Photovoltaics

I have been in France for a couple of days, visiting a potential business partner's sites. They have plans to install a huge area of photovoltaic (PV) panels at both sites. In both cases, they claim that the PV will pay for the cost of the buildings on which the panels will be installed. Hence they are building very big structures to cover with PV.

That is somewhat surprising, because PV, unless massively subsidised, doesn't even cover the cost of itself (i.e. installing and running the panels), let alone pay for the building underneath. The explanation: the French government is introducing a tariff to pay €500/MWh from PV. By comparison, their power costs (they claim, though this probably hides massive subsidy to the nuclear industry) around €37/MWh to produce, and consumers pay €42-120/MWh (large industrial to small domestic).

In this respect, they are outdoing even the Germans, who "only" threw €320-400/MWh at PV. This made the Germans the biggest deployers of PV in the world (relative to the size of their economy). And yet contributed a gnat's fart of electricity (<0.1%) to their total energy supplies.

Our potential colleagues will not be the only ones planning to respond to this incentive by building installations that otherwise would not be built, which will cost a fortune, fit badly with their nuclear power (as both are inflexible), and add little to their energy supplies or security. There will doubtless be a spate of construction subsidised by this massive distortion, whose cost bears no relation to the environmental or economic benefit (particularly in France, where this power will mainly be displacing nuclear, and therefore making a minimal impact on carbon emissions, and reducing the efficiency of the nuclear power stations).

The French government justifies this, as governments always do, by claiming that massive support will produce massive deployment, which will achieve economies of scale, and drive the technology down the learning curve, making the technology viable in the long-run. What they have not explained is why this has not already been achieved by the German programme, and why, following that programme and the supposed economies and learning achieved, they have had to introduce a subsidy even more generous than the Germans in order to encourage the market. Is this yet another example where the learning curve is negative, and the lessons learned are that the technology is more expensive and less likely to reduce in cost than its proponents expected?

A member of the Claverton group of energy fantasists (of which I am amused to be a member), posted the following article not only to the other members, but to Ed Miliband, Mike O'Brien and Joan Ruddock. See if you can spot the flaw, children:

The United States may have helped to pioneer solar technology, but it has fallen behind nations like Germany, China, and Japan in producing it.

According to iSuppli Corp, these countries have moved ahead of the United States, with Germany holding the lead in this fast-growing alternative energy market due the nation's and Europe's long-term commitment to solar power.

"Europe's early and enthusiastic embrace of solar energy is paying off, with the region leading in production of photovoltaic (PV) cells, potentially paving the way for a 300 billion Euro savings in electricity costs," said Henning Wicht, senior director and principal analyst for photovoltaics at iSuppli, in a statement.

According to iSuppli's data, European companies supplied 27.4% of global PV cells in terms of wattage in 2008, just besting China's total of 25.8%, and exceeding Japan's 16.2% and the United States' 13.7%.

The market research company reported that more than 80% of new worldwide PV capacity installed in 2008 was in Europe. Germany and Spain accounted for 84% of Europe's installed PV capacity during the year.

"Beyond leading in the production of PV cells, Europe is by far the world's largest market for solar installations," Wicht said. "This hasn't happened by accident, as European governments, research institutions, and industry players during the last two decades have worked in close coordination to reach this point."

Behind the collaborative effort was an aspiration to move the European economies away from hydrocarbon-based electricity sources while creating jobs and establishing a new industry capable of competing on the global stage.

The US Recovery Act, endorsed by semiconductor industry groups including the IPC and the SIA, takes a similar approach in its alternative energy strategy and is expected to in part spur tech job growth while making the US a more formidable competitor in such spaces as solar energy.

ISuppli suggested that when looking for ways to boost the US solar market the Obama administration consider what the company called the "main factor behind Europe's leadership in this area," feed-in-tariffs. Feed-in-tariffs -- incentives that allow entities that feed the grid with solar energy to receive premium pricing, making the return on investment on PV installations more attractive -- are starting to slow in 2009, iSuppli said, noting this is especially true in Spain. However, such incentives have successfully served their purpose by driving down prices and building a large-scale, competitive PV supply chain, according to Wicht.

ISuppli also noted that during the recent Sustainable Energy Week event in Brussels, the EU Commission further presented a plan for renewable energy in which solar plays a strategic part and will generate 15% (12% by PV electricity and 3% by concentrating solar thermal systems) of the region's electricity demand by 2020.

According to iSuppli, the world's top producer of PV cells in 2008 was Q-Cells of Germany. As PV demand expands around the world in the coming years, iSuppli said it expects European companies will continue to play a major role.

That's right, Zippy, there's not a single mention of kW or MW, let alone kWh or MWh, in the whole thing. Nothing that gives us a feel what those percentages mean in real terms. Percentage of what?

Well, here's a couple of figures for you. PV contributed 2.5 TWh of the EU-27's total electricity production of 3,196 TWh in 2006 (the most recent year for which EU stats are available). Total final energy consumption in the EU-27 ("by far the world's largest market for solar installations") that year was 13,869 TWh. Germany's contribution was 2.2 TWh of PV, out of 595 TWh of electricity and 2,710 TWh of final energy consumed.

Solar photovoltaic power is so insignificant that, in almost all countries, its share of total electricity generation is under 0.05% and less than 0.01% of final energy consumption. Even in Germany, the supposed success story, it is less than 0.4% of electricity production and less than 0.1% of final energy consumption. The average across the EU is around 0.08% of electricity supplies, and without Germany would be 0.01%.

With that sort of start, and "large-scale, competitive PV supply chain", 12% of our electricity supplies by 2020 should be a doddle.

So go ahead, America. Copy the Germans' magnificent success at spending a fortune encouraging a technology that contributes two-fifths of bugger all. So long as you can light your houses with percentages, you'll be fine.

Or could this just possibly be yet another example of rent-seeking lobbying in the energy industry? After all, that "300 billion Euro" figure for potential savings in electricity costs looks a bit steep. Taking 150 Euros/MWh as a reasonable estimate of the European average of retail electricity prices, we would need to increase our PV output to around 2000 TWh p.a. to achieve this saving. That's a mere 80,000% increase. Now, there's a percentage that tells a story.