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Solar Power Global and European TrendsKey Developments
Dr. James Watson, CEOIstanbul, GUNDER conference, 30th May 2016
2
What is SolarPower Europe?
• ThenewEPIA(EuropeanPhotovoltaicIndustryAssociation)
• Amemberledassociationrepresentingorganisations activealongthewholevaluechain
• Shapestheregulatoryenvironmentandenhancesbusinessopportunities
• SolarPower Europe – The new European Photovoltaic Industry Association (EPIA) – hasbeen promoting solar electricity in the European market for over 30 years. Werepresent our members, who are active along the whole solar value chain and inrelated business sectors.
Title and date 3
Our Members IncludeUpstream Members include: Downstream Members include: National Associations include:
3
1GLOBAL STATUS AND OUTLOOK FOR SOLAR
THE GLOBAL SOLAR PV MARKET
>50 GW in 2015
© SolarPower Europe 2016
GLOBAL SOLAR PV ANNUAL GRID CONNECTIONS 2000 - 2015
THE GLOBAL SOLAR PV MARKET
>228 GW by 2015
GLOBAL SOLAR PV TOTAL GRID CONNECTIONS 2000 - 2015
© SolarPower Europe 2016
Title and date 7
A SOLAR DAWN IS RISING
COP21 has added urgency: The International Solar Alliance was launched and targets make solar a necessity
Countries across the world already choosing solar since Paris
2EUROPEAN STATUS AND OUTLOOK FOR SOLAR
THE EUROPEAN SOLAR PV MARKET
>8 GW in 2015
EUROPEAN SOLAR PV ANNUAL GRID CONNECTIONS 2000 - 2015
© SolarPower Europe 2016
THE EUROPEAN SOLAR PV MARKET
>96 GW by 2015
EUROPEAN SOLAR PV TOTAL GRID CONNECTIONS 2000 - 2015
© SolarPower Europe 2016
Title and date 11
Europe: Once the cradle of solar
EVOLUTION OFANNUAL EUROPEAN SOLARPVGRID-CONNECTION SHARESCOMPARED TOOTHERREGIONSFROM2010 - 2015
Title and date 12
Solar a truly global phenomenon
EVOLUTION OFCUMULATIVE EUROPEAN SOLARPVGRID-CONNECTION SHARESCOMPARED TOOTHERREGIONSFROM2010 - 2015
TraditionalMature-TransitionImmature-TransitionEmergingUntapped
THE EUROPEAN SOLAR PV MARKET
STATUS OF EUROPEAN SOLAR MARKETS IN 2015
© SolarPower Europe 2016
THE EUROPEAN SOLAR PV MARKET
In 2015
4%Of the EU Electricity demand was
covered by PV
© SolarPower Europe 2016
POWER GENERATION CAPACITIES ADDED IN THE EU 28 IN 2015
Source: EWEA, ESTELA, SOLARPOWER EUROPE
THE EUROPEAN SOLAR PV MARKET
Title and date 16
SOLAR POWER OUTLOOK IN EUROPE
THE EU MARKET IS STABILISING AROUND 7-8 GW, THIS TREND IS EXPECTED TO CONTINUE TO 2020
SOLAR POWER A MAJOR PLAYER IN 2030
3A MOVE TO TENDERS IN EUROPE
• Tenders are a procurement mechanism by which public authorities solicit bids for a given amount of renewable energy supply (MWh) or capacity (MW), generally based on price.
• Although tenders and auctions are used as synonyms, price is the only award criteria in auctions (combined with qualifying requirements), while tenders may combine price with other award criterions.
DEFINITION OF TENDER
TENDERS INCREASINGLY USED WORLDWIDE
Source: IRENAbased onREN21– Renewables 2015GlobalStatus Report
EUROPEAN STATE AID GUIDELINES
Since 1July2014,newrules fornewRESinstallations(operatingaid):
Integration inthemarket
•From 2016,RES installations:
•Sell onthemarket andreceive apremiuminadditiontothemarketprice
•Bear balancing responsibilities
•Receive nosupportduring periods ofnegative prices
Introductionofcompetitive bidding
•Transitional phase 2015-2016:•Aid granted through competitivebidding processes foratleast5%oftheplanned RES capacity
•From 2017:•Aid granted viacompetitive biddingprocesses for100%oftheplanned REScapacity (see exceptions)•Process opentoallgenerators andtechnologies (see exceptions)
Special regime forsmall installations
•Installationsbelow 500kW still eligibleforFITs (3MWor3generating units forwind)
•Nocompetitive process required forinstallationsbelow 1MW(6MWor6generating units forwind)
EUROPEAN STATE AID: EXEMPTIONS
Tendersopeninprinciple toalltechnologies,buttechnology-specific approach still possible:
• Long-termpotential ofatechnology• Needtoachievediversification• Gridstability• Systemintegrationcosts• Avoid distortions onrawmaterial markets (biomass)
Tendering asarule butMemberStatescan derogate if:
• Onlyoneoraverylimitednumberofprojectsorsitescouldbeeligible;or
• Thebiddingprocesswouldleadtohighersupportlevels;or• Thebiddingprocesswouldresultinlowprojectrealisation rates.
So far, only 5 countries are using tenders for solar in Europe:
• France: systems between 100-250 kWp and above 250 kWp• Germany: pilot programme for ground-mounted installations
between 500 kW and 10 MW. • [Poland: upcoming tenders for installations above 40kW (bill
approved)]• The Netherlands: SDE+ scheme• UK: « contract for difference » for systems above 5 MW• Spain: Possible introduction
GROWIND TREND IN EUROPE
NEED FOR STABILITY
• TheStateAidGuidelinesareatransitiontool,thekeyremainstohavestability forinvestments.
• ThismeansthatFiT shouldbehonoureduntiltheendoftheperiodtheyaregrantedfor
• Noretroactivemeasuresshouldbeemployed
• Smallscaleofunder1MWmustremaintenderfreeandshouldbeeligibleforFiTs,whichisprecludedundertheStateAidGuidelines(500kwthreshold)
• StabilityofRegulationiskeyforinvestors,developers,society…
4MARKET SEGMENTATION
Title and date 25
DistributedSolar PV
CentralizedSolarPV
Prosumers
Producers
Grid injection, PPA, market design fit for variable generation
Self-consumption, support to the grid, increased competitionat retail level to unlocknew business models, leverage of new formsof financing
ONE TECHNOLOGY
TWO DISTINCT SOLAR PRODUCTS IN EUROPE
SOURCE: Becquerel Institute
ROOFTOP MARKETS DOMINATE IN EUROPE
• Newfinancingmodels appearing:
Ø Third-partyfinancingØ Jointpurchasing
Ø Cooperatives
Ø Crowdfunding
ROOFTOP SEGMENTS LED BY SELF-CONSUMPTION BUSINESS MODELS
PROSPECTS PER MARKET SEGMENT IN THE WORLD
5TRADE MEASURES AND SOLAR
Title and date 30
THE EU – CHINA MODULE AND CELL CASE
TRADE MEASURES IN EUROPE
• MeasuresintroducedinDecember2013,followingperiodofinvestigation(alsosubjecttoduties2012)
• ConsistofMinimumImportPrice(MIP)andduties(combined64%)
• MeasureswereduetoexpireinDecember2015,currentExpiryReviewextendsperioduptomaximumMarch2017whenarulingwillbemade
• AppliesonlytomodulesandcellsfromChina,Chineseinstallationsinothercountriesnotcovered
SOLARPOWER EUROPE APPROACH
• Nopositioninoriginalinvestigation,strictneutrality
• UnanimousdecisionoftheBoard,includingEuropeanmodulemanufacturers,inMarch2015toopposeextensionofmeasures
• SolarPowerEuroperecommendsthattraderelationswithChinaonsolarproductsreturntonormal,undistortedandfairtradeimmediately
• Theneedforastableregulatoryframeworkiscrucial
WHY DOES OUR ASSOCIATION TAKE THIS POSITION?
Module Production continues to decline in Europe – this is not about dumping or illegal subsidy
• Despitethetrademeasures,solarmoduleproductioncapacitiescontinuetoshrink.
• Therehavebeennonewentrantsandnonewproductionlinesinstalled.
EUROPEAN COMMISSION STUDY ON MODULE MANUFACTURING
• AstudybytheEuropeanCommission’sJointResearchCentre(JRC)inJune2015foundthatthemajorchallengeforEuropeansolarmodulemanufacturerstobecompetitivewasachievingeconomiesofscale.
• Thereportstatesthat:
• Multi-gigawattfactoriesareneededproducingmodulesat40Euroc/w(theMIPtodayis56Euroc/w)– noneexistinEurope.ChinaandotherAsiancountrieshavemulti-gigawattsites(4-5GWproduction)(ExecutiveSummary)
• ContinuedcostsavingsinAsianproductionwillcome fromcheaperpolysilicon,thinnerwaferswithsmallerkerflossesandincreasedefficiency(page20)
• ThereisnomentionofChinesedumpingorillegalsubsidyinrelationtochallengesforEuropeanmodulemanufacturersinthereport
THE IMPACT OF TRADE MEASURES
ArtificiallyhighpricesintheEUformodulesandcellsinanerawithouthighsubsidiesslowsdownsolardeployment:
• ItisclearthattheMIPisabovethemarketpriceofmodulestoday.TheEUhashigherpricesthantherestoftheworldbecauseoftheMIP.TheEUispayingmoreformodulesthanitneedsto.
• TodaysolarmustcompeteformarketincomethroughparticipatingintendersintheEU,priceisking.
• Themeasuresmakesolarmorecostlythanitreallyis,thismakesithardtocompeteintenders.ThismeansthatthegoalofsubsidyfreesolarinEuropeisbeingdelayedunnecessarily.
TRADE MEASURES: UNINTENDED CONSEQUENCES
Trademeasuresconsequences:
• IntheEUsystemcostreductionpricepressureiscurrentlyonbalanceofsystems(BOS)manufacturers(Voestalpine,ABB,Zimmermann,etc.)andprojectdevelopers,(BayWa r.e.,SolarCentury,Enel,etc.)becauseofthetrademeasures.
• Theseupstreamanddownstreamcompaniescannotreducecosts.
• Europeanconsumerspaymoreasthecostsofsolarareartificiallyincreasedforsociety. 0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
2007 2008 2009 2010 2011 2012 2013 2014 2015
BOS
Modul
CONSIDER ALTERNATIVE MEASURES
IndustrialPolicyasaspecifictooltosupportgrowthofindustry?
TheEuropeanCommissionJRCreportonmodulemanufacturingsuggeststhefollowing:
• GuaranteedLoans
• Accesstoventurecapital
• Publicfinanceforresearchanddevelopment
• Improvedinnovationthroughfunding
Alsobeawareofeco-designmeasuresinEuropewhichwillsetWTOcompatiblelegalstandardsforplacingmodulesandsolarproductsonthemarket– expectedAutumn2016
SolarPower Europe (European Photovoltaic Industry Association)Rue d’Arlon 69-71, 1040 Brussels, BelgiumT +32 2 709 55 20 / F +32 2 725 32 [email protected] /www.solarpowereurope.org
Learn more atwww.solarpowereurope.org