The next stage in European solar power: A boom in subsidy-free solar?

by James Martin II on January 23, 2013

Solar PV growth graph

Europe has seen massive uptake of solar photovoltaic (PV) systems in the past few years. At the helm has been Germany, whose EEG legislation has paved the way for a world-leading rate of uptake for solar panels in the country. Others–Italy, Spain, and France, among others–are also doing well thanks to government support for renewables. All the while, however, renewable energy incentives are being scaled back as technologies such as solar panels become more affordable, and it is only a matter of time before they are phased out entirely. But lack of subsidisation will not be an issue in several years’ time, according to global investment bank UBS, who predicts that a boom in unsubsidised solar power will begin around the end of the decade.

“Socket parity” is a term used in the solar industry to denote the point at which the cost of generating power from a home solar system reaches competitiveness with power purchased from the electrical grid. According to UBS analysts in a new report provocatively titled “The Unsubsidised Solar Revolution”, and as reported in Australian clean energy news site RenewEconomy, socket parity for solar photovoltaics (PV) is just around the corner for most of the European continent–and the UK isn’t far behind.

The change in the fortunes of solar power are close to miraculous. As the UBS analysts write, “Solar has turned from a heavily-subsidised marginal technology into a mainstream source of power generation. Thanks to significant cost reductions and rising retail tariffs, households and commercial users are set to install solar systems to reduce electricity bills – without any subsidies.” They estimate that Germany alone could have up to 80 gigawatts (GW) of unsubsidised solar by 2020–compared to its current subsidised installed solar capacity of around 32GW. The US is also a making impressive headway, with strong support for rooftop solar power in New York and New Jersey, to name just one of the states currently encouraging renewables (and to say nothing of incentives on the federal level).

The report is noteworthy in particular because of its source–UBS, as an investment bank, is financially minded and does not have an overarching climate change or renewable energy-focused prerogative. The report corroborates McKinsley’s ‘Darkest before Dawn’ report, released in April last year, which predicts that solar power will be competitive with coal and nuclear plants as an energy source by the year 2020. McKinsley, like UBS, is an investment-focused firm.

In addition to anticipating future prices for solar systems, the UBS report provides a broader perspective on the role that solar PV will play in the energy markets. Among the most surprising of the predictions is that by 2020 homes will begin to produce on average 29% of their own power. This number could jump to 50-60% for an average home with a 4kW solar system and 3kWh of battery storage as energy storage units become more affordable. Solar PV systems will in effect become competition for electricity retailers, whose margins will drop significantly as households and businesses increasingly turn towards generating and storing their own power.

Thanks to the UK’s feed-in tariff and the unprecedentedly low cost of solar panels, households and businesses are already enjoying the financial benefits of having a solar PV system installed well in advance of the future that UBS predicts in its report. The purpose of the feed-in tariff in the first place was to make solar panels investment-worthy in order to help the UK meet its 2020 renewable energy target of 15%. If you’re interested in going solar, fill out the Solar Quote Comparison request form to the right of this page or contact us today. 

Source: RenewEconomy

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