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 PV to become a leading world energy market
European Photovoltaics Industry Association (EPIA)
The global photovoltaic (PV) sector has been growing at an
average of over 40% during the last eight years. Photovoltaics
has entered a transition phase towards competitiveness in all
market segments and, in particular, grid-connected applications,
thanks to the development of market support programmes.
Several leading countries - Germany, Japan and United States
(US) representing two-thirds of the global market - have
enabled this. Because of growing public awareness and political
commitment in these countries, renewable energy is supported
by government driven programmes.
By 2020 photovoltaics will increasingly contribute to global
electricity demand. With adequate policies in the transition
phase, competitiveness as a decentralised electricity source, both
on-grid and off, and growing prices of conventional electricity
production, it is estimated, in 2040, PV could represent 25% of
global electricity consumption.
Becoming competitive
One of the key challenges of the photovoltaic sector is to reduce
cost of PV modules. Until 2003, the prices of modules decreased by 20%. There
was a 5% annual reduction each time the cumulative capacity installed was
doubled. Depending on countries and its level of insulation, PV could become
competitive in the next few years. Electricity prices are usually higher at peak
times - around midday and coincidentally this is when PV naturally has its
biggest output. In countries like Spain, Italy or Greece solar electricity could be
competitive with other peak power prices within the next 10 years, northern EU
countries in the following decade.
Support mechanisms to initiate mass markets must be in place to enable
competitiveness,. The most effective one is the feed-in tariff system in Germany.
It offers investors in solar electricity systems an attractive price for selling
electricity to the utility grid.
The tariff is high enough to
enable a positive return on
investment and a reasonable
pay-back time (e.g. 10 years).
The tariff is paid for 20 years,
enabling a long-term visibility
and stability for the investor.
This system, in place since
2000, has been renewed and
improved in 2003 enabling an
impressive market take-off and
achieving over 100% market
growth in 2004.
Industry has to properly to answer consumers’ needs. Demand is growing and
should not remain unsatisfied. Other European governments are adopting similar
systems to develop solar electricity - Spain since 2004, Italy in 2005, Greece in
June 2006 and now France.
Manufacturers must adapt production capacity to answer this demand. PV cell
and module producers have to up scale production outputs but also balance it
with system producers (inverters, cabling devices) and silicon producers.
There is a shortage of solar grade silicon because the chemical industry did not
anticipate this current growth. It is estimated that, to reach market targets by
2010, current solar grade silicon production must be doubled to an annual output
of 30000 tons. The photovoltaic sector is becoming an attractive business able to
reboot some sectors facing market slowdown.
Fighting poverty
 More than two billion people live without electricity. Because of the increasing
population in remote rural areas this figure is growing, despite the successful completion of many electrification programmes. PV solar electricity is best for
the decentralised power needs. After the continuing price decline in the next
decade PV will be cost efficient and affordable, closing the energy gap in the
developing world.
The rest of world market off-grid applications will start to overtake other markets
in the mid of 2020 and will have the largest share after 2030. Allocating local
content in future markets will become a major topic. Today’s leading EU grid
market will be almost saturated as well as the Japanese and US Markets. The PV
industry has to set the course today to prepare for this.
Not only does photovoltaic electricity have high potential over the long term to
meet electricity needs, but it will also become a leading business. Today the PV
industry has a turnover of five billion Euros a year and is estimated to generate
500 billion in 2040. Over 40,000 people already work for PV in Europe. That is
expected to rise to two million people world wide, directly and indirectly, by 2020.
A single photovoltaic voice
The European Photovoltaic Industry Association (EPIA) represents over 95% of the
Europe’s photovoltaic industry and 80% of manufacturers globally. Its role is to
encourage industry along expected market growth by ensuring political support
and the adoption of adequate support mechanism to ensure demand, and by
working with all stakeholders so industry can meet the demand created.
There are four important areas: competitiveness, innovation, quality and
promotion. EPIA is developing its strategy through partnerships and sees the
key for success by working with professional associations, local governments,
research institutes and the media. Transparency, from reports, papers, seminars
and promotional campaigns, and collaboration with the right stakeholders are
fundamental to obtaining reliable, credible and widely accepted results.
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