/CommercialResidential/CommercialResidential
New Jersey
System Size
Sector
JWPR076-Asplund
Territory
TABLE 5.1 (Continued)
c05Char Count=
c05
JWPR076-Asplund
January 12, 2008
12:40
Char Count=
95
Solar Power
TABLE 5.2 Support Mechanisms for Solar PV in Europe and China (Part 1 of 2)Austria
The amendment of the Austrian Eco Electricity Law(Ökostromgesetz) was passed by Parliament on May 23, 2006, andwent into force on July 1, 2006. But the tariﬀ negotiations are stillongoing. It is expected that they will be decided in October 2006.Key elements of the Law are: Electricity from all renewable energysources will be supported with €17million per year. 10 percentare earmarked for PV, with the same amount added by the FederalStates because of their coﬁnancing duty. The support will beconstant for 10 years, with a degressive support for three moreyears and thereafter an obligation for the utilities to accept theelectricity from a PV system for another 13 years.Some of the federal states have investment support schemes.
Belgium
Green Certiﬁcates (with guaranteed minimum price): 0.15 €/kWh;Flanders from January 1, 2006: 0.45 €/kWh for 20 years.Additional support in Flanders depends on whether the PVinstallation is done privately, by an enterprise, or by a farmer.The support schemes used are investment subsidies,eco-premiums, tax reductions, and interest reduced mortgages.
Cyprus
Feed-in tariﬀ: 0.22CYP£/kWh (0.391 €/kWh) for households and0.196CYP£/kWh (0.342 €/kWh for enterprises).If an investment grant is taken, the tariﬀ is reduced to 0.012CYP£/kWh (0.21 €/kWh).Investment grants for households, other entities and organizations,not engaged in economic activities are limited to a maximum 55percent of the eligible costs and the maximum grant is 16.5 k€(CY£9.500). For enterprises, the grant is 40 percent of eligiblecosts and the maximum amount of the grant is 12 k€ (CY£7.000).
CzechRepublic
New Law on the Promotion of Production of Electricity fromRenewable Energy Sources went into eﬀect on August 1, 2005.Producers of electricity can choose from two support schemes:Fixed feed-in tariﬀ for 2006: Systems commissioned after January 1,2006: 13.2CZK/kWh (0.466 €/kWh); Systems commissionedbefore January 1, 2006: 6.28CZK/kWh (0.222 €/kWh).
Denmark
Market price + Green Bonus; Green Bonus for 2006; Systemscommissioned after January 1, 2006: 12.59CZK/kWh (0.445€/kWh); Systems commissioned before January 1, 2006:5.67CZK/kWh (0.200 €/kWh). From 2007 onwards the annualprice decrease for new installations should be 5 percentmaximum.No speciﬁc PV program, but settlement price for green electricity 60Øre/kWh (0.08 €/kWh) for 10 years, then 10 more years40Øre/kWh.(Continues )
c05
JWPR076-Asplund
January 12, 2008
96
12:40
Char Count=
PROFITING FROM CLEAN ENERGY
TABLE 5.2 (Continued)Estonia
Finland
France
No speciﬁc PV program, but Renewable Portfolio Standard and taxrelief. Feed-in tariﬀ for electricity produced out of RES is 5.1ct/kWh.No PV program, but investment subsidy up to 40 percent, andtax/production subsidy for electricity from renewable energysources (6.9 €/MWh).New feed-in tariﬀ since 26 July 2006: (only valid for newinstallations) 0.30 €/kWh (0.40 €/kWh in Overseas Departmentsand Corsica) for 20 years.For building integrated PV installations there is a supplement of0.25 €/kWh (0.15 €/kWh in Overseas Departments and Corsica).50 percent of the investment costs are tax deductible. Lower VAT of5.5 percent on system costs (without labor). Accelerateddepreciation of PV systems for enterprises. Regional support stillpossible.The 5 percent tariﬀ degression for new installations was cancelled.All tariﬀs (old and new) will be adjusted annually in accordance tothe inﬂation during their duration.
Germany
Feed-in tariﬀ for 20 years with built-in annual decrease of 5 percentfrom 2005 onward. For plants, neither on building nor soundbarriers, the annual decrease is 6.5 percent from 2006 onward.Tariﬀs for new installations in 2006: Free-standing systems: 0.406€/kWh; Systems on buildings and sound barriers: 0.518 €/kWh <30 kWp,0.4928 €/kWh >30 kWp, and 0.4874 €/kWh > 100 kWp.For façade integration there is an additional bonus of 0.05 €/kWh.
Greece
New feed-in tariﬀ since June 2006: 0.45 €/kWh (0.50 €/kWh onislands) for systems <100 KWp; 0.45 €/kWh (0.45 €/kWh onislands) for systems > 100 KWp. Guaranteed for 20 years.Commercial installations are eligible to grants (30 percent to 55percent of total system costs) while small domestic systems areeligible for a 20 percent tax deduction capped at €500 per system(€700 in 2007).For 2020 a target to reach at least 700 MWp (500 MWp mainland,200 MWp islands) has been set.
Hungary
No PV speciﬁc measure, but feed-in tariﬀs for RES were set throughthe Electricity Act, which entered into force on January 1, 2003.According to Regulation No. 105/2003 (XII.29) GKM, theElectricity Suppliers are obliged to purchase electricity fromproducers utilizing RES, if their capacity is over 100kW. However,in the case of smaller plants, individual arrangements arepossible. There is no diﬀerentiation between the renewablesources. The current feed-in tariﬀs are: Peak: 25.30 HUF/kWh(€0.1); Oﬀ-Peak: 15.80 HUF/kWh (€0.063); Average: 19.36HUF/kWh (€0.077).
c05
JWPR076-Asplund
January 12, 2008
12:40
Char Count=
97
Solar Power
TABLE 5.2 (Continued)Ireland
Italy
The Alternative Energy Requirement (AER) tender scheme wasreplaced by a new Renewable Energy Feed-in Tariﬀ (ReFIT) schemein 2006. PV is not included.Feed-in tariﬀ: guaranteed for 20 years. The tariﬀs for 2005 and2006 are listed below, after that there is a 5 percent decrease fornew systems each year, but tariﬀs and degression will becorrected according to inﬂation (ISTAT). The original cap of 100MW to be reached in 2012 was raised to 500 MW (MinisterialDecree, February 6, 2006).1) Up to 20 kW: 0.445 €/kWh + “net metering,” i.e., each kWh usedat home is deducted from the electricity bill. (1 and 2 togetherhave a cap of 60 annually).
Latvia
Lithuania
Luxembourg
Malta
2) Between 20 kW and 50 kW: 0.46 €/kW.3) Between 50 kW and 1 MW: 49 €/kWh (cap of 25 MW annually).Feed-in tariﬀ but not PV speciﬁc:• Licensed before June 1, 2001: double the average sales price(∼0.101 €/kWh).for eight years, then reduction to normal sales price.• Licensed after June 1, 2001: regulators set price.A national investment program for RES has been running since2002.No speciﬁc PV support. National Control Commission for Prices andEnergy approves long-term purchase prices for renewableelectricity, and grid operators must give priority to its transport.A support scheme was set with a Règlement Grand Ducal inSeptember 2005. The Règlement has a cap of 3 MW by 2007. Thenew feed-in tariﬀ is 0.56 €/kWh for 20 years, but due to the factthat this is a Règlement and not a law, it is not binding.In addition, grants up to 15 percent are available, but limited to€900 per each member of a household (only the head of thehousehold can receive double that amount).Net metering for electricity from PV systems: 0.126 €/kWhSurplus exported to the grid: 0.063€/kWh, but there is a one-oﬀcharge of €46 for the extra meter.20 percent grant for rooftop PV installations
Netherlands
Feed-in tariﬀ: 0.097 €/kWh for 10 years and net metering up to3,000 kWh/year for existing systems.On August 25, 2006, the Minister of Economy announced theimmediate suspension of support for new electricity generationplants using renewable energy sources.(Continues )
c05
JWPR076-Asplund
January 12, 2008
98
12:40
Char Count=
PROFITING FROM CLEAN ENERGY
TABLE 5.2 (Continued)Poland
Tax incentives: no customs duty on PV and reduced VAT (7 percent)for complete PV systems, but 22 percent for modules andcomponents. Some soft loans and subsidies. A new law passed inApril 2004 required that tariﬀs for all renewable energies have tobe approved by the regulator. (Until now that was only forprojects larger than 5 MW).
Portugal
Revision of feed-in tariﬀ in 2005 with cap of 150 MW (2010). Thetariﬀ is guaranteed for the ﬁrst 15 years or 21 GWh/MW whicheveris reached ﬁrst: 0.45 €/kWh < 5 kWp; 0.28 €/kWh > 5 kWp.Reduction of VAT rate from 21 percent to 12 percent on renewableequipment, custom duties exemption and income tax reductionsup to €730 for solar equipment.Grants up to 40 percent of the total eligible cost (max. €150,000 perapplication) are available under the PRIME program (2000–2006).
Slovakia
Slovenia
Spain
Feed-in tariﬀ set by regulator each year.8 SKK/kWh (ca. 0.206 €/kWh) for 2006.Tax reduction on income earned. RES feed-in tariﬀ in 2005: ∼3ct/kWh.Feed-in tariﬀ: either ﬁxed price or electricity price (8 SIT/kWh) +premium.The plant size limit was removed in June 2006.Feed-in tariﬀ with cap of 150 MW:• 0.44 €/kWh < 100 kWp for 25 years (575 percent of averageelectricity price).After 25 years 460 percent of average electricity price.• 0.23 €kWh > 100 kWp for 25 years (300 percent of averageelectricity price)
Sweden
After 25 years 240 percent of average electricity price.70 percent tax deduction on investment and installation cost forsystems on public buildings from May 2005 until end of 2007,with maximum limit per building of €550,000 and covers bothmaterial and labor costs. Electricity certiﬁcates for wind, solar,biomass, geothermal, and small hydro. Energy tax exemption.
Switzerland
Net metering with feed-in tariﬀ of min. 0.15 CHF/kWh (0.10 €/kWh);investment subsidies in some cantons; promotion of voluntarymeasures (solar stock exchanges, green power marketing).
UnitedKingdom
Investment subsidies in the framework of a PV demonstrationprogram. Reduced VAT.
China
A Renewable Energy Law went into eﬀect in January 2006 to providethe legal framework for the development of renewable energy inChina. However, bidding for wind power feed-in has been in eﬀectfor several years and the National Development and ReformCommission (NDRC) said that the bidding system would continueunder the new law.
c05
JWPR076-Asplund
January 12, 2008
12:40
Char Count=
99
Solar Power
TABLE 5.2 (Continued)Most of the wind power projects were awarded bids of 0.4 to 0.5yuan (5.1 to 6.4 U.S. cents)/kWh. In addition, the ﬁve big powercompanies beneﬁted from some preferential tax policies thatgave them refunds of 0.1 yuan (1.2 U.S. cents)/kWh.There is much lobbying by the Chinese solar power companies forthe government to adopt a feed-in tariﬀ policy for solar power,but there is little expectation of that happening in the near future.Most use of solar power so far has been in rural areas with noconnection to the power grid.Source: Arnulf Jager-Waldau, PV Status Report 2006: Research, Solar CellProduction and Market Implementation of Photovoltaics, European CommissionJoint Research Centre, Institute for Environment and Sustainability, August 2006,Table 5, http://www.epia.org/documents/PV Status Report 2006.pdf.
incentives for solar PV is likely to grow even further in coming years, thusproviding strong support for the solar PV industry as it moves towards parity with fossil fuels.
SOLAR POWER PRICING ANDCOMPETITIVENESSSolar power is still expensive relative to other methods of electricity production. Solar power currently costs about 25 cents per kilowatt-hour onaverage across the world according to Photon Consulting’s calculations,a figure that loads in all costs and does not include any subsidies or government support measures.38 Solar research group Solarbuzz puts U.S. solar PV electricity prices lower at 21 cents/kilowatt-hour.39 In any case, theactual cost of solar power for any particular user varies quite widely depending on differences in solar equipment and the intensity of the sun at acustomer’s location.In any case, the world average cost of solar power of 25 cents perkilowatt-hour is well above the traditional U.S. power generation methodsof coal (4 cents), nuclear (6 cents), or natural gas (7 cents), as displayed inFigure 5.13. However, that 25 cent solar power cost is already within theretail price of electricity for some residential and commercial users, whichranges widely throughout the world from about 4 to 30 cents per kilowatthour (see Figure 5.14).It is important to emphasize that solar power does not have to competeagainst the cheapest utility generation costs to be competitive. Solar PVsystems that are installed at residential and commercial buildings have to
JWPR076-Asplund
January 12, 2008
12:40
Char Count=
100
PROFITING FROM CLEAN ENERGY
25
Cents per kWhr
20
15
10
5
0Solar
Coal
Nuclear
Wind
Gas
Oil
FIGURE 5.13 Average U.S. Electricity Generation CostsSource: U.S. Department of Energy.
compete only with the retail price of electricity provided by the local utility,not with the utility’s generation cost. However, when solar PV power costsdrop to or below utility generation costs without subsidies, then utilitieswill have an economic incentive to build large solar parks as an alternativeto coal- and natural-gas-fired power plants and nuclear power plants.It is also important to emphasize that solar power does not necessarily have to compete against the lowest flat-rate retail electricity prices inthe world to be competitive. In a variable-rate pricing system, electricity
2520Cents per kWhr
c05
151050Japan
Italy
Germany
UK
France
US
S.Korea
Canada
India
FIGURE 5.14 Global Residential Electricity PricesSource: International Energy Agency, Key World Energy Statistics 2007, p. 43. http://www.iea.org/textbase/nppdf/free/2007/key stats 2007.pdf.
c05
JWPR076-Asplund
Solar Power
January 12, 2008
12:40
Char Count=
101
prices are higher during the day when electricity demand is high and lowerat night when electricity demand is low. In a variable-rate pricing environment, solar power only needs to compete against the peak electricity ratesthat utilities charge during the day (when solar power is available), whichcan be as high as 20 to 30 cents per kilowatt-hour in the United States versus the 10 cent per kilowatt-hour average flat-rate seen in the United States.Variable-priced electricity pricing is already the norm for commercial customers and is becoming more popular at the residential level in Europe andthe United States as a means to increase overall grid efficiency. As consumers face peak utility electricity pricing of 20 to 30 cents per kilowatthour in some areas in the United States, solar PV starts to look attractiveeven without subsidies.The conventional wisdom among the public at large is that solar PVpower is not even close to being competitive with existing electricity pricesworldwide. However, Photon Consulting estimates that solar power is already competitive with residential grid electricity prices in 5 to 10 percentof the developed OECD countries, representing a hefty 150 to 300 gigawatthours of electricity.40 Much of that competitive area is in Japan, where retail electricity prices are high.Going further, Photon Consulting in its report, The True Cost of Solar:10 Cents/kWh by 2010, makes the aggressive forecast that the cost of solarPV power, excluding subsidies, will fall to 10 to 15 cents per kilowatt-hourby 2010 and will be competitive with 50 percent of OECD residential demand and 10 percent of commercial customers in the OECD countries.41Photon Consulting based its estimates on a bottom-up analysis of the coststructures of 75 solar power companies and the figures were peer-reviewedby several senior executives in the solar power industry.The U.S. Department of Energy’s (DOE) Solar America Initiative(SAI) has provided forecasts for how the downward cost curve for solar PV may develop in the United States (see www.eere.energy.gov/solar/solar america/).42 Solar America Initiative’s cost projections are shown inFigure 5.15 and Table 5.3. The SAI data show that the current cost range ofsolar power (without subsidies) is above residential and commercial electricity rates in the United States. However, the chart shows how SAI expects solar costs to move progressively lower to compete with retail electricity prices over the 2008–2012 time frame and with grid-generated powerby 2012 to 2015 without subsidies.The DOE’s Solar America Initiative program has ambitious goals. By2015, SAI wants solar PV electricity to be cost-competitive in all sectorswithout government support and to provide 5 to 10 gigawatts of electricity generating capacity (which is enough to power 750,000 to 1.5 million households). By 2030, SAI wants solar PV to provide 70–100 GW of
JWPR076-Asplund
January 12, 2008
12:40
102
Char Count=
PROFITING FROM CLEAN ENERGY
353025Cents per kWhr
c05
Solar CostRange
2015Retail Electricity8–16 cents/kWh
105
Grid Cost 4–8 cents/kWh
02005
2010
2015
2020
FIGURE 5.15 Solar America Initiative (SAI): Projected Cost Reductions for SolarPV with SAI programSource: U.S. Department of Energy, Oﬃce of Energy Eﬃciency and Renewable Energy, Solar American Initiative: A Plan for the Integrated Research, Development,and Market Transformation of Solar Energy Technologies, 5 February 2007, p. 8,http://www1.eere.energy.gov/solar/solar america/pdfs/sai draft plan Feb5 07.
electrical generating capacity (10 to 15 million households) and for solarPV to provide 40 percent of all new electric capacity in the United States.SAI envisions that the U.S. solar market value will grow to $30 billionby 2030 and that some 150 million metric tons of CO2 emissions will beavoided.How is the solar PV industry going to actually cut its costs? RenewableEnergy Corp. (REC) (Oslo: REC NO), the world’s largest integrated solarTABLE 5.3 Current U.S. Electricity Costs vs. Future Solar CostsCurrent Electricity
ResidentialCommercialUtility Generation
Solar PV Costs (cents/kWh)
Cost Range2005
Benchmark2005
Target2010
Target2015
5.8–16.75.4–15.04.0–7.6
23–3216–2213–22
13–189–1210–15
8–106–85–7
Source: U.S. Department of Energy, Oﬃce of Energy Eﬃciency and RenewableEnergy, Solar American Initiative: A Plan for the Integrated Research, Development,and Market Transformation of Solar Energy Technologies, 5 February 2007, p. 8,http://www1.eere.energy.gov/solar/solar america/pdfs/sai draft plan Feb5 07.
c05
JWPR076-Asplund
January 12, 2008
12:40
Char Count=
Solar Power
103
PV company has a specific 2010 Cost Reduction Roadmap that illustrateshow REC plans to cut its costs.43 REC has an explicit target of cutting theprice per watt for solar PV by 50 percent by 2010 from the baseline in 2005.REC has identified further cost savings beyond its 2010 Road Map. REC’s2010 Road Map includes the following efforts:
r 60 percent reduction in polysilicon costs through REC’s fluidized bedreactor (FBR) technology, which is a continuous batch process thatuses much less electricity than the industry-standard Siemens processand produces granular polysilicon (rather than rods), which is moreefficient for use in the wafer stage of production.r 50 percent reduction in wafer production costs through improved production line processes and reduced wastage.r Cost reductions at the cell and module production stages though advanced technologies to be installed in new production lines.
UPSTREAM SOLAR PLAYERS: POLYSILICONAND WAFER PRODUCERSPolysilicon has been in short supply since about 2004 due to strong demandfrom the solar industry. The shortage has led to high polysilicon prices andhigh profit margins for the handful of companies that produce polysilicon.Renewable Energy Corp (Oslo: REC NO), for example, produced an operating profit margin in 2006 of 37.2 percent, which for reference purposeswas more than double Intel’s 2006 operating profit margin of 17.5 percentand even beat Google’s 2006 operating margin of 33.5 percent, accordingto figures on Bloomberg.Silicon is indeed the second most plentiful element in the earth’s crust,but there is limited global plant capacity for converting raw silicon into thepure polysilicon that is suitable for manufacturing solar cells. Polysiliconis the feedstock for the crystalline silicon wafer solar cell technology thatis used in about 94 percent of solar modules (the other 6 percent of modules use various thin film technologies). The polysilicon shortage has beencaused by the emergence of strong demand for polysilicon from the solarindustry. In fact, the solar industry in 2006 used more polysilicon than thesemiconductor electronics industry. Figure 5.16 illustrates how Photon International expects solar demand for polysilicon to grow sharply and gainshare against the semiconductor electronics industry where annual growthin demand is fairly steady at about 10 percent.The world’s five largest polysilicon producers are Hemlock Semiconductor Corp. (privately owned: 63 percent by Dow Corning Corp,
JWPR076-Asplund
January 12, 2008
12:40
Char Count=
104
PROFITING FROM CLEAN ENERGY
Thousand Metric Tons
120
8083.860.542.1
40
30.6
24.0
17.318.7
20.0
21.4
22.9
24.5
26.2
2005
2006
2007
2008
2009
2010
0
Electronic
Solar
FIGURE 5.16 Polysilicon Supply—PV vs. Electronic (in thousands of metric tons)Source: Photon International.
25 percent by Shin-Etsu Handotai Co., and 12 percent by MitshubishiMaterials Corporation), Wacker Chemie (German Xetra: WCH GR), Renewable Energy Corp.(Oslo: REC NO), Tokuyama (Tokyo: 4043 JP), andMEMC Electronics (NYSE: WFR). The top global polysilicon producersare ranked in Figure 5.17, according to their 2006 production. A detailedlist of companies involved in polysilicon production is shown in Table 5.4.
Hemlock
10,000
WackerUnits/Description
c05
6,500
REC
6,000
Tokuyama
5,400
MEMC
4,000
Mitsubishi
2,800
Sumitomo
9000
2,000
4,000
6,000Metric Tons
FIGURE 5.17 Top Global Polysilicon ProducersSource: Marketbuzz 2006, www.solarbuzz.com.
8,000
10,000
12,000
c05
JWPR076-Asplund
January 12, 2008
12:40
Char Count=
105
Solar Power
TABLE 5.4 Polysilicon Established Producers and StartupsEstablished Players
Location
Ticker
Web Site
HemlockSemiconductorRenewable EnergyCorpTokuyamaWacker Chemie AGMEMC ElectronicsMitsubishi
United States
Private
www.hscpoly.com/
Norway/UnitedStatesJapanGermanyUS/ItalyJapan/UnitedStates
REC NO
www.recgroup.com
4043 JPWCH GRWFR US5711 JP
www.tokuyama.co.jp/eng/www.wacker.comwww.memc.com/www.mmc.co.jp/english/product/electronics/01.html,www.mpsac.com
New Entrants with Traditional Techniques (Siemens Process)AriseCanadaAPV CNwww.arisetech.comCSG HoldingsHubei200012 CHwww.csgholding.com/en/ProvinceDC Chemical CoKorea010060 KSwww.dcchem.co.kr/english/index.aspEmei Semiconductor ChinaPrivatewww.emb739.com/Material Factoryehome.htmGiraSolarHollandGRSR USwww.girasolar.comHoku ScientiﬁcUnited StatesHOKU USwww.hokuscientiﬁc.comIsofoton/EndesaSpainPrivate (Grupo www.isofoton.es/Berge)lanzadera.asp?idioma=ingJFE SteelJapanPrivatewww.jfe-steel.co.jp/en/Jiangsu SunshineChina600220 CHwww.sunshine.com.cnJoint Solar SiliconGmbH & Co (JSSI)
Germany
LuoyangM.Setek
ChinaJapan
Private (JV ofDegussa AG51% andSolarWorldAG)PrivatePrivate
MitolNanyang BulkNippon Steel
RussiaChinaJapan
PrivatePrivate5401 JP
www.degussa.com andwww.solarworld.de
nawww.msetek.com/en/index.htmlnanawww0.nsc.co.jp/shinnihon english/(Continues )
c05
JWPR076-Asplund
January 12, 2008
12:40
Char Count=
106
PROFITING FROM CLEAN ENERGY
TABLE 5.4