Photovoltaics can be a fully-competitive electricity source in Europe by 2020

Solar photovoltaic (PV) electricity can be competitive with grid electricity in some European markets as early as 2013, and in all market segments across the continent by 2020, according to a new study by the European Photovoltaic Industry Association (EPIA), released today (5 September).

PV technology is showing impressive price reductions, with the price of PV modules decreasing by over 20 per cent every time the total volume of PV modules sold doubles. Importantly, there is a huge potential for a further reduction of around 50 per cent up to 2020. The new EPIA report compares the real cost of PV electricity generation to that of other energy sources over the coming decade, and finds that under the right conditions PV can be competitive across Europe by 2020.

“Already today, PV electricity is cheaper than many people think,” said EPIA President Ingmar Wilhelm. “In the coming years it is going to get even cheaper thanks to ever-improving technology and economies of scale. As the price of electricity from conventional sources increases, solar PV will be become a fully competitive part of the energy mix.”

EPIA’s analysis of the five markets of France, Germany, Italy, Spain and the UK, Solar Photovoltaics Competing in the Energy Sector - On The Road to Competitiveness was released on Monday (5 September), at the 8th EU Photovoltaics Industry Summit in Hamburg. The study shows that given the right regulatory and market conditions, PV electricity can reach full competitiveness with conventional power sources across Europe by the end of this decade.

The point at which, in a particular market segment in a specific country, the present value of the long-term electricity revenues from a PV installation equals the long-term cost of receiving traditionally produced and supplied power over the grid – or dynamic grid parity - could occur as early as 2013 in the commercial segment in Italy, and then spread out in Europe to reach all types of installations considered in all the selected countries by 2020.

Generation value competitiveness, or the point at which, in a specific country, adding PV to the generation portfolio becomes equally attractive from an investment point of view to investing in a traditional - normally fossil fuel-based technology - could be reached as early as 2014 in Italy and in the other countries studied by 2020.

Achieving PV competitiveness across Europe will require political commitment to support development of the technology and remove market distortions. Support mechanisms such as feed-in tariffs have helped PV gain a foothold in many countries of, compensating for the difference in cost competitiveness between PV electricity and that of conventional sources. As the competitiveness gap narrows due to technology development and a parallel decrease in generation cost, PV will need less dedicated financial support, leading to the phasing out of such support schemes.

EPIA says encouraging PV development will also play a major role in the EU’s efforts to create a smart, sustainable economy. Switching to solar photovoltaic electricity is not just a desirable option for achieving our energy and environmental goals,” said Wilhelm said, “It is also a realistic and competitive one. By creating the right conditions now for the development of PV, we can ensure that it fulfils its promise as a clean, safe and infinitely renewable energy source and a major part of Europe's energy mix.”

The report is available on the EPIA’s website www.epia.org