European solar group calls for feed-in tariffs

BRUSSELS, Belgium, August 17, 2005 (Refocus Weekly)

Implementation of a feed-in tariff for solar photovoltaic electricity is “a necessity to significantly increase the deployment of PV in Europe,” and the continent’s PV association recommends that the necessary legislative measures be prepared.

Comparing the performance of different support mechanisms applied to green power market development concludes that “a feed-in tariff is at present the best support proposal for the PV market,” says the European Photovoltaic Industry Association in its position paper. In future, when the market for PV is well developed, other mechanisms such as net metering may prove more suitable but, “at the present stage of PV development in Europe, only a feed-in model can create a secure future market for today’s less cost-competitive technologies such as PV.”

The major advantage of a feed-in tariff is that it is “effective, flexible, fast and easy to establish,” although the paper concedes that “criticism and improper applications are also a reality.” This support instrument should be carefully designed and, as past experience shows, administrative burdens should be removed and low ceilings of total system power
avoided.

The PV industry also needs a “favourable legal and administrative framework” for building regulations and grid access procedures, and a feed-in policy must allow long-term (15 to 20 year) contracts, a guaranteed price that offers reasonable rates of return for producers, integration into long-term planning with other policy options, an annual rate decrease according to technological progress for newly installed systems, independence from state budgets, simple structure, and low administrative costs and demands.

“Considering large investments needed to establish photovoltaic solar electricity in energy systems, it must become a magnet for private capital,” the report explains. “Long-term stability of income is a pre-condition to attract investors in long-term investments such as green power plants.”

“The transition to a sustainable global energy system is one of the largest challenges to face mankind in the coming century,” and increased electricity generation from renewable energy sources “contributes substantially to the easing of geo-, climate- and energy-political areas of conflict, and should therefore be prioritised at all levels - local, national and global,” it states. The European Union has set a target of 21% from renewables by 2010, but only a few member states have implemented a framework for renewables and the Commission has called on member states to ensure the fulfilment of those targets by implementing appropriate measures.

“Within various technologies, photovoltaics seems to attract considerable attention due to its potential of contributing a major share of renewable energy in coming decades,” it adds. “The most appreciated advantage of this hi-tech innovative technology is its free, abundant and inexhaustible source of energy.”

A recent study has estimated that the entire electricity consumption of EU25 countries could be met by covering 0.7% of their total territory with PV modules. If the installed PV capacity in the EU increases to 200 GWp by 2030, CO2 emissions of 180 Mt would be avoided by deployment of PV technology alone.

“As it is risky to assume that the increase of competitiveness of PV electricity will be ensured by market forces driving the prices for conventional energy to higher levels only, and ultimately favouring alternative energy resources,” and there is a need to launch support mechanisms to ensure lower inception costs for the investor and adequate gains generated throughout the lifecycle of a PV system regardless of size. “Ensuring that these two objectives are realized will result in favourable returns for both private users (small investors) and large investors.”

A feed-in tariff obliges a utility to purchase green power at a rate determined by public authorities and guaranteed for 20 years. Different tariffs can be defined for solar, wind, biomass and other renewables, and the tariff rate is reduced each year for new installations in order to stimulate decrease in production costs.

The paper was prepared within the PV Catapult Project by the European Photovoltaic Industry Association, with 16 solar PV groups in Europe.


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