European PV industry predicts cost parity by next year

Photovoltaic (PV) solar power could provide up to 12 per cent of Europe's energy by 2020, according to a major new study from the European Photovoltaic Industry Association (EPIA) and management consultancy AT Kearney.

The report, entitled Set for 2020, predicts that based on business as usual scenarios PV will account for about four per cent of Europe's energy mix by 2020. But it also argues that increased adoption of energy storage and smart grid technologies, and the rapid development of the PV industry's supply chain would allow for the sector to provide 12 per cent of the continent's electricity. Under such a scenario, carbon emissions would be cut by up to 196 million tons a year.

Echoing recent predictions from within the industry that the sector will be able to compete with traditional power sources on price within five years, the report argues that this high level of penetration could be largely achieved without a reliance on government subsidies.

It notes that based on previous rates of technology development, the price of PV electricity will continue to decline at eight per cent a year, halving generation costs every eight years.

"Photovoltaic electricity generation will already be competitive in parts of southern Europe by next year," said Dr Winfried Hoffmann, EPIA president. "The study shows that under the 12 per cent scenario, photovoltaic electricity will be competitive with other power sources in as much as 75 per cent of the EU electricity market by 2020, without any form of external price support or subsidy."

However, the report argued that while support mechanisms could be phased out during the next decade, they are still needed currently to bolster demand for PV and help justify investments in scaling up the industry's supply chain.

It recommended that feed-in tariffs, such as that pioneered in Germany and soon to be adopted in the UK, represent the most effective support mechanism, but it also warned that such incentives should be "sustainable and not unduly generous".