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Solar-Powered Europe

By Siân Harris
article published in SPIE Professional
Source: SPIE.ORG

In recent years, Germany has built an impressive market and industry base in photovoltaics. Now other European countries are following its lead. From SPIE Professional, January 2009. Dazzling sunshine is a poetic image. The idea of powering our homes and businesses from it is also a beautiful idea. Yet there is little that is poetic about one of the heroes in the quest to harvest solar energy from sunlight: legislation.

Nowhere is the impact of government laws in advancing the solar energy industry more evident than in Germany. Although it is not the sunniest place on Earth, Germany has around 49% of the world’s market for photovoltaic systems.  According to the organization Invest in Germany, the total installed power from photovoltaics in Germany was an impressive 3.8GW in 2007, and a further 1.1-1.2 GW is being installed each year.

Germany’s success story started in 2000 when the government introduced its Renewable Energy Law (Erneuerbaren-Energien-Gesetz, or EEG). The law’s so-called “feed-in tariff” provides subsidies to those who feed electricity generated from renewable energy sources into the public electric grid. It also requires electric companies to buy a certain amount of electricity derived from renewable sources such as solar power at above-market rates.

In June 2008, the law was updated to reduce the subsidies for renewable energy production over time, depending on how fast the market grows. Essentially, if the German market grows as predicted, the subsidy drops a set percentage each year–to match the cost benefits of increasing production volumes and anticipated improvements in efficiency of the technology. If uptake of the technology is significantly better than expected, then the subsidy reduction will occur more quickly. If, however, the market growth is slower than predicted, then the subsidy will remain high for longer.

“There is more support if the market is not growing that aggressively,” says David Wortmann, director of renewable energies and resources for Invest in Germany. In either case, industry and the planet win.

The subsidy does not come from the government. Instead, the utility companies–and ultimately their customers–pay the tariff. “The average additional cost is around €2-2.5 per month per household,” Wortmann says. “This is far less than a pint of beer, and people are generally willing to pay this because it saves the climate and creates jobs.”

Multiple Impacts

The effects of this legislation were not just to encourage people to purchase photovoltaic systems for their homes. The government stance also boosted German industry in this sector, particularly in eastern Germany. In 2007, the country’s photovoltaic industry had total revenues of €5.7 billion. There are also more than 250,000 people working in Germany’s renewable energy industry.

Rooftop PV systems have sprouted all over Germany since passage of legislation that provides subsidies to those who feed electricity generated from renewable energy sources into the public grid. Photo courtesy of SCHOTT Solar.

Well-known German companies such as Q-Cells, SCHOTT, and Wacker Chemie are among the businesses benefitting from these market conditions. And it is not just German companies. Signet Solar of the USA, for example, recently began producing photovoltaic modules in its first manufacturing plant near Dresden. Similarly, U.S. thin-film technology company First Solar picked Frankfurt Oder, Germany, for its first non-U.S. production plant, thanks to the favorable market conditions in the country.

And these are far from being the only companies in the country. Germany boasts an impressive list of both homegrown and foreign photovoltaic companies in all parts of the supply chain, from wafers to cells. It also has a wide range of companies working in thin-film technologies and electronics to support photovoltaics. There are also many world-renowned universities and institutions doing research in this area.

This dominance was advanced further by recent investment in a German photovoltaic cluster. Solarvalley Mitteldeutschland was chosen as one of five high-tech clusters to share in €200 million of funding over the next five years from Germany’s Ministry for Education and Research. The cluster, which includes 27 companies, seven research centers, and four higher education institutes, must match its share of the funding from the industry.

“It is very well organized. Before we got the money, we had to show what we planned to do,” says Hubert Aulich, one of the executive directors of PV Crystalox Solar and coordinator of the cluster.

The cluster’s goals over the next five years include reducing silicon consumption. Currently the silicon wafers used in PV are typically 180 microns thick. The goal is to reduce this below 100 microns, which will require different techniques. In addition, the efficiency of the cells needs to improve and the lifetime is targeted to increase from 25 years to 30.

Another goal is to improve the electronics and to change the designs so that space on the front of the panels is not wasted with metal contacts. Aulich adds that the cluster’s milestones are not just technical. It also must get qualified operators in factories, so it must consider training a workforce, which would further build up the industry and the economy.

Germany is not the only country with this sort of vision. After Germany, Spain is now the second largest market for photovoltaic systems, with 13% of the global market. As in Germany, this has been a product of favorable legislation.

Spain has also become a world leader in solar power. The PS10 solar field in Spain is composed of 624 of Abengoa Solar’s Sanlúcar 120 heliostats, each with a surface of about 1300 square feet (120 square meters). The heliostats direct the concentrated solar radiation onto a receiver at the top of a 377-foot (115 m) high tower.

Since October 2006, Spain’s Building Technical Code (Código Técnico de la Edificación, or CTE) has required all new or restored houses in Spain to use solar thermal energy for 30% to 70% of their domestic hot water. It also requires a minimum contribution from photovoltaic systems to the total electricity consumption. In addition, it is mandatory for large shopping centers, industrial buildings, government buildings, hotels, and hospitals to have photovoltaic panels installed.

The success of the legislation has not just been in attracting customers but also in building up the country’s solar industry, both photovoltaics and solar thermal. This has partly been from foreign investment, especially from German companies. SCHOTT Solar, for example, has recently opened a plant in Aznalcóllar, near Seville, Spain, that will manufacture solar receivers, a key component in solar thermal parabolic trough power plants.

Stefan Dietrich, head of public relations for Q-Cells, which makes photovoltaic wafers and cells, noted that Spain is Q-Cells’ second biggest market after Germany.

There are also plenty of home-grown Spanish companies in a country whose landscape is dotted with more than 300 megawatt-sized solar parks. Abengoa Solar, aided by a sunny climate, European Union funding, and Spanish production tariffs, operates the world’s first commercial CSP solar tower plant, known as PS10, and the world’s largest and first commercial photovoltaic low concentration plant in Sanlúcar la Mayor. Three other solar plants are being constructed on the Sanlúcar Platform, which covers a land area near Seville of 800 hectares, almost 2,000 acres. When complete in 2013, the Sanlúcar Platform will have a total output capacity of 300 MW, enough to electrify 153,000 homes while eliminating 185,000 tons of CO2 per year.

Another Spanish company, photovoltaic manufacturer Isofoton, has provided the current president for the European Photovoltaic Industry Association (EPIA), Ernesto Macías.
Attaining Grid Parity

At a recent meeting of the EPIA in Spain, more than 4000 scientists from 750 companies across Europe agreed on what they believe to be realistic goals for photovoltaic energy production. They believe that the photovoltaic industry could provide 12% of European electricity demand by 2020. At the meeting, Macías called for “common efforts of the photovoltaic sector to make this technology a real solution to global energy challenge.”

The delegates also predicted when various countries will reach so-called grid parity, the point at which electricity from solar cells costs the same as that from traditional methods.

For countries with the highest solar irradiation and higher traditional electricity prices, such as Italy and Spain, grid parity could be reached as early as 2010 and 2012 respectively, according to EPIA. Germany, which is the most established market but has less sunshine, is expected to reach grid parity by 2015 and most other European countries are expected to reach this point by 2020.
EU Support

This is a goal that the European Union echoes. Last year it set binding targets for member states to reduce greenhouse gas emissions by 20% and to ensure that 20% of electricity comes from renewable sources by 2020. Invest in Germany’s Wortmann does not see these goals as a challenge for Germany.

“In Germany, we could maybe do more than these objectives. Already, in 2008, 15%-16% of our electricity is from renewable sources,” he says. And the EPIA believes that the 20% renewable sources goal could be exceeded Europe-wide if efforts are coordinated between those involved in different renewable energy technologies.

Once the technology comes down in price sufficiently, it has potential benefits all over the world.

“The good thing about PV is that you can use it both ways–households making their own electricity or utilities generating and selling it,” says Q-Cells’ Dietrich. “When costs go down, we’ll see much more development in African and South American countries that have no stable grid. It will be similar to the way that mobile phones have taken off in areas that had no established telecommunications network. At the moment, these small communities might have a diesel generator. But the price of diesel is going up.”
Challenges Ahead

Outside of Germany, there are challenges to all the photovoltaic hopes, though. Beyond the required technical improvements, there can be negative legislative issues. In some countries, for example, there are regulatory hurdles to installing photovoltaic panels. Feed-in tariffs, like Germany’s, are also needed to encourage adoption before grid parity is reached.

The traditional utility companies could cause problems. “We’ve seen a lot of resistance so far from the utilities, and we will see more,” Dietrich says. “However, I think that in the mid to long run, they are going to stop obstructing and start making money from solar.”

He notes that this will require a different mindset for such companies. Large nuclear power plants have power outputs of up to 1.5GW and run around the clock. In contrast, the largest photovoltaic farms produce about 40MW and only when there is sunlight. “A change of culture is needed towards a more decentralized approach,” Dietrich says. There are potential benefits in doing so.

Always a Good Investment

After all, once the photovoltaic panels have been purchased and installed, their maintenance costs are very low. They don’t have moving parts like wind turbines or power plants, although they might need occasional cleaning in dusty environments.

“Performance does degrade a bit, but we give a guarantee on our products of at least 80% performance after 20 years,” Dietrich says, “and there are PV panels that have been in use for more than 30 years and are still working.” Perhaps the biggest potential advantage in the present economic climate is that they do not require any fuel.

The recent global financial uncertainty does not seem to be causing as much concern for the photovoltaic industry as it is in other industries. Although banks have become more cautious about lending money, those involved in Germany’s photovoltaic industry believe that the country’s guaranteed subsidies will attract those who are looking for more secure investments.

“We think more money will go into real products rather than virtual financial products. The world knows that energy is needed,” Wortmann says.

Hubert Aulich agrees: “Our industry has real background and is a real industry, not a bubble,” he says. “In the longer term, the future is bright for solar. The possibilities are basically unlimited: Off-grid, on-grid, and almost everywhere globally. Once we reach grid parity, the growth rate will only depend on our ability to penetrate the market.”

Sunshine Helps Make Germany a Leader
* Germany is Europe’s leading PV manufacturer and has the world’s largest PV market with 49% of global installations in 2007
* Germany also has Europe’s largest solar thermal market
* Annual growth rate in Germany’s PV market is estimated at 28.7%
* Nearly €176 million was invested in Germany for R&D for PV in 2007, and that number is expected to increase to €224 million by 2010
* Research institutions such as the various Fraunhofer institutes, the Forschungszentrum Jülich (Research Center Jülich), and the Hahn-Meitner Institut (Hahn-Meitner Institute) contribute to Germany’s PV R&D programs
* Germany’s investment incentives for renewable energy apply to investors from anywhere in the world—not just Germany
–Source: Invest in Germany

Solar Incentives

Under Germany’s original renewable energy legislation, the feed-in tariff fell by 5% every year in order to encourage cost reductions and efficiencies among renewable energy producers who receive the tariff in the form of subsidies. Under reform legislation, the tariff will now be reduced between 8% and 10% in 2009 and 2010 and then 9% annually.
Q-Cells Opens Institute

Q-Cells AG celebrated the grand opening of its Reiner Lemoine Research Centre in the Thalheim district of Bitterfeld-Wolfen, Germany, in August. Q-Cells has invested almost €50 million to bring a new generation of solar cell concepts and processes from the laboratory to industry standard.

“The opening of the research centre is another milestone for Q-Cells,” said Technological Manager Florian Holzapfel. “This is because innovation is key to the success of photovoltaics. Only companies which focus on research and development will achieve success.”  The Reiner Lemoine Research Centre is named after the late founder of Q-Cells and is an important part of the photovoltaics sector growing in eastern Germany.

Siân Harris
Siân Harris is a science and technology journalist based in the United Kingdom.  This is an open-access article from SPIE Professional, the SPIE member quarterly magazine. An SPIE member login is required to access the full text of other feature articles inside SPIE Professional magazine.