The Solar PV Index

Last week we investigated the performance of German wind farms which, after a massive surge in capacity over the past two decades, are now in a position to contribute substantially to the electricity mix (7.6 % in 2011 according to the national statistical office). However, as we have seen, this comes at a price. The contribution shows large and largely unpredictable variations which have a destabilising effect on the grid.

Another source of renewable energy which has gained a lot of support recently is solar PV. Like wind PV has soared dramatically  in the past years. Nevertheless, its overall contribution to the energy mix is very low (3.1 % of total power generation in 2011).  Moreover, like electricity produced by wind mills, PV is a factor of instability to the grid. The sun is not shining uniformly throughout the day. Passing clouds may severly impact the output of solar cells causing fluctuations in the supply chain.

Impressive growth rates in both capacity and production, are inclined to mislead the observer. A more thorough consideration of the situation of solar PV, however, will have to look at the output per MW installed. That is the quantity which allows us to assess the investment in that energy source.

Like in the case of wind farms, the expected productivity of solar PV depends heavily on the location. And thus, we should not be surprised to see huge differences between various installations. Here, however, we look at the global picture. This point of view is even more justified since Germany decided to abolish all nuclear plants by 2022 which, in turn, means a higher burden for all other sources of energy. As the country, simultaneously, is highly committed to reducing its carbon footprint renewables are bound to play a much larger role in the future.

Fig. 1 Solar PV in Germany. Average output per MW installed capacity and solar irradiation.

Fig. 1 shows the average PV output (P/C) in MWh/MW (blue curve) while the red curve refers to the average solar irradiation (SI) in kWh/sqm (r.h.s. scale). The performance per MW installed has been adjusted by using a specific model in order to account for extra capacity added over the course of a year. The two curves appear to follow a similar trend. Nevertheless, their correlation is quite weak. An increase in irradiation may even coincide with a downturn in specific production. Thus, on a global scale, more sunshine does not necessarily mean more solar energy produced. Over the period in question we get an average PV output of 868.8 MWh per MW installed with a spread ranging from less than 700 MWh/MW to 1157 MWh/MW.

Fig. 2 Solar PV in Germany. Deviation from mean output per MW installed (P/C) and solar irradiation (SI) in %.

Fig. 2 displays the deviations of both specific output P/C and solar irradiation SI in % over the period in question. This picture confirms the conclusions drawn from Fig. 1. The variations in PV performance are not necessarily reflected in the respective variations of solar irradiation. They may even go in opposite directions. Remarkably, the fluctuations in SI are much larger than the ones in P/C, at least on an annual scale.

As in the case of wind more capacity does not always mean more output. The availability of sunshine comes in as a crucial factor which may be decisive for the performance of a particular facility. And, like the wind, this quantity may vary a lot over the years as can be inferred from the green curve.

There is one more message hidden in Fig. 2. One may argue that due to the relatively small scale of solar PV in terms of the entire German power production, the variations in P/C do not fully reflect the varying nature of solar irradiation. In other words, one might expect them to become even larger as the number of PV installations increases. This in turn implies that the fluctuations in the power grid may be even disrupting than today.

In view of this it is of utmost importance to develop storage facilities for the solar energy produced. This should in fact be a priority.

Is the German Solar Dream Coming to An End?

Germany used to be one of the cornerstones of the European solar industry. But times have changed and what has so far been considered as the avant-garde of renewable energies is facing a grim reality.

A number of German solar panel producers have run into serious economic troubles. The most recent case is the company Q-Cells which filed for bankruptcy earlier this week. For some time Q-Cells used to be the biggest German producer of solar modules.

Another company, Phoenix Solar, is struggling with massive financial problems. The same is true for Conergy which, in addition, suffered from serious management errors. Solon, Solar Millenium and Solarhybrid filed for bankruptcy during the past four months. Even the brightest star on the German sky, Solarworld, is no longer as shiny as it used to be due to a changing economic environment.

Pampered by abundant subsidies Germany´s solar industry saw a massive growth during the past 10 years. However, recently two crucial factors came into play which led to a substantial shift. On the one hand, there was a discussion in Germany as to how much money should be pumped into renewable energies. Economic analyses revealed that more than EUR 100 billion have been directed towards renewables so far. With ever growing installed capacities this amount is bound to grow over the coming years, thus putting a substantial burden on electricity consumers who, in the end, are paying the bill. As a consequence and in order to keep subsidies under control feed-in tariffs have been cut drastically recently.

On the other hand, German producers of solar modules are increasingly suffering from competitors, especially in China. This led to a slump in prices for PV modules (more than 70 % since 2009) which, in turn, increased the pressure on German companies. Being under pressure from two sides, PV producers are now facing a different reality than at the time when solar industry took off.

The figure below shows the development of electricity produced from PV.

PV power production and share in the electricity grid. Source: AG Energiebilanzen.

Although these the growth rates were impressive, starting from virtually zero in the year 2000, the contribution of PV to the power grid remained rather modest (3 % in 2011). Given the low share of PV in electricity production, the question arises what level of subsidies is considered to be justified. One may even wonder if feed-in tariffs are to be abolished at all.

What is going to happen? Once the market forces have done their work, PV will continue its upward trend, though at a more moderate pace. But most importantly, the vast majority of PV modules will come from China, thus leaving not much room for production in Europe. What is bad news for the solar industry is, in turn, good news for the consumers and for investors who will see lower investment expenses as the prices for modules have fallen dramatically.

PV as such is not to be blamed for the current problems. On the contrary, PV fills a useful niche in the power grid, but not more than that. However, what is to be blamed is a legal framework which created the illusion of a quasi risk-free economy where feed-in tariffs were guaranteed for 20 years and even paid for non-produced electricity in case of network problems caused by the renewables themselves. The price for this illusion was first to be paid by the consumers and now by the people losing their jobs in the companies going bankrupt.

Photovoltaics has certainly a future in Germany as in other parts of Europe. However, its growth needs to be based on a sound economic environment. This process is now under way. It goes without saying that PV will always be a minor player in the field. Nevertheless, it has a role to play and maybe, on a smaller scale and by using smart storage technologies, it may develop  into a key power source for local communities.

Renewables in Europe 2: Photovoltaics

In a recent posting we discussed the development of energy produced from biogas in the EU over the past two decades. The growth rates, as for most renewables, were impressive, showing the huge potential of that particular source of energy. Simultaneously, it became clear that not all countries progressed at the same speed. Yet the overall contribution of biogas to the energy mix is still quite small.

Similar statements can be made about photovoltaics. At the beginning of the 1990s it was virtually non-existing. But soon things started changing.

Fig. 1 Energy generation from photovoltaics

In 1990 only the following countries produced more than one TJ (Terajoule) of solar power (in decreasing order): Spain, Italy, Portugal, Germany, Finland (!) and the Netherlands. The output of all other states now forming the EU was virtually zero. But gradually more and more countries embarked into photovoltaics. By the end of our reporting period, i.e. in 2009, just a handful of the 27 Member States remained abstinent from solar energy, amongst them the Baltic countries, Ireland, Poland and Romania. Due to the low starting level in practically every country, the relative changes experienced in each of them turned out to be close to 100% or even higher than that in some cases. Fig. 1 highlights the annual change of energy produced from photovoltaics in some selected countries. A significant increase is almost always linked to a corresponding growth in PV capacity.

The overall picture turns even more impressive when we take a different point of view.

Fig. 2 Electricity generation from photovoltaics, 1990 = 100

Fig. 2 illustrates how production figures have risen. The starting level is 1990 = 100. As can be inferred from the picture, some countries like Germany, Belgium and France even exceed the scale given. In 2009, Germany almost reached a whopping 600,000, thus being the unquestionable European champion in relative output since 1990. Spain (not shown) comes second with almost 100,000. One of the most striking examples, however, is Belgium where PV virtually did not exist until the year 2005, after which solar electricity began skyrocketing. In that context it is worthile noticing that Belgium is not a particularily sunny country. Nevertheless, PV is underlining its growth potential even in places where clear skies are not so frequent.

Having seen all those astounding figures we should not forget, however, that solar electricity is still a minor contributor to the entire power supply. This is true even in countries like Germany where the solar industry has been pampered with high subsidies. In any case, it will be exciting to follow the further development of photovoltaics in Europe over the next decades. Its full potential is still not exploited. The question is where its limits are.