This Reneweconomy article points at China's problems in meeting its Solar PV objectives of about 14GW for 2014. In 2013 as Europe reduced its PV demand, China basically rescued its PV business by introducing a $0.15/kWh incentive which resulted in about 12GW of mostly utility scale PV capacity in western China. The returns for investors exceeded 10% which explains the rapid deployment.
For 2014 policymakers wanted to move a substantial portion of new PV to rooftop installs. Its more difficult to ramp installations on lots of rooftops compared to large arrays in open fields. Its also more labor intensive and more expensive and the incentives for rooftop installs are not much higher, so the investor returns are substantially lower. As a result, as the article points out, Deutsche Bank analysts think the 14GW target may be in jeopardy.
I’m only bringing this up because it illustrates the direct link between subsidies and PV installs. Subsidies almost completely determine the size of the PV market. Overall worldwide, subsidies pay for more than 50% of PV capacity. This means that until PV costs come down by more than 50% from current levels, PV industry survival is dependent on subsidies continuing, and PV market size is determined by the amount of subsidy.
While world combined PV subsidies last at current levels (which overall are reduced from 2011 levels), PV will grow and be a profitable business, but will not be a significant contributor to reducing CO2 emissions.
The cost reduction path of PV is well understood and is slow and painful. If subsidy support is maintained for long enough, PV costs will eventually come down to where the business can grow substantially, but affordable energy storage and other constraints will then become the factors limiting growth.
By Edmund Kelly
For 2014 policymakers wanted to move a substantial portion of new PV to rooftop installs. Its more difficult to ramp installations on lots of rooftops compared to large arrays in open fields. Its also more labor intensive and more expensive and the incentives for rooftop installs are not much higher, so the investor returns are substantially lower. As a result, as the article points out, Deutsche Bank analysts think the 14GW target may be in jeopardy.
I’m only bringing this up because it illustrates the direct link between subsidies and PV installs. Subsidies almost completely determine the size of the PV market. Overall worldwide, subsidies pay for more than 50% of PV capacity. This means that until PV costs come down by more than 50% from current levels, PV industry survival is dependent on subsidies continuing, and PV market size is determined by the amount of subsidy.
While world combined PV subsidies last at current levels (which overall are reduced from 2011 levels), PV will grow and be a profitable business, but will not be a significant contributor to reducing CO2 emissions.
The cost reduction path of PV is well understood and is slow and painful. If subsidy support is maintained for long enough, PV costs will eventually come down to where the business can grow substantially, but affordable energy storage and other constraints will then become the factors limiting growth.
By Edmund Kelly
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