Innovation and technological development in energy

The European Union photovoltaic market reached the limits of the sector’s procurement capacity for the first time. Photovoltaic industrialists would have been able to produce many more modules if it  had not been for the current shortage of silicon, the principal raw material of solar cells.In 2005, the European photovoltaic market finally reached 644 MWp, bringing the cumulated total of installed European capacity to 1791.7 MWp. This capacity consists essentially in grid-connected applications (solar roofs and facades and photovoltaic power plants) with 94.4% of installed capacity.
Germany continued to be the leading photovoltaic market in the world in 2005, far ahead of Japan and the USA,with, according to the new German Solar Industry Association (BSW), 603 MWp installed during the year. Germany now represents 85.8% of the total capacity installed in the European Union. This unashamed success has inspired other countries to set up the conditions necessary for rapid development of their photovoltaic sectors.
In this way, Spain has had a significant increase in its national market with, according to the Institute for Energy Savings and Diversification (Idae), an additional capacity of 14.5 MWp bringing Spain’s total installed capacity up to 51.8 MWp. The Idae now plans on an increase of 26 MWp in 2006, with the objective being to reach the 400 MWp mark by the year 2010. This growth is explained by the improvement in photovoltaic electricity purchase conditions resulting from Royal Decree 436/2004 of March 2004.
In Italy, the new purchase price system adopted by decree on July 15th, 2005 was quickly found to be overextended with, at the end of 2005, 311 MWp in requests for connection to the power grid whereas the purchase price was only valid for the first 100 MWp. In order to respond to investor expectations, the government promulgated a new decree on July 26th, 2006 raising the upper limit to 500 MWp. This new system, however, was not able to effect the 2005 market.With 6.8 MWp installed for this year, the country ranks in 3rd place for Europe, ahead of the Netherlands.
In France, the system set up in 2005 for metropolitan France, which combined a 40% income tax credit with a low purchase price (14.13 c€/kWh in 2005) did not convince investors.Growth was essentially supported by the French overseas departments which have a system of specific subventions. In the end, France installed an additional capacity of 6.7 MWp, bringing total capacity up to 33 MWp.Noting the situation, the government raised the income tax credit to 50% and re-evaluated the purchase price a first time to 22.5 c€/kWh for private individuals (30.5 c€/kWh for professionals) and then a second time, raising it in July 2006 to 30 c€/kWh plus a 25 c€/kWh bonus in case of integration in a building. France’s objective, defined in the law of long-term programming of investments is to reach 120 MWp in 2010 (85 MWp for the French overseas departments and 35 MWp for metropolitan France).

The prospects of growth in the photovoltaic market are still just as good as before. Silicon producers have finally responded to the expectations of the photovoltaic industry by announcing new production capacities. These extensions have reassured the photovoltaic industry, which in turn has responded by massively investing in new production capacities, in phase with ever greater demand. This increase in demand remains, however, dependent upon the political will to develop this market at the national level. In Germany, the purchase price guaranteed until 2007 should make it possible to continue to maintain a very high number of installations and it is more and more probable, taking the investments made by the German industry into consideration, that an incentive system will be renewable by the new government. The Italian decision is good news because it is going to make it possible to structure the sector and, if the policies continue to follow, create a big new photovoltaic market. The situation is also very favourable in Spain and France. Taking these new elements into consideration, the consortium has defined a new estimate of European installed capacity of 6000 MWp in 2010. The ambition of the “Sustainable Energy Europe” campaign is to install an additional 1500 MWp between 2005 and 2008. In view of current growth, this objective should be reached in 2007.

2.Comparison between current trend and White Paper Objectives (in MWp)

EurObserv'ER 2006