Solar Photovoltaic Electricity Generation

SETIS

In brief

Solar energy is the most abundant energy resource on Earth. After hydro and wind power, solar photovoltaic (PV) energy is the third most important renewable energy source, in terms of global installed capacity. A whole range of solar technologies exists to capture the energy from the sun and convert it to deliver heat, cooling, electricity, lighting and fuels for many applications. Around 85 % of all new PV systems, though, are based on crystalline silicon technology, which is now mature. Novel technologies are being explored based on nanomaterials and could give rise to breakthroughs in terms of efficiency.

As the cost of PV technology continues to decrease and electricity prices remain high, PV is on its way to becoming commercially competitive in the energy sector. In coun-tries with plenty of sunshine, payback on the initial investment can take as little as two years.

Having long been the undisputed leader in the PV market, Europe has finally been overtaken by Asia, in terms of new instal-lations (2013). Growth in the PV market is still driven by policy. Phasing out of national support schemes in some European coun-

tries has led those markets to decline, while the introduction of feed-in tariffs in China and Japan is boosting growth there. There is still plenty of room for new growth in Europe, though, while opportunities exist

for synergy with other renewable energy sources (RES). Meanwhile, local distributed electricity storage is becoming increasingly important for solar PV with some countries (like Germany) offering attractive subsidies.

Evolution of global PV cumulative installed capacity 2000-2013 (MW)

RoW MEA China Americas APAC Europe

807n/a2424

496265

887n/a4254

686399

964n/a52

102916601

9931

62163

1,1981,306

1,0031

70246

1,5022,291

1,1081

80355

1,8273,289

1,1502

100522

2,0985,312

1,2263

140828

2,62811,020

1,30625

3001,3283,373

16,854

1,59080

8002,4104,951

30,505

2,098205

3,3004,5907,513

52,764

2,098570

6,8008,365

12,15970,513

2,098953

18,60013,72721,99281,488

Total 1,615 2,069 2,635 3,723 5,112 6,660 9,183 15,844 23,185 40,336 70,469 100,504 138,856

20,000

0

40,000

60,000

80,000

100,000

120,000

140,000

160,000

MW

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

RoW: Rest of the World. MEA: Middle East and Africa. APAC: Asia Pacific.

Methodology used for RoW data collection has changed in 2012. Source: EPIA, Global Market Outlook for Photovoltaics 2013-2018

The technology

Photovoltaic (PV) solar electricity generation technologies exploit the PV effect, where electron–hole pairs generated in semicon-ductors are spatially separated by an internal electric field. This leads to a negative charge on one side of the cell and a positive charge on the other side. The resulting charge sep-aration creates a voltage. When the cell is illuminated and the two sides are connected to a load, a current flows from one side of the device, via the load, to the other side of the cell.

PV cells are usually made of inorganic mate-rial (mostly silicon) and may be wafer-based or thin-film cells. Crystalline silicon cells are made from thin slices cut from a single crystal of silicon (monocrystalline) or from a block of silicon crystals (polycrystalline). On average, commercial solar modules have efficiencies of about 15 %, which means

about one-sixth of the sunlight striking the module generates electricity. Flat panels are expected to reach average efficiencies of 20 % by 2015 and 40 % in the longer term.

Crystalline silicon-based technology is expected to remain the dominant photo-voltaic technology and maintain its market share (over 85 % in 2012) in the short-term. This is mainly due to the maturity of the technology, as well as the existing and grow-ing capacity in China and APAC countries, which favour wafer-based technologies. Crystalline silicon is widely available, has a proven track record in reliability, and its physical characteristics are well understood.

Thin-film modules are constructed by depos-iting thin layers of photosensitive materials onto substrates such as glass, stainless steel or plastic. After huge growth expectations for thin film technologies some years ago, the competing market price of c-Si has slowed the development of this technology. The market share of thin film modules increased until 2010, when it was larger than 15 % and since then has declined to about 10 %.

In the medium term, photovoltaic systems will become integral parts of new and retrofitted buildings. Eventually new and emerging technologies are expected to come onto the market (in the so-called Sun Belt), such as high concentration devices that are better suited to large grid-connected mul-ti-MW systems and compact concentrating PV systems.

Ongoing research

The main challenges for PV technology are to further improve solar cell efficiency while lowering production costs. Advances in effi-ciency, reliability and reproducibility require a better understanding of material properties and fabrication processes.

Most ‘novel’ technologies (i.e. which have the potential for breakthrough developments) are focused on improving efficiency. One line of research seeks to change the properties of the active layer to improve its match to the solar spectrum. Other approaches aim to modify the incoming solar spectrum without fundamentally changing the properties of the active layer. Nanotechnology and nano-materials are expected to provide the basis for achieving both of these effects.

Above and beyond improvements in solar cell technology, R&D is now increasingly focusing on the interconnection of PV systems with building energy management systems and smart grids. This includes the development of decentralised energy management sys-tems that support the efficient use of fluc-tuating power sources. More specifically, research on PV systems is looking at ways to improve voltage control and stability, for example through smart and self-adaptive inverters that react quickly to fluctuations in frequency. Cheaper and better storage for grid-connected PV systems is also being investigated. Another active area of research is more accurate forecasting of the output

The PV (solar photovoltaic) market has grown over the past decade at a remarkable rate – even during difficult economic

times – and is on the way to becoming a major

source of power generation for the world.

European Photovoltaic Industry Association (2014)

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Solar Photovoltaic Electricity Generation

European annual PV market scenarios until 2018

0

5,000

Historical data High scenario Low scenario Medium scenario

10,000

15,000

20,000

25,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

MW

202 705 985 9972,023

5,708 5,833

22,259

17,726

10,975

6,852 6,983 7,449 7,955 8,290

13,04513,655

14,505

16,08017,185

13,651

Source: EPIA, Global Market Outlook for Photovoltaics 2013-2018

of PV plants. This includes predicting cloud cover and the optical transparency of the atmosphere, perhaps with the use of sat-ellite technology, as is already the case for weather forecasting.

The European Photovoltaic Technology Plat-form has recommended, in its latest Strate-gic Research Agenda, that special attention be paid to building-integrated photovoltaics (BIPV) over the next decade.1 This includes incorporating PV modules into structural building products. Cost compensation can be achieved when, for example, PV systems perform other functions, besides producing electricity, such as heat insulation and noise reduction. This can reduce or eliminate the need to provide these functions separately, at extra cost. Considerable work still needs to be carried out on the interconnection of

PV with other components in this kind of integrated system.

The industry

Globally, the solar PV market continues to make considerable progress, with at least 38.4 gigawatts (GW) of newly installed solar photovoltaic (PV) capacity worldwide in 2013 and a global cumulative installed capacity of 138.9 GW.2 Solar PV remains the third most important renewable power in terms of installed capacity, after hydro and wind. PV now covers 3 % of the electricity demand and 6 % of the peak electricity demand in Europe.

This strong global growth compensated for a relative decline in the European PV market

since 2011. While Europe accounted for 74 % of the world’s new PV installations in 2011 and about 55 % in 2012, the region only represented 29 % of the world’s new PV installations in 2013. For the first time in a decade, Europe lost its position as regional leader in 2013, overtaken by Asia, which took a 56 % share of the global solar PV market.

Europe has also slipped behind China, Japan and Taiwan in terms of solar cell production, but is still a world leader in the development of PV technology. The global overcapacity in terms of solar PV modules is further chal-lenging the European solar cell manufactur-ing sector. With a shrinking local market in Europe and the market shift to Asia, inverter manufacturers are facing increasing compe-tition with lower profit margins and limited growth opportunities.

Solar Photovoltaic Electricity Generation

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Fact file● At least 38.4 GW of PV systems were

installed globally in 2013, up from 30 GW in 2012.

● Almost 11 GW of PV capacity were connected to the grid in Europe in 2013, compared to 17.7 GW in 2012 and more than 22.4 GW in 2011.

● Europe remains the world’s leading region in terms of cumulative installed capacity, with 81.5 GW as of 2013.

● Germany is the leading European PV market, with 3.3 GW installed in 2013, bringing the country’s cumulative installed capacity to 35.71 GW.

● Several other European markets installed more than 1 GW of PV capacity in 2013: UK (1.5 GW), Italy (1.4 GW), Romania (1.1 GW) and Greece (1.04 GW).

● PV is now a significant part of Europe’s electricity mix, producing 3 % of demand in the EU and 6 % of peak demand. PV could provide up to 12 % of the EU’s electricity demand by 2020.

● According to EPIA (2014) forecasts, the total installed capacity in Europe could reach between 119 - 156 GW in 2018. In the best case, the 100 GW mark could be reached by 2015 in Europe.

● The energy payback time (the amount of time the system has to operate to com-pensate for the energy used to manu-facture it) for photovoltaic systems is between 0.5 and 1.4 years, depending on cell and module type, as well as the solar radiation at a given location.

● The technical lifetime of PV systems is over 30 years, so they produce net clean electricity for more than 95 % of their lifetime.

● Employment figures in the PV sector for 2011 are estimated at around 750 000 worldwide and about 275 000 in the EU (Bloomberg New Energy Finance, (2012), JRC, (2014)). According to a study by the European Photovoltaic Industry Association (EPIA), 265 000 people were in full-time employment in the PV industry in Europe in 2012.

● Regardless of where they are manu-factured, more than 25 % of the value of PV modules installed in Europe is created in Europe.

● The levelised cost of electricity (LCOE) for crystalline silicon PV systems in the first quarter of 2014 ranged from EUR 0.061 to EUR 0.244/kWh world-wide and EUR 0.107/kWh to EUR 0.206/kWh for Europe, depending on the loca-tion of the system.

World and European PV markets in 2013

1. http://www.eupvplatform.org/publications/strategic-research-agenda-implementation-plan.html#c27832. EPIA Global Market Outlook for Photovoltaics, 2014-2018

Rest of Europe (3%)

Denmark (2%)Belgium (2%)

Austria (2%)Ukraine (3%)

Switzerland (3%)Netherlands (3%)

France (6%)

Greece (9%)

Romania (10%)

United Kingdom (14%)

Germany (30%)

Italy (13%)

Total installedcapacity

10,975 MW

Others (3%)Thailand (1%)

Korea (1%)Canada (2%)

Australia (3%)India (4%)

USA (18%)

China (43%)

Japan (25%)

Total cumulativecapacity

27,377 MW

Source: EPIA, Global Market Outlook for Photovoltaics 2013-2018

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Solar Photovoltaic Electricity Generation

As photovoltaic electricity system costs con-tinue to decrease, while electricity prices remain high, PV is moving steadily towards competitive retail pricing. Parity is reached when the savings in electricity cost and/or the revenues generated by selling PV elec-tricity on the market are equal to or higher than the long-term cost of installing and financing a PV system. Solar PV is becoming commercially competitive in some market segments of several EU countries.

With a relatively high take-up of PV in sev-eral European countries, the business case for electrical storage already makes sense, especially in markets with high peak costs in the evening, where only a shift of a few hours is required. To accelerate this development, further research on system integration and electrical storage is required.

Concentrating Photovoltaics (CPV) is an emerging market with two main tracks – either high concentration > 300 suns (HCPV) or low to medium concentration with a con-centration factor of 2 to approximately 300. Module efficiencies with HCPV are already exceeding 30 %. In order to maximise the benefits of CPV, the technology requires high Direct Normal Irradiation (DNI) and is available only within a limited geographical range – the Earth’s ‘Sun Belt’. CPV, mainly HCPV, is considered by some to be a sleeping giant and is expected to reach around 1 GW of production capacity by 2017.

Other emerging technologies such as Organic Photovoltaics (OPV) will gain a market share, and will see high growth rates, since the current production capacity is very small. Some see a scenario of around 300 MW of produced OPV and close to 1 GW of yearly production capacity globally by 2017. How-ever, due to the low efficiency of this technol-ogy, it could take years to transform OPV into a viable competitor to existing technologies.

The main challenge for solar PV now is to reduce the soft costs, like installation, permit-ting, and financing, as well as costs related to the integration of PV systems and the dispatachability of electricity generated from these systems.

Barriers

The main obstacles to larger-scale industrial deployment of PV systems are both admin-¬istrative and regulatory – and are mostly concerned with access to the grid. PV still

requires a higher initial investment cost, but offers very low operational costs. Therefore, project financing costs and the expected return on investment largely determine the final PV electricity costs.

Techno-economic barriers to the expansion of the solar photovoltaic sector include the development of PV as a standard building material, integration into existing electricity grids and a faster cost reduction for electrical storage options.

Other barriers include:

● regional shortages of skilled professionals; ● introduction of new materials and substi-

tution of precious ores, rare raw materi-als (e.g. silver, indium) in the production process;

● regulatory and administrative barriers, such as access to grid, high connection fees and long waiting times for connec-tion. The EC’s PV GRID project aims to identify the main legal and administrative barriers to large-scale PV integration with the grid in Europe;

● lack of public awareness, including among construction experts.

Needs

Developing a healthy, growing market is essential for the development of PV tech-nologies. As Asia has now overtaken Europe in terms of market growth, one of the main challenges for European PV is to continue to increase the cost-competitiveness of PV with other electricity sources and move towards greater grid integration.

Research push-tools must be combined with market pull-mechanisms to balance production capacity with market growth. Maintaining priority access to the grid is also crucial for the sector in the coming decade and adaptive feed-in tariffs with built-in reduction mechanisms reflecting technological progress and market growth has proven to be an effective tool, in par-ticular when compared to pure investment or tax-credit subsidies.

Additionally, highly educated specialists, such as chemists, material science engineers, and electronics and informatics engineers are required in large numbers by the PV pro-duction industry. The availability of these highly-skilled experts in Europe needs to be increased for further uptake of the technology.

For further information:

SETIS chapter on Solar Photovoltaichttp://setis.ec.europa.eu/technologies/solar-photovoltaic

European Photovoltaic Industry Association (EPIA)http://www.epia.org

European Photovoltaic Technology Platformhttp://www.eupvplatform.org

JRC PV Status Report 2013http://setis.ec.europa.eu/publications/ jrc-setis-reports/pv-status-report-2013

International Energy Agency Medium- Term Renewable Energy Market Report (2014) http://www.iea.org/publications/medium- termreports/

Installed capacity

In 2013, global cumulative installed PV capacity amounted to 138.9 GW. This rep-resents a rise of about 578 % since 2009, when the world’s cumulative installed PV capacity amounted to 24 GW, increasing to 40.7 GW a year later and to 71.1 GW at the end of 20113. In the EU-28, PV now covers 3 % of the electricity demand and 6 % of the peak electricity demand. Europe remains the world’s leading region in terms of cumulative installed capacity, with 81.5 GW as of 2013.

Germany remained the top European mar-ket with 3.3 GW of newly installed capacity (2013). Other significant European markets include UK (1.5 GW), Italy (1.4 GW), Romania (1.1 GW) and Greece (1.04 GW). This picture will undoubtedly change in 2014, with some analysts expecting the UK to overtake Ger-many as the largest European market for solar PV (e.g. SolarBuzz, 2014).

As a result of political decisions to reduce PV incentives, several European markets that had performed well in the past declined in 2013, such as Germany, Italy, Belgium, France and Denmark. The size of the remaining European PV market seems stable, with around 6 GW per year since 2010.

According to EPIA (2014) forecasts, the total installed capacity in Europe could reach between 119 - 156 GW in 2018. In the best case, the 100 GW mark could be reached by 2015 in Europe.

3. EPIA 2014