Are energy utilities "doing an IBM" by ignoring solar opportunity?

Solar photovoltaic (PV) technologies could provide energy to more than four billion people worldwide by 2030, meeting 14 per cent of global electricity demand and slashing annual carbon emissions by 1.6 billion tonnes, but established energy utilities are in danger of missing out on the booming market.

That is the conclusion of a joint report released yesterday by the European Photovoltaic Industry Association (EPIA) and Greenpeace International, which claims that the improvement in efficiency and production techniques achieved over the past decade mean the industry is on track to emerge as a mainstream player in the global energy sector over the next two decades.

EPIA president Ernesto Macias said that solar PV electricity had the potential to supply energy to 1.3 billion people in developed areas and a further three billion in rural communities without access to the grid by 2030.

The report claims that the solar PV industry already employs 120,000 people worldwide, but predicted that booming demand for the technology will see two million employed by the sector by 2020 and almost 10 million employed by 2030.

Speaking to BusinessGreen.com, report co-author and renewable energy director at Greenpeace International Sven Teske said that it was emerging solar manufacturers rather than established energy companies that were likely to exploit the opportunities presented by the fast-expanding market.

"I see a repetition of what happened with IBM three decades ago when it said there was no market in PCs," he observed. "The same thing is happening with the utilities' approach to solar and as a result there is real potential for the solar companies to break through and dominate the market."

However, he warned that the sector would have to evolve if it is to break energy companies' stranglehold on residential energy supply, adding that solar firms will have to develop new business models capable of tapping into increased demand from domestic customers.

"Solar PV is the best technology to provide households with electricity and the industry needs to move towards becoming more consumer and service oriented if it is to exploit that fact," he said, adding that a four-person home with energy-efficient applications could comfortably produce all the energy it requires from a solar array on the roof. He also predicted that improvements in battery technology driven in large part by demand for hybrid cars could soon enable homes to efficiently store power generated during the day for use at night.

Teske said that based on current trends, solar PV in southern Europe would be cost competitive with the grid by 2015, with solar installations across Europe reaching cost parity by 2020. "Almost half the power plants in Europe are between 20 and 30 years old and will need replacing over the next decade," he explained. "That means the cost of [grid] electricity will increase at the same time as improvements in PV efficiency and production techniques mean the cost of solar is falling. The delta between the cost of grid and solar PV is shrinking fast."

However, he also warned that in the shorter term the solar PV sector's future would remain largely dependent on the continued adoption of feed-in tariffs by countries other than Germany. "It is dangerous for any technology to be dependent on one or two countries," he said. "Germany has proved that the feed-in tariff is the best means of incentive for driving adoption and now we need to see it more widely adopted."