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Solar Power in Europe
Datamonitor, February 2012, Pages: 30
Solar power remains a hot topic in the European energy debate. Falling costs mean that solar energy is getting closer to grid parity. Meanwhile, feed-in tariffs are under pressure in several European markets.
Scope of the report:
- The report provides a comprehensive analysis of the state of the European solar market and the key drivers.
- The report looks at investment trends in the sector.
- The report addresses the threat to European equipment manufacturers from lower cost sources.
- Solar photovoltaic (PV) module prices have fallen due to an oversupply of modules and lower demand from some European markets. Technology improvements and increased silicon production are also behind the drop in PV module prices. Also, lower feed-in tariff rates are reducing demand for solar PV modules, leading to further pressure on prices.
- Investments in renewable energy technologies globally increased by 5% in 2011 from 2010 levels, largely led by a 36% increase in investments in solar power technologies. However, the impact of stimulus funding will likely weaken beginning in 2012 as governments (specifically in the western world) reduce spending owing to budget constraints.
Key questions answered:
- What are the technology improvements in the solar sector and how will they lower costs and improve efficiency?
- What are the trends in the cost of solar PV systems? When will solar PV achieve grid parity?
- What is happening to feed-in tariffs?
Falling costs are making solar investments more attractive, but funding investments is difficult due to the weak economic outlook
Oversupply and reducing demand drive down solar photovoltaic module prices
Solar PV may attain grid parity in all segments by 2020, starting with the commercial segment in Italy by 2013
Reduction of FiTs for solar PV in some key markets
Germany moved from a scheduled reduction of tariffs to a more market-linked mechanism
Italy adopted reducing tariffs based on installation volume coupled with a cap on annual installation volume
Spain reduced tariffs with retroactive effect
Czech Republic slashed tariffs by half
The UK reduced tariffs by half, but protects the interests of existing operators
The growth of renewable energy investments continues, but will likely face challenging times ahead
Rising cost of debt in Europe
The need for energy security and European Union 20-20-20 legislation will ultimately drive European solar
Germany is the largest market for solar photovoltaic in Europe, and its exit from nuclear will be a strong driver for solar moving forward
Spain leads the way in concentrated solar thermal power, and will continue to do so due to the country's DNI levels and favorable support schemes
German solar cell manufacturers face the biggest threat from Asian manufacturers, so must compete by producing advanced technologies
Emerging solar PV markets in Europe need strong policy certainty to gain investor confidence
Parabolic trough plants are the most common concentrated solar power technology
Crystalline solar photovoltaic cells dominate, whereas thin-film technologies are better suited to very hot climates
Ask the analyst
Table: Solar PV grid parity timeline estimates, 2011
Figure: Solar PV module retail prices (per Watt Peak), January 2011 to January 2012
Figure: European PV levelized cost of electricity range projection by segment (€/kWh), 2010–20
Figure: Global total new investment in renewable energy ($bn), 2007–11
Figure: Cost of debt broken down, January 2005 to January 2011
Figure: All Renewables Attractiveness Index, November 2011
Figure: DNI levels across Europe
Figure: Global existing and added solar PV capacity, 2006–10
Figure: EU CSP installed capacity (MW), 2007–10
Figure: Summary of different concentrated solar power technologies
Figure: Images of main solar thermal energy types
Figure: Types and sub-types of solar PV technologies, 2011
- Hutchison 3G UK Limited
- Landesbank Baden-Wurttemberg
- PricewaterhouseCoopers International Limited