This month executives from more than a dozen British solar-energy companies flew out to Saudi Arabia led by Greg Barker, minister for energy and climate change. Their objective was to capture a slice of the Islamic kingdom’s $109bn push into renewable energy.
Saudi Arabia, the world’s biggest oil exporter, says it hopes to generate 41GW of solar power by 2032 to help meet its growing domestic energy needs and reduce its reliance on oil reserves.
Although at an early stage, its ambitious plans have the attention of the renewables industry and start-up companies from the UK. These include Naked Energy and Oxford Photovoltaics. Guildford-based Naked Energy has developed a hybrid solar technology that generates both heat and power from the same glass collectors.
Christophe Williams, managing director, hopes the trip will lead to a partnership in the country. He argues that Naked Energy’s technology addresses two key problems facing the kingdom: dust and heating.
Conventional photovoltaic panels lose about half a per cent of their efficiency with every degree rise in temperature above 25C. Naked Energy’s design transfers that heat away from the cells, increasing the electricity output from the solar cells and providing hot water, he says.
Its technology is still in development – pilot production is expected to start next year – but Naked Energy is among a handful of small players in Europe that are prospering despite high-profile victims of the solar boom, such as Conergy and Q-Cells, and a global supply glut. “There has been enormous consolidation in Europe,” says Mr Williams, “but I think there is still plenty of growth and sustainability here”. While it was “not easy” to secure initial funding, the company has benefited from British expertise and knowhow, he adds.
Europe is still “a hub for research and development into solar”, says Jenny Chase of research group Bloomberg New Energy Finance. Much of the focus is on small improvements in the materials and processes used in solar manufacture to keep driving down costs. The world’s cumulative photovoltaic capacity surpassed 100GW of installed electrical power last year – capable of producing as much annual electrical energy as 16 coal plants, according to the European Photovoltaic Industry Association.
While about 31GW of capacity was commissioned around the world in 2012, the amount of new solar power installed in Europe fell sharply for the first time in more than a decade, says the association. This was a “turning point in the global PV market that will have profound implications in coming years”.
“Europe does not need more solar,” says Ms Chase. “Most countries are well on track for or have exceeded their 2020 solar targets.” The market for large-scale new build solar is almost done, she adds, with the market moving to focus on households and small and medium enterprises (SMEs).
The group expects total PV new build in Europe this year to total 9.2GW, of which 2.8GW is residential, 3.5GW commercial buildings and 2.9GW utility scale. Last year, total European build was 16.9GW. The slack, says Ms Chase, is being made up by Japan and China, with a combined total of 16.3GW this year, up from just 6.1GW in 2012.
Government subsidies helped drive rapid growth in Europe. Holger Rubel, senior partner and global head of Boston Consulting Group’s green energy and sustainability sectors, says that, in Germany, “it was good to have subsidies for solar PV to help it get off the ground but the industry was over-subsidised and it needed to be corrected.”
The key focus, he says, will be on “self-consumption, with homeowners and SMEs installing panels on roof tops, rather than a subsidised market”. Module prices have fallen by more than 80 per cent since 2008. This is creating opportunities for unsubsidised solar amid increasing examples where solar has achieved grid parity – the point at which electricity from PV is as cheap as conventional power.
In Germany, says Mr Rubel, electricity retail prices are near €0.30 per kWh, compared with the “levelised cost” of energy using roof-top PV of €0.11 to €0.15 cents per kWh: “The more energy you can consume yourself, the better.”
BCG expects installations in Germany to fall as the market shifts from one driven by feed-in tariffs to one driven by “self-consumption”.
By 2016, the market should see an installations pick-up, with about 4GW-5GW by 2020, fully driven by self-consumption.
Europe has done a great job to build solar into an industry, says Ms Chase, “but it is not necessary that Europe continues to bear the burden – in terms of the cost of energy – to increase the installation numbers.”
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