About Conference The Joint Graduate School of Energy and Environment (JGSEE) and CHE Center for Energy Technology and Environment (CEE) at King

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1 About Conference The Joint Graduate School of Energy and Environment (JGSEE) and CHE Center for Energy Technology and Environment (CEE) at King Mongkut's University of Technology Thonburi (KMUTT) and Kyoto University are pleased to organise the 4th International Conference on Sustainable Energy and Environment (SEE 211) during February 212 in Thailand. The event was initially scheduled to be held in November 211. However, due to exceptional floods in Thailand, the conference had to be postponed to 212, although its name has been retained as SEE 211. Since the first of its series of biennial conferences that started in 24, the SEE Conference has focused on advances in science and technology that addresses energy security, environmental impacts and climate change issues. The SEE 211 will continue to adhere to this theme. However, it has become increasingly apparent that the goal of sustainable energy and environment will not be attained by the application of lower-emission technologies alone, but a paradigm shift in policy and decision making and the engagement of government, industry and community towards the development of a low-carbon society. It is in this context that potential contributors from academia, research organizations, government agencies and businesses were invited to present their research work at the conference in the areas of science, technology and policy. In addition, a post-conference workshop on Biofuel technologies: from present to future is scheduled on 1 March 212. As part of SEE 211, an exhibition is also staged, offering companies and organizations an opportunity to publicize their products and services. A technical tour is also organised on 2 March 212. This programme also contains abstracts of papers presented either orally or by way of poster during the 3-day event. I hope the readers find this programme & book of abstracts and the accompanying CD of proceedings, which contains all the papers presented at the conference, a useful source of information and reference. Assoc. Prof. Dr. Sirintornthep Towprayoon Co-Chairperson of the Organizing Committee Prof. Keiichi Ishihara Co-Chairperson of the Organizing Committee HOME ABOUT CONFERENCE PROGRAMME SCHEDULE COMMITTEES PAPER SEARCH PAPER CONTACT US JGSEE Page 1 of 1 file://d:\conference Program.html?name=content&page_id=

2 4th International Conference on Sustainable Energy and Environment (SEE 211): February 212, Bangkok, Thailand Promoting Electricity Generation from Photovoltaics Efficiently and Effectively: A Survey on Lessons Learned Assumpcio Lopez-Polo 1, Reinhard Haas 1,*, Gustav Resch 1, Christian Panzer 1, Julieta Ch. Schallenberg 2 and Jaroslav Knapek 3 1 Energy Economics Group, Vienna University of Technology, A-14 Vienna, Austria, 2 Departamento de Ingenieria de Procesos, Universitario de Tafira, Las Palmas de Gran Canaria, Spain 3 Technical University of Prague, Czech Republic * Corresponding Author. Tel: , Fax: , haas@eeg.tuwien.ac.at Abstract: High investment costs has been a major barrier for market breakthrough of Photovoltaics. Yet, in recent years attractive promotion schemes have brought down the costs significantly. The core objective of this paper is to analyze more in detail the reasons for these developments in costs and to discuss the perspectives for future promotion schemes. Moreover, of specific interest is the likely competitiveness of PV due to grid parity - leading to lower costs of PV than the household electricity price is. Keywords: Photovoltaics, economics, promotion schemes, grid parity, cost development 1. INTRODUCTION For a long time Photovoltaic systems has been seen as an environmentally benign technology with a huge potential for electricity generation. However, the high investment costs has been a major barrier for harvesting these potentials [1-4]. Yet, in recent years PV systems have in several countries like Spain and Germany reached remarkable magnitudes, see Fig.1. This was mainly due to attractive promotion schemes which has brought down the costs. PV has for a long time been considered as an environmentally benign alternative for electricity production. Yet, mainly because of high costs PV has not yet reached a remarkable market share [5-9]. Yet, in recent years especially in Germany significant price reductions have taken place mainly as a response to the national German policy of FIT. This led to the fact that finally PV systems are on the verge to so-called grid-parity. 45% was grid connecte d capacity in California South Korea 2% Japan 7% USA 7% Installed NEW PV PV-capacity INSTALLED CAPACITY 29 Australia 1% China 2% Rest of the World 5% France 3% Czech Republic 6% Belgium 4% Spain 1% Italy 1% Germany 52% Fig. 1 Installed PV capacities by country world-wide in 29 [1] As can be seen from Fig. 2 over the last decades the countries leading in PV deployment changed over time. From the 199s to 23 Japan was the clearly leading country. After that Germany with very ambitious highly subsidized promotion schemes took over. In 28 Spain was leading followed by a plummeting in 29. In 21 (surprisingly) Czech Republic jumped on a major place in the world-wide ranking. Moreover in the last years Italy has continuously increased its deployment so far with no looming backlashes. The core objective of this paper is to analyze more in detail the reasons for the uptakes in these countries and to discuss the perspectives for future promotion schemes. Moreover, of specific interest is the likely competitiveness of PV due to grid parity - leading to lower costs of PV than the household electricity price is. This analysis is applied to the European countries with the largest capacities installed recently. The perceptions and conclusions of this analysis can be used in many countries world-wide. 29

3 4th International Conference on Sustainable Energy and Environment (SEE 211): February 212, Bangkok, Thailand 6, 5, 4, MW/year 3, 2, 1, DE ES CR IT JP US Fig. 2 Installed capacities in major European countries in recent years [1-2] 2. METHOD OF APPROACH The method of approach applied in this work is based on a formal framework analyzing the costs and the economic performance of the promotion programmes from the following points-of-view: The concept of Technological learning How did costs historically follow learning trends? identifying investment costs as well as solar yields by country over time and calculating the corresponding electricity generation costs of PV plants ; investigating the over-all promotion costs depending on size of system; Comparing these costs with household electricity prices. 3. HISTORICAL DEVELOPMENTS OF PV COSTS AND LEARNING Fig. 3 depicts the basic principle of technological learning applied to PV. Until 2x it followed clearly the expected Learning path. Then it deviated. Why? Fig. 3 The basic principle of TL applied to world-wide PV (Source: Yu (211) [11]) Why? To understand this it is necessary to understand how prices come about in markets 291

4 4th International Conference on Sustainable Energy and Environment (SEE 211): February 212, Bangkok, Thailand Price ($/kw) Long-term development Short-term development New companies enter the market: prices drop Demand increases: Prices rise Quantity (kw) Fig. 4 How price and cost developments in markets are linked 4. FIRST LEADER IN PV PROMOTION: JAPAN Historically, the prices of PV systems were influenced mainly by two countries: By Japan up to about 25 and the by Germany. Figs. 5-6 depict the development in Japan MW/yr MW SGCS per year MW cumulative Fig. 5 Development of yearly and cumulative small grid-connected PV systems in Japan MW cumulated Yen/Wp Average system costs ( per kw) Average subsidies per kw Fig. 6 Development of system costs and subsidies of small grid-connected PV systems in Japan 292

5 4th International Conference on Sustainable Energy and Environment (SEE 211): February 212, Bangkok, Thailand We can finally see that up to 25 the Japanese system worked perfect. Decreasing subsidies and in lockstep decreasing system prices led to almost exponentially increasing PV capacities. Yet there was a break in 25. Why? 5. CURRENT LEADER IN PV PROMOTION: GERMANY In 25 the German government introduced a new FIT for PV. This tariff led to a considerable uptake of PV systems installed in Germany see Fig. 2. This introduction of higher support led temporarily to price increase due to the scarcity in PV systems due to high financial incentives, see Fig. 7 especially from 23 to 27. However intensified competition afterwards led to a rather steep decrease in recent years leading to a skyrocketing in capacities installed in Germany and some other countries. Fig. 8 depicts the development of Feed-in-tariffs (FITs), costs and household electricity prices in major European countries (historically) and provides a forecast up to 212. Fig. 9 depicts for Germany possible developments up to 212 in an upper and a lower corridor depending on the capacity of systems installed. As can be seen from Fig. 1 in the lower corridor scenario the so-called grid parity could already be brought about before Higher prices due to scarcity in PV systems due to high financial incentives EUR/kWp Intensified competition Fig. 7 How prices and system costs developed in the German PV market cent/kwh CR DE AT ES Costs Fig. 8. Feed-in-tariffs (FITs), costs and household electricity prices in major European countries (historically) and (forecast) 293

6 4th International Conference on Sustainable Energy and Environment (SEE 211): February 212, Bangkok, Thailand 6 5 Upper corridor cent/kwh Lower corridor <3 kw historisch <3 kw Ob. Korridor <3 kw Unt. Korridor >1 MW historisch >1 MW Ob. Korridor >1 MW Unt. Korridor Fig. 9 Historical development of PV costs in Germany and expectations up to 212 in an upper and a lower corridor cent/kwh <3 kw historical <3 kw Upper corridor <3 kw Low er corridor Household Ele price Fig. 1 Historical development of PV costs for small systems in Germany and expectations up to 215 vs household electricity prices leading to grid parity CONCLUSIONS The major conclusions regarding country-specific lessons learned are: (i) The Japanese promotion system starting in 1994 can so far be considered as the world-wide most successful on: It led with decreasing financial incentives to up to 23 - continuously increasing capacities and decreasing costs; (ii) The Japanese system came in troubles after Germany introduced higher financial incentives which led temporarily also to higher costs. Since then Germany was with the exception of the year 28 world-wide leading country in yearly PV installations; (iii) in 28 Spain become champion in new PV-capacities installed per year. However, the Spanish system was not really sustainable and the peak in 28 was followed by a crash in the years after. Moreover, already today (in 211) major shortcomings like lowquality installations of the 28 boom emerge; (iv) The last recent skyrocketing country in PV installations was Czech are radically cut down. The most important conclusions with respect to an efficient and effective deployment of PV systems are: (i) A welldesigned (dynamic) Feed-in tariff system provides a certain deployment of photovoltaic electricity fastest and at low costs for society; However, the correct dynamic design is the crucial point; (ii) In addition this system might be improved by conversion into an investment subsidy to ensure an own use share of PV as high as possible; This might lead to a lower burden for the distribution grid and, hence, cause less costs for society; (iii) A radical change in the system can lead to an immediate breakdown as observed in Spain; (iv) If the proper dynamic adaptation to cost decreases due to Learning is missing - like in Czech Republic - it can lead to an extreme overheating of the market; (v) However, all in all these European developments led to a significant cost decrease which bring PV systems on the:verge to cost-competitiveness, the so-called grid parity. 294

7 4th International Conference on Sustainable Energy and Environment (SEE 211): February 212, Bangkok, Thailand 7. REFERENCES [1] IEA (different years) Trends in Photovoltaic Applications, Survey report of selected IEA countries between 1992 and 28, 29. [2] IEA (different years) National Survey Report of PV Power Applications in different countries and different years. Report IEA-PVPS T1-19:21. Available at [3] Haas, R. (22) Market deployment strategies for PV systems in the built environ-ment: An evaluation of Incentives, Support Programmes and Marketing Activities, IEA-Photovoltaic Power Systems Programme, Report IEA-PVPS T7-6:22. [4] Haas, R. (1995) The Value of Photovoltaic Electricity for Society, Solar Energy, 54(1), pp [5] Lopez Polo, A. and Haas, R. (211) An international OVERVIEW of PROMOTION POLICIES for grid connected PV systems. March 211 (Mimeo). [6] Lopez Polo, A., Haas, R. and Suna, D. (28) Promotional Drivers for Grid-Connected PV, IEA PVPS Task 1.Report IEA-PVPS T1-5:29. March 29. [7] Dusonchet, L. and Telaretti, E. (21) Economic analysis of different supporting policies for the production of electrical energy by solar photovoltaics in western European Union countries, Energy Policy, 38, pp [8] Dusonchet, L. and Telaretti, E. (21) Economic analysis of different supporting policies for the production of electrical energy by solar photovoltaics in eastern European Union countries, Energy Policy, 38, pp [9] Lüthi, S. (21) Effective deployment of photovoltaics in the Mediterranean countries: Balancing policy risk and return, Solar Energy, 84, pp [1] Dinçer, F. (211) The analysis on photovoltaic electricity generation status, potential and policies of the leading countries in solar energy, Renewable and Sustainable Energy Reviews, 15(1), pp [11] Yu, C.F., van Sark, W.G..J.H.M. and Alsema, E.A. (211) Unraveling the photovoltaic technology learning curve by incorporation of input price changes and scale effects, Renewable and Sustainable Energy Reviews, 15, pp