Pressure on Prices and Innovations

By Karl-Heinz Remmers, CEO of Solarpraxis AG

Dear Readers,

Today’s PV market is now completely different to that of one year ago when the previous edition of this brochure was published. Thanks to a dramatic fall in the price of solar modules and an equally significant drop in the price of inverters and other components, solar power is now economically viable in many new areas. Grid parity, which has for a long time been a crucial hurdle to cross in terms of market development, has been achieved far more quickly than expected in many countries.

Additionally, PV solar power is now so much cheaper than electricity from concentrated solar power (CSP) plants that the future of these plants is being brought into question before the technology has even gained a strong foothold. At the same time, international technology introduction programs and market distribution have changed dramatically. While in Europe almost all feed-in tariff (FIT) programs have been significantly reduced, or as is the case in Spain, completely suspended, many countries worldwide have created or adapted market launch programs, meaning that an ever-rising number of countries are installing a continuously higher amount of solar power systems.

Germany was for a long time a step ahead in terms of system prices, but now at least the Chinese have caught up, and it seems that further countries will soon be following suit. In addition to increased efficiency in terms of implementation, the extremely diverse wages play an important role in this. It is usually the case that in countries which have created stable legal conditions for implementing photovoltaics, system prices fall very rapidly in line with the development of the supply chain.

However, there are great regional variations, an issue which, among others, we want to tackle in this brochure, by striving for international transparency in terms of prices and technology. In doing so, we hope to make solar electricity, which in many countries is already available at significantly less than 10 euro cents per kilowatt hour (kWh) (thanks to regulations ensuring the best system prices), even cheaper. Different forecasts suggest that prices between 2 and 3 cents/kWh will be possible in the most suitable locations around the world by 2020 at the latest, making it possible for the market volume to expand significantly. As a result, it has been predicted that an annual worldwide installation of 200 gigawatts peak (GWp) or more is likely.

Even today, solar electricity is lowering Germany’s peak load power prices dramatically. On certain days, the currently installed capacity of more than 25 GWp leads to electricity prices of zero at the German Energy Exchange, and even during the winter of 2011/2012, solar power produced in Germany was exported to France to counterbalance an electricity shortage. Despite eight nuclear power stations being disconnected during 2011, Germany has remained a net exporter of electricity and market prices in the day are significantly lower than power prices before the nuclear plants were shut down. This is all thanks to solar power.

The rapid changes have resulted in incredible pressure on prices and innovations, which are a burden on the entire industry and require considerable adjustments to be made in many places. Further technical developments are consequently needed in the large power plants sector to ensure that the ambitious targets are achieved.

As in previous years, we want this brochure to reflect the technical and commercial advances made in the area of large solar installations. In doing so, we hope to pave the way for the installation and successful operation of constantly improving systems at continually lower prices. It is clear that PV power generation lost its image as being “too expensive” at an impressive speed, and it is now seen as the power production technology which is the quickest to install and the most low-maintenance, while also being among the cheapest. It has achieved all this without consuming resources and only produces very low levels of CO2.

Climate protection and a lower level of dependency on imported raw materials, thanks to the flexibility and stability of the technology, are an added bonus, and form yet another incentive for further developing this technology rapidly worldwide.

Karl-Heinz Remmers