Over the last decades, we have known the energy sector as a rather slow-moving creature. Progress in technology, costs and market deployment of the largest part of today’s technologies has been rather sluggish, compared with the multiple challenges that Europe’s power supply is facing.
Maybe it is this general tardiness that has kept alive the notion of photovoltaic power as a marginal and expensive niche player. It is high time now to revise this outdated prejudice about photovoltaics and realise its huge potential.
Earlier in June, the European photovoltaic industry association (EPIA) launched its new report 'global market outlook for photovoltaics 2014-2018', showing that installed photovoltaic capacity already amounts to more than 80 gigawatts in Europe, covering 3 per cent of the electricity demand.
Despite last year’s relative market slowdown, compared to the booms experienced in 2011 and 2012, photovoltaics still reached a level of new installations in Europe in 2013 that was only slightly exceeded by wind, with all other sources of electricity lagging behind.
"For the first time in more than a decade, Asia took the lead over Europe in terms of new installations"
But the market uptake is not limited to Europe. Also globally, photovoltaics is no longer the niche player it used to be a few years ago. For the first time in more than a decade, Asia took the lead over Europe in terms of new installations, and other regions have continued to catch up. Such vigorous growth in non-European markets kept the global photovoltaic development on an upward trajectory, leading the world’s cumulative installed photovoltaic capacity to reach nearly 140 gigawatts at the end of 2013. This is the equivalent of the electricity produced by as much as 32 large coal power plants. And EPIA forecasts continued growth for photovoltaics in the coming years, leading the global cumulative installed capacity to almost triple by 2018.
Of course, one of the main drivers of this photovoltaic market uptake is its ever-increasing economic attractiveness. In only over seven years, the cost of photovoltaic systems decreased by as much as two thirds. Already today, photovoltaic power generation costs stand below retail power prices in many areas of Europe.
For large-scale photovoltaic installations, the costs per kilowatt-hour of generated electricity can be compared with those of conventional power plants. And cost reductions are expected to continue: ongoing innovation and a strong global demand will undoubtedly bring prices further down.
But make no mistake, approaching cost-competitiveness is not to be confused with market competitiveness in the current circumstances. Whether the EU will continue or not to participate in the global photovoltaic market in a pole-position still depends on the removal of many barriers that are standing in the way.
"Europe’s power markets and rules have been developed around the old electricity mix"
Europe’s power markets and rules have been developed around the old electricity mix. They suit the nature of large, centralised and often inflexible conventional power plants. Solar photovoltaics is different. It is more distributed and naturally variable, bringing different opportunities and requirements to the system.
Such characteristics are not reflected enough in current market design, and many regulatory and practical obstructions still prevent renewable power generators from participating in the market on a fair basis.
Fundamental adjustments to the market rules, both on the wholesale and on the retail levels, are necessary to create a truly competitive market that allows for the full participation of photovoltaics and brings real benefits to consumers.
Photovoltaics is giving a new direction to our power supply. With a forward-looking market design that rewards flexibility and clean power generation rather than pollution and inertia, Europe can reap the benefits of this energy transition in a smart and cost-effective manner.