After the turn of the century governments across Europe set in place a series of programmes to expand investment on grid-connected solar power technology, especially photovoltaics (PV). But in face of rapidly declining costs most of these programmes have been tapered in recent months. Using a simple cost model this article shows that PV technologies can indeed supply electricity to the grid for less than 0.10 €/kWh in large swaths of the continent, apparently justifying this policy change. However, the roll back of fixed rates to PV suppliers will likely result in a market structure close to perfect competition, where profits are not expectable and the price should fall towards marginal generation cost: 0 €/kWh. Due to the scalable nature of PV, many consumers in Europe are now able to produce their own electricity at a cost considerably lower than the rates demanded by grid utilities. Investment on PV is thus set to continue in spite of recent policy changes, but henceforth on off-the-grid systems, conceived for self consumption. Long term this trend presents serious challenges to utilities and traditional electricity suppliers, putting at stake the existing electricity market framework.
CITATION STYLE
de Sousa, L. (2013). Photovoltaics: New policy challenges for Europe. Frontiers in Energy Research, 1(DEC). https://doi.org/10.3389/fenrg.2013.00007
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