In 2011, 74 percent of the globally installed capacity was connected to the grid in Europe. Last year, this was 28 percent. The volume shrank from 22.4 GW (2011) to 10.3 GW (2013). Despite how weak the European market was, the global market grew from 30.2 GW to 37.0 GW in the same period. This has to do with three markets outside of Europe, which took the lead last year and replaced Germany as the driving force: China, Japan, and the USA. In 2013, they jointly accounted for 62 percent (23 GW) of the world market.
The six largest markets in Europe in the past year were Germany, Italy, Great Britain, Romania, Greece, and France. In these countries, a total of 8 GW to 9 GW were installed, which corresponds to approximately 85 percent of the European market. As always, photovoltaics are concentrated in just a few regions within Europe.
In Belgium, the expansion of photovoltaics is very advanced. With regard to the installed capacity per inhabitant, Belgium is ranked third in Europe behind Germany and Italy.
The Belgian market is divided into three parts: Flanders, Wallonia, and Brussels, each of which independently promotes photovoltaics, most successfully in Flanders where the greatest number of PV plants by far are installed. But there are uniform national regulations. These include support for small plants through “green certificates” and net metering. This explains the high market share of the residential segment in Belgium. Only in Denmark is this share higher.
In Wallonia, operators of PV plants that provide more than 10 kW are obliged to consume 50 percent of the produced solar energy themselves. This regulation limits the development of the commercial and industrial segments. Plants with more than 250 kW capacity are not promoted effectively. Nationwide, the essential prerequisites are lacking for the erection of large-scale PV plants.
With 10.3 GW installed in 2013, Europe accounted for 28% of the global market.
In order to meet the demand for energy, Bulgaria must import about 60 percent of the necessary energy raw materials, especially uranium and hard coal. Domestic energy sources include brown coal, hydropower, and biomass. In order to reduce dependence on imports, the government decided to increase the share of renewable energies in the energy supply system from 10 percent (2011) to 16 percent (2020). Feed-in tariffs are the most important promoting instrument.
Through these, photovoltaics in Bulgaria experienced a notable upswing in 2012. With regard to increasing costs, the government then implemented measures intended to slow down further expansion. Retroactive network connection fees, which came to 76 million euros, have in the meantime been extensively repaid following a successful contestation. But the investors are now holding back.
Through a change in the law, since January 2014 a duty in the amount of 20 percent is payable on the revenue from energy production through wind power and PV plants. Furthermore, the government plans to charge a network utilization fee in the amount of approximately €1.25/MWh.
It has emerged that Bulgaria can reach the 16-percent target a few years in advance of 2020, so that there is no more reason for the government to force support for renewable energies. Because energy prices are lower than anywhere else in the EU, solar energy is still a long way from grid parity despite reductions in cost.
In Denmark, support for photovoltaics is very simple: The operator of a PV plant can offset the produced solar energy against the consumed gray energy (net metering), and because the household electricity prices in Denmark are the highest within the EU, this investment is worthwhile, since grid parity has been reached. That was the case around the end of 2011, so that the market in 2012 grew almost 40-fold in relation to the preceding year.
In November 2012, the government reacted and restricted net metering. The energy quantities can only be offset on an hourly basis. Solar-produced kilowatt hours, for which there is no corresponding consumption within one hour, are compensated on feed-in to the network, whereby the remuneration is reduced on an annual basis. This year the operators of PV plants will receive 1.17 DKK/kWh (€0.157/kWh) and in the coming year 1.00 DKK/kWh (€0.134/kWh).
The energy prices for business and industry in Denmark are significantly lower; the market therefore consists almost entirely of the residential segment. The economic prerequisites are lacking for the erection of large-scale PV plants.
With a share of around 80 percent of energy production, nuclear energy ensures that the country’s CO2-emissions are relatively low in France. The stimulus to use renewable energies is, therefore, weaker than in Germany for example, and is essentially based on the need to reduce the country’s worrying dependence on nuclear power. Photovoltaics are promoted in France through feed-in tariffs and tenders.
However, the government is endeavoring to limit the size of projects. This has already been the case for many years with wind power. In photovoltaics, for example, this is reflected in the tender announced in April 2013 (for the period from 2013 to 2015) for smaller and medium-sized roof-mounted plants with a maximum capacity of 250 kW. The entire tender volume was decreased from 400 MW (as originally announced) to 120 MW.
In July 2013, the energy regulatory authority CRE (Commission de Régulation de l’Énergie) decreased the feed-in tariffs, whereby the capacity class and the external image of PV plants play a large role. PV plants that are fully integrated into the shell of the building and do not provide more than 9 kW, are rewarded with a relatively high feed-in tariff (€0.297/kWh). Large, open-space plants with a capacity of between 100 kW and up to a maximum of 12 MW receive only a fraction of this tariff (€0.0776/kWh).
Based on the stable, general conditions established over many years, which were created by the Renewable Energy Sources Act (EEG), Germany was the driving force behind market development in Europe from 2004 to 2012. The legally determined feed-in tariffs, which are guaranteed for 20 years, ensure the economic viability of the investments, and started a photovoltaics boom in 2004 that culminated in three “golden years” (2010 to 2012), during which approximately 7.5 GWp per year were installed respectively.
With 3.3 GW solar power installed in 2013, Germany experienced a 57% PV market steep decrease compared to 2012 (7.6 GW).
At the end of 2013, 36 GW were installed in Germany and the share of solar energy in the German energy market climbed to 5 percent – in some regions, however, this is significantly higher. Yet growth has slowed down, as the government had massively decreased the feed-in tariffs by the end of 2012. These are to be adjusted on a monthly basis now, so that the annual expansion moves within a “corridor” of between 2.5 GW and 3.5 GW. This target was already reached in 2013.
In 2012, the segment of open-space plants (ground-mounted) represented somewhat more than 40 percent and had thereby reached an interim peak. Installation had been greatly streamlined over the course of the years, so that the plants could be constructed within ever shorter periods. The planning and erection (Engineering, Procurement and Construction, EPC) of open-space plants was optimized in Germany.
The latest amendment of the EEG law is to come into effect in August 2014 and will lead among other things to the annual installation of open-space plants being limited to 400 MW. When this limit is reached, open-space plants constructed beyond this can only sell their energy “outside the EEG framework”. New business models that should enable economically viable operation “without the EEG law” through the direct marketing of solar energy are already being tested.
In spite of the extremely high levels of sun irradiation in comparison with the rest of Europe, as well as the lack of fossil fuel deposits, by the end of 2008 only 20 MW of solar energy were installed.
The introduction of relatively high feed-in tariffs in February 2009 expanded the market volume enormously. From 2009 to 2013, the PV market grew almost 30-fold. In contrast to Spain, the sovereign debt crisis in Greece has not affected the development of the PV market yet. By the end of 2013, the market volume had grown to 1 GW and the installed capacity to 2.6 GW.
Feed-in remuneration began in 2009 at a very high level. Operators received €0.40/kWh for energy produced by large-scale PV plants (over 100 kW) and as much as €0.55/kWh was paid for small roof-mounted plants (up to 10 kW), which despite the high levels of sun irradiation was significantly more than in Germany. The tariffs have been repeatedly reduced since then. Moreover, the government decided on massive retroactive cutbacks in financial support: In addition to the special levy of 25 to 42 percent on the agreed feed-in tariffs already decided in May 2013 for the period from July 2012 to July 2014, a 20 percent retroactive deduction from the payments for 2013 is also planned. In conjunction with the tax of 40 percent levied on the plant operator’s revenue, the market has shrunk significantly since the second half of the year.
Because the proposed introduction of nuclear energy was defeated in a referendum, the need for the Italian government to expand renewable energies in order to reach its climate protection goals is even greater. With the “National Energy Plan”, the goal was set to increase the share of renewable energies in end energy consumption from 5 percent (2011) to 17 percent (2020).
Italy experienced a 70 percent market decrease in 2013 compared to 2012.
The most important support instrument is the feed-in remuneration determined in the “Conto Energia”. The relatively high tariffs, as well as the high levels of sun irradiation, resulted in the Italian PV market temporarily becoming the largest in Europe. In 2011, PV plants with a total capacity of almost 9.5 GW were connected to the Italian energy grid – 2 GW more than in Germany. This boom was short-lived however, as in the following two years the market shrank by approximately two thirds respectively.
By the end of 2011, the government had already limited the annual sum of the feed-in remuneration, and this sum reached its cap in June 2013. The support volumes determined by the state in the amount of 6.7 billion euros were exhausted. Consequently and since then, newly installed PV plants do not receive any remuneration for the time being in accordance with Conto Energia.
Several European markets like Italy, UK, Romania, and Greece were close to the gigawatt mark in 2013.
Since grid parity in Italy was reached long ago thanks to greatly reduced costs for photovoltaics, net metering can be a useful support instrument. Off-setting the produced solar energy with the consumed gray energy was also temporarily possible for the operators of large-scale PV plants. However, the capacity limit for net metering was reduced in February 2013 to 200 kW.
Because of the rich coal deposits in Poland, energy supply depends on this fossil fuel to about 90 percent and the country’s energy policies are heavily influenced by the coal lobbies. This is also one of the reasons why the government has only hesitantly supported photovoltaics in the past. Because of hastily announced changes to the general conditions that are yet to be realized, photovoltaics could not previously be developed in Poland.
From 2005, the Polish government tested a quota system. Only wind power profited from this however. At the end of 2012, a feed-in remuneration was announced and soon after related trade in “green certificates”. Since the end of 2013, it has been apparent that both instruments are meant to be supplemented with tenders and investment costs subsidies. Nowhere in Europe are the support policies more complicated than in Poland.
Until recently, it was considered a certainty that PV plants up to 40 kW capacity would be supported with feed-in remuneration of about €0.32/kWh.
However, another regulation is now contained in a draft bill. The feed-in tariff is now based on the very low energy prices in Poland. Operators of PV plants can, if there are no more changes to the draft bill, only expect 80 percent of the current price, which corresponds to about €0.04/kWh. One can, therefore, no longer speak of a feed-in remuneration that promotes solar energy production. Investment costs subsidies are supposed to ensure that, in future, small PV plants are built at all.
Large-scale PV plants must win tenders – possibly even against coal-fired power plants, which are considered to be “green” generators in Poland if they burn a certain quantity of solid biomass (co-firing). In this case, these coal-fired power plants could underbid any large PV plant. Photovoltaics only has a chance, if a regulation is implemented ensuring that 25 percent of the supported new plants may have a maximum capacity of 1 MW.
By 2020, renewable energies in Romania are to cover at least 43 percent of the demand for electricity. This ambitious goal appears attainable, as large hydropower plants already contribute approximately 25 percent of the power supply.
Energy policy support for renewable energies in Romania has already been successful twice, almost from the start. Just as suddenly as the upswing in the use of wind power in 2010 occurred, photovoltaics started. Until 2012, it played almost no role, but just one year later Romania became one of the five largest PV markets in Europe.
Romania decided in favor of the quota model. The government prescribes to energy providers and energy-intensive businesses how much energy must come for renewable sources. To do this, they require a certain number of “green certificates”, which they must acquire if they do not fulfill the quota. The producers of renewable energy are rewarded with these certificates, the price of which fluctuated between 38 euros and 58 euros in 2013.
Investment security is relatively high, as all producers of renewable energy receive a certain number of these certificates per megawatt hour for a period of 15 years. Operators of wind parks initially received two certificates and operators of solar parks received six. Because the costs of photovoltaics fall more quickly than the costs of wind power, the strict ratio of 3:1 for certificate allocation resulted in a change in the ranking last year. Photovoltaics is now considered to be an attractive investment and for the first time there was more investment in solar plants than in wind parks.
In order to stabilize the value of the certificates, whose price had fallen lately, the government has already reduced the number of certificates twice – with the result that photovoltaics now only receives three certificates per megawatt hour.
The PV potential in Spain is still largely unexploited.
State support for renewable energies in Spain is full of contradictions. Since 2007, energy policy has fluctuated between generous and restrictive, with the result that the expansion of both wind power and photovoltaics has almost come to a standstill. Initially, the Real Decreto 661/2007 of May 2007 started a kind of gold rush in Spain, as the feed-in remuneration for solar energy at that time was not much lower than in Germany, even though the levels of sun irradiation in the south of Spain are about twice as high. Operators could expect double-digit returns.
This generous support catapulted the Spanish PV market with 2.6 GW in 2008 to the forefront within Europe. But within a few months, the cost of this support caused the government to reduce the feed-in remuneration and to cap expansion. From 2009, no more than 400 MW were to be installed annually. Though this limit was slightly exceeded in 2010 and 2011, the average for the years 2009 to 2012 was complied with.
The European sovereign debt crisis, which Spain was particularly heavily effected by, had drastic effects on support for renewable energies here. This is because the energy market is more heavily subsidized in Spain than in the other EU countries. Support for energy production and, therefore, for renewable energies also made a large hole (24 billion euros in 2011) in the deficient national budget, so that the government ended support for photovoltaics.
Although the economically viable operation of open-space plants is, in the meantime, still mathematically possible in the south of Spain without remuneration due to the high levels of sun irradiation, the investors have been holding back.
The alpine locations in Switzerland are distinguished by a high level of sun irradiation and low temperatures, so that PV plants obtain particularly high yields there. Following the example of the German EEG law, the introduction of a cost-covering feed-in remuneration (“kostendeckende Einspeisevergütung” – KEV) at the beginning of 2009 did not cause the same boom in Switzerland as in the neighboring country. The reasons for this are financial. As in Germany, the KEV is financed by a cost apportionment for each kilowatt hour of energy sold, so that the national budget is not burdened. In Switzerland, however, this apportionment was limited from the start to 0.014 SFr/kWh (€0.0115/kWh). As early as February 2009, the available means were exhausted by PV plants already registered. The waiting list, which currently consists of 30,000 plants, is now gradually being processed.
The annually installed capacity has been rising steadily in Switzerland and doubled in the years 2011 and 2012. With reference to the reduced system costs, the government reduced the KEV from the start of 2014, graded according to capacity. Small plants with less than 30 kW can now expect to receive €0.29/kWh, large plants with more than 1 MW can expect €0.12/kWh. In addition to this, the remuneration period was reduced from 20 to 15 years.
Just three months later, support for photovoltaics was modified. The KEV will apply unrestricted as of 1 April 2014 only to PV plants with more than 30 kW capacity. Operators of small plants (less than 10 kW) receive an investment costs subsidy which comes to a maximum of 30 percent instead of the KEV. Anyone who operates a medium-sized plant (10 to 30 kW), can choose between the KEV and the subsidy.
Due to rich natural gas deposits and correspondingly efficient energy production, the Dutch government previously had no reason to promote renewable energies. The lack of attention to renewable energies in the Netherlands must further be divided between photovoltaics, wind power, and biomass.
Until now, the government has structured its sparse measures accordingly. Similar to Denmark, the primary support for photovoltaics in the Netherlands is net metering (free of cost for the state). The regulation applies to PV plants up to 15 kW and has, nevertheless, resulted in moderate market growth from 2011, as it is absolutely worthwhile in view of the high household electricity prices. Larger plants, however, can only be economically viable using new business models for the investor. Energy supply contracts with consumers in close proximity form the basis for the first, isolated “community-based systems”.
High levels of sun irradiation and relatively high, quickly growing energy prices are the two most important prerequisites that have belatedly accelerated development of the PV market in Turkey.
At this rate of growth, the ground-mounted solar energy plants will presumably have a large share of the market, as demand for electricity in this country is rising quickly with an average growth rate of 6 percent between 2006 and 2011. The government is endeavoring to reduce dependence on fossil fuels, which for the most part have to be imported, and to increase the share of energy production using renewable energies to 30 percent by 2023. Rising energy prices have resulted in photovoltaics reaching grid parity more quickly than expected.
In January 2011, new feed-in tariffs were introduced in Turkey. Energy from PV plants is remunerated at about $0.133/kWh (€0.097/kWh), with a maximum bonus of $0.05/kWh (€0.036/kWh) if locally produced components are used (local content). Commercial and industrial energy consumers can reduce their energy bills through net metering.
At the end of 2012, not even 15 MW were installed in Turkey. The government wants to give the market a strong push using tenders for PV plants with more than 1 MW capacity. The first tender round in June 2013 was oversubscribed almost by a factor of 15. A volume of 600 MW received a response of 496 project proposals and a total capacity of 8,900 MW.
Insofar as different projects compete for individual network connections, a bidder procedure is implemented that is moderated by the national energy network operator, TEIAS. The applicants must indicate a remuneration below the feed-in tariff and the supplier with the lowest tariff is awarded the contract.
Large-scale PV projects are subject to a formal approval procedure. The application for an operator license is the most important prerequisite for receiving feed-in remuneration.
Turkey has an almost untapped PV potential.
The British government is reacting to climate change by building nuclear power plants, developing shale gas deposits and erecting large wind parks at sea. Wind power on land is only wanted in Scotland, so that in England and Wales photovoltaics are at the forefront. They are promoted through feed-in tariffs and green certificates (Renewables Obligation Certificates, ROC) .
With more than 120 large-scale PV farms recently approved for construction, the UK is fast becoming a hugely attractive market.
The last time the British regulatory authority, Ofgem (Office of Gas and Electricity Markets), reduced the feed-in tariffs was in May 2013. However, this only applies to small PV plants up to a maximum capacity of 50 kW, which can each expect a tariff of between €0.180/kWh and €0.152/kWh, depending on their size. As before, all larger plants receive €0.131/kWh.
State support has been very successful over the past three years. The British market started brilliantly in 2011 and in 2013 was among the few countries in Europe still experiencing growth. The market volume has exceeded 1 GW. Altogether, 3 GW are currently installed.