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Global Futures Report 2013 - Solar PV

56 RENEWABLES GLOBAL FUTURES REPORT 06 EVOLUTION OF TECHNOLOGIES, COSTS, AND GLOBAL Market Growth transmission lines across the water. The deciding factor is how the infrastructure costs are allocated between transmission and the turbines and offshore plant itself.”20 Technology experts envisioned definite technology evolution for offshore turbines. Possible future innovations include floating off- shore configurations, offshore logistical platforms that can service entire groups of offshore turbines, longer lifetimes (now 25 years versus 20 years for onshore), and larger turbine sizes. One wind industry executive believed that offshore turbine sizes will reach at least 10 MW in size. Experts saw the maturing of supply chains, including vessels, harbor facilities, operations and maintenance and logistics strategies, new foundation concepts, fewer moving parts, new two-blade concepts, gearless turbines, and a greater focus on reliability and logistics to reduce operating costs and downtime.21 Solar PV Many solar PV experts and visionaries were very optimistic about the future of solar PV. “A lot of new markets for solar PV are going to pop out of the woodwork as the cost per watt declines—the sky is the limit,” said one. Another lamented persistent perceptions of solar PV as “exotic,” when in fact its maturity is beginning to rival wind and geothermal. One longstanding industry expert projected that global solar PV capacity could reach 400–800 GW as soon as 2020. And by 2050, global solar PV capacity could reach as high as 8,000 GW, one visionary challenged.22 Expert estimates in 2011 for the annual solar PV market by 2015 ranged from 23 GW to 43 GW, and for the annual market by 2020 from 40 GW to 160 GW. (The annual market in fact reached a record 30 GW in 2011, as reported in mid-2012 after those estimates were made.) Europe accounted for 75% of the global market in 2011, but some experts believed that this would shift before 2020, with Europe’s market share declining below 50% as markets in China, Japan, and other Asian countries take hold.23 (See also Chapter 5.) For a long time, many considered “grid parity” to be the “holy grail” of solar PV, dating back to the 1980s. Generally, “grid parity” is accepted by most to mean equivalence of solar PV generation costs with retail electricity prices. However, solar PV experts pointed out that this concept can be misleading or distorted due to subsidies, differential electricity prices across customer classes, seasonal or peak pricing, “smart” pricing plans that link prices to grid conditions, and net metering rules.a Grid parity including subsidies matters to investors, while grid parity excluding subsidies matters to policy- makers (as an indication that cost- or price-based policy support is no longer needed).24 In addition, if customers face “time of day” (peak) pricing, or prices based on grid conditions, then grid parity may well exist at peak times (or on high-demand days) but not at other times. Furthermore, financial experts pointed out that “cost of electricity” metrics, including the concept of grid parity, are not as important to investors as financial rate-of-return metrics—that is, does a solar PV project meet a given rate-of-return threshold? The answer can depend on factors outside of conventional “grid parity” assess- ments, and financial experts asserted that finance, not cost, has become the key constraint for solar PV markets.25 Many solar PV experts claimed that grid parity already exists in some locations around the world for certain types of consumers, although such claims often mean costs including subsidies rather than unsubsidized costs. Regions cited include Germany, Italy, Japan, Spain, parts of India, and parts of the United States, including California and Hawaii. But there was little consistency among expert claims.26 A typical comment was, “Yes, I agree that solar PV is close to grid parity in many places, and I would expect grid parity in parts of the United States, Japan, and Europe by 2015.” One expert expressed optimism that by 2020, fully 30% of global electricity sales would be at retail price parity with solar PV. Another claimed that grid par- ity in the United States already existed in Hawaii and would come to California within 3–5 years, and to several other states by 2020. Another believed that “about 20% of the U.S. population is already at grid parity, and most of the rest will get there by 2020.” The IEA ETP (2012) “Solar PV Roadmap” also shows grid parity by 2020 for most applications (in many regions).27 Historically, one common metric for PV progress has been module price in dollars per watt. This metric has undergone a long decline that has accelerated in recent years, and in 2011 it was approaching the historic “holy grail” level of $1/watt. Many experts pointed to the dramatic reductions in this metric in recent years. Said one Chinese solar PV industry manager: “Since 2000, manufacturing cost has been reduced by 3–4 times, from $6/watt in 2000 to below $1.50/watt today; back then, we thought $3/watt was going to be a big achievement, but we went right past that.” Several experts (in 2011) predicted prices below $1/watt in the near future, including prices down to $0.80 for crystalline silicon before 2020.28 REN21 gives current solar PV costs in Europe of 22–44 US cents/ kWh for rooftop installations and 20–37 US cents/kWh for utility- scale installations, depending on system size, efficiency, latitude, local solar radiation conditions, and other factors, although there are a wide range of estimates cited from other sources, including lower numbers in the 9–13 cents/kWh range, and much controversy a) In some countries, grid parity is also confounded by public subsidies to retail consumer electricity prices. Cost- or price-based policy support is generally a capital investment subsidy or tax credit, or a feed-in tariff (preferential pricing). However, other forms of policy support may continue to be needed even at grid parity, such as net metering rules, interconnection standards, and guaranteed-purchase mandates. See Endnote 24 for this chapter for details. See footnote on page 26 for definition of net metering.

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