirtschaft, BSW / German Solar Industry Association

Worldwide energy supply is undergoing an upheaval: experts consider crude oil prices of over US$100 dollars per barrel likely, and $250 possible. Increasing the use of coal to produce energy instead would further accelerate climate change and switching from fossil fuels to nuclear power is not viable, in part because of limited uranium availability.

Sustainable, climate-friendly energy supply needs renewable sources and, together, wind power, biomass, geothermal energy, hydro power, photovoltaics (solar electricity) and solar heat (solar thermal energy) have sufficient potential. The sun annually radiates around 15,000 times more energy than the world’s entire population consumes in the same period.

Areas of Application

Off-grid applications: Solar power systems produce electricity where no grid supply is available, providing households and villages with light and enabling communication and access to the media. They drive water pumps, refrigerate medical supplies, and much more. As such they are the key to a lasting electricity supply for the two billion people without grid access.

Grid-connected applications: 85% of the world’s photovoltaic systems feed into an electricity grid, reducing coal, oil, gas and uranium consumption. These include individuals using small home systems of one or more kilowatts and commercial operators with systems of up to 10 megawatts.

In the long term, photovoltaics will become a cornerstone of electricity supply. This has many advantages and is the best potential out of all the renewable energy sources. Today’s systems are reliable and offer long service lives when quality components are used and they are correctly configured.

The advantages are:

Bullet point long-term availability in unlimited quantities;
Bullet point worldwide usage and accessibility;
Bullet point climate neutral - no greenhouse gases emissions;
Bullet point works with both grid-connected or off-grid systems;
Bullet point reliable functionality and little maintenance;
Bullet point good for regional economic development; and,
Bullet point no further fuel costs after the initial investment

A lasting source must produce more electricity than it took to build it. Current studies show a photovoltaic system in Germany with a service life of 30 years produces 6-20 times more energy than it took to produce it, in southern countries 9-30 times more.


Systematic incentives required

The market needs support to achieve economic efficiency. Off-grid regions have subsidy programmes offered by national and international institutions, but these alone are not sufficient for the systematic implementation of this technology.

In areas with an existing power grid, financial incentives for investors are required. As such, investment grants or reduced interest loans can be made available. Alternatively, electricity companies could be obliged to take some of their electricity mix from solar power systems (Renewable Portfolio Standard).

The most effective promotional tool has proved to be increased remuneration for feed-in tariff systems which have caused the dynamism of the German, Spanish, and Italian markets. Remuneration systems have also been agreed in Greece, France, and South Korea.

The principles

The feed-in tariff system was introduced in Germany in 2000; it gives the owners of photovoltaic systems the right to:

Bullet point to connect their systems to the grid;
Bullet point to feed their electricity into the grid; and
Bullet point to receive a remuneration for this electricity at a fixed price over a fixed period of time. The rates and the period of remuneration are fixed so the expected income covers expenses and allows the investor a profit.

Today an investor receives between 40 and 50 euro cents per kWh of solar electricity for a period of 20 years. In countries with higher sun radiation, the same system will produce more electricity, and thus the feed-in tariff can be lower. The extra costs created by the remuneration of solar energy are passed on to all electricity users. Because of future photovoltaic price reductions, the feed-in tariff can also be reduced for new systems.

Economic efficiency

In many off-grid regions, solar electricity is already cheaper than electricity from diesel generators. In the grid-feeding sector, in Germany it is around 40-50 euro cents per kWh. In sunnier countries the price sinks as low as 20 euro cents - more than the price for base load or medium load electricity. However, peak load electricity already costs more than this in many countries. The first area where it will be economical is covering demand during summer daytime, as most of solar electricity is produced then.

So far, photovoltaics has only contributed a small proportion of the total electricity. In Germany this proportion will increase from the current 0.2% to a probable 4% by 2020. There is a world of opportunities and the major task over the next few years is to expand the market and industry, develop technology further and reduce costs.

From 2020 not only will it be economic to use photovoltaics as a lasting energy source in many applications and on a large scale globally, but it will also mitigate the effects of climate change.

Bundesverband Solarwirtschaft, BSW / German Solar Industry Association: click for web site

Bundesverband Solarwirtschaft, BSW
German Solar Industry Association

Gerhard Stryi-Hipp - Managing Director
Tel. +49 30 2977788 0
Fax +49 30 2977788 99

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