When we launched the PV version of the StratoSolar web site early last year, one of our central themes was the unsustainable cost of PV subsidy. Events in the second half of 2011 seem to bear out this prediction with a vengeance.
Overly generous European FIT subsidies created a PV supply bubble that has now burst. In the last few years Germany alone has invested over $100B in PV and German electricity consumers will spend over $200B in excess electricity costs paying off this investment over the next 20 years. There is a growing political backlash as the extent of the costs become apparent. Germany is aiming to limit new installed PV capacity to an average of 3GWp in 2012 and subsequent years, down from around 7.5GWp in 2010 and 2011. Italy, in the grip of austerity is aiming for 1.4GWp in 2012, down from 6.9GWp in 2011.
Italy and Germany combined were about 60% of the entire world PV market in 2010 (11GWp of 16GWp) and 2011 (14.4GWp of 23GWp). Lower panel prices and continuing subsidies should lead to some growth outside of Europe, particularly in the US and China, but not enough to make up the European shortfall. Optimistically 2012 world PV installations might be 23GWp, but a more realistic estimate would be around 16GWp
The bottom line is that growth in the PV industry is going to be much lower going forward. PV panels are being sold below cost as a major industry restructuring is eliminating the oversupply from thousands of uncompetitive big and small PV businesses worldwide, including China. PV panel prices will stabilize at around $1.00/Wp but at this price level the slower growth will lead to decades of PV panel prices too high to make PV electricity competitive without subsidies even in the best markets like California with lots of sunshine and high electricity prices. This is borne out in the current small solar energy market size projections from the EIA, the IEA, the World Bank and others.
Germany is an object lesson in all the problems of current PV technology. Being a cloudy northern country, its panels make less than half the electricity they would in southern California or Spain. Its installed 25GWp of PV only has a utilization of about 8% and produces the power of about 3GW of gas, coal or nuclear plants. However the installed PV capacity is sufficiently large (providing only 3% of total electricity) that the unpredictable intermittent nature of the supply is already causing problems for the German electricity grid. The uncertain PV capacity cannot count against maximum electricity demand and is effectively an expensive fuel saver that cannot replace existing capacity such as nuclear.
25GWp of StratoSolar PV in Germany would produce the power of over 10GW of gas, coal or nuclear power plants, and the fully predictable electricity would integrate easily into the grid, add to supply capacity and support the goal of replacing nuclear power. At today’s PV prices the unsubsidized electricity produced would be considerably cheaper than current German electricity prices.
This is a stark contrast in the possible outcomes for the future of PV. Solar energy is the most abundant clean energy resource, widely accepted as capable of providing for all world energy needs. PV technology has made enormous strides and has clearly demonstrated its practicality and scalability. However it is still at least a factor of two too expensive at the best sunny locations and on its well-proven learning curve it will take a cumulative installed capacity of between 200GWp and 500GWp for the cost to halve. The 2011 cumulative installed PV capacity was about 62GWp and at likely PV installation rates getting to 300GWp will take at least a decade. This will not solve the problems of unreliable supply due to weather or the lower utilizations at cloudy northern locations.
Stratospheric PV platforms solve all three problems (cost, reliability, utilization) and would seem to be a reasonable technology to make PV electricity practical today as opposed to the distinct possibility of never as government subsidies continue to disappear.