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Solar Power Begins to Shine as Environmental Benefits Pay Off

By Diana S. Powers

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Published November 11, 2013

PARIS — Amid polemics over rising electricity prices in Europe and the level of green energy subsidies in various countries, it is easy to lose sight of the fact that the growth in clean-energy generation is a huge success story.Solar photovoltaic generation, known as PV, like wind power before it, is coming into the mainstream — at great environmental benefit.

Based on comparative life-cycle analyses of power sources, “PV electricity contributes 96 percent to 98 percent less greenhouse gases than electricity generated from 100 percent coal and 92 percent to 96 percent less greenhouse gases than the European electricity mix,” said Carol Olson, a researcher at the Energy Research Center of the Netherlands.

Photovoltaic generation offers several additional environmental advantages, Ms. Olson said in an interview.

“Compared with electricity from coal, PV electricity over its lifetime uses 86 to 89 percent less water, occupies or transforms over 80 percent less land, presents approximately 95 percent lower toxicity to humans, contributes 92 to 97 percent less to acid rain, and 97 to 98 percent less to marine eutrophication,” she said. Eutrophication is the discharge of excess nutrients that causes algal blooms.

Toward the end of last year, installed global photovoltaic generating capacity passed the milestone of 100 gigawatts — enough to meet the energy needs of 30 million households and save more than 53 million tons of carbon dioxide emissions annually, according to a recent report by the European Photovoltaic Industry Association, E.P.I.A., a solar powerindustry lobby group.

“Right now, today, the world has installed 130 gigawatts of PV, up from 1.4 gigawatts in 2000,” Wolfgang Palz, a former manager of the European Commission’s development program for renewable energies, told a conference organized by France’s National Center for Scientific Research, CNRS, in Paris last month.

Europe alone now has 80 gigawatts of installed photovoltaic capacity, of which 35 gigawatts is in Germany, the European Union leader, providing about 7 percent of the country’s electricity, he said.

Some regions of Germany are even further ahead: “If you buy an Audi today, manufactured in Bavaria, 10 percent of the electricity used to produce it is PV,” Mr. Palz said in an interview.

With large-volume installation, economies of scale have substantially reduced unit costs.

According to a report by the E.P.I.A., the European solar industry’s lobby group, photovoltaic costs have dropped 22 percent with every doubling of production capacity.

Going back 10 to 15 years, “we had to fight to find some crazy people who would install solar panels for $70 per watt on the rooftop,” said Eicke Weber, director of the Fraunhofer Institute for Solar Energy Systems, in Freiburg, Germany.

“We had to find some market support systems for the first thousand-roof program,” Mr. Weber said. “That became the 100,000-roof program — and then the million-roof program.”

Now, “the number that should be broadcast is that, in Germany now, we are able to put PV systems on the rooftop for one euro per watt,” or $1.34, “with the back-up system, with the inverter, and with the cost of installation,” Mr. Weber said. An inverter is a device that converts the direct current electricity produced by solar generation into alternating current that can be fed into the electrical grid.

“In other countries, in the United States, it’s about a factor of two to three more expensive,” he added.

The rapid expansion of renewable energy generation in Europe has been driven by policy, and specifically by the provision of relatively high guaranteed prices for renewable energy sold into the transmission grid — known as feed-in tariffs.

Ahead of the 2009 United Nations climate change conference in Copenhagen, the European Union adopted a set of targets committing it to a 20 percent reduction in its greenhouse gas emissions below 1990 levels; an increase in the renewables’ share of E.U. energy consumption to 20 percent; and a 20 percent improvement in energy efficiency — all by 2020.

Since then, feed-in tariffs have been one of the main drivers of cuts in greenhouse gas emissions. The other has been reduced industrial activity resulting from economic recession. Between them, they appear to have been remarkably effective.

In Germany, Spain, Italy and France, for example, renewable energy investment boomed after the introduction of feed-in tariffs, though it has since slowed abruptly as governments have backed off to avoid a glut in supply.

According to the European Environment Agency, Europe had already achieved an emissions reduction of 18 percent by last year, putting it on course to overshoot the 2020 target, even if the E.U. economy recovers by then.

According to the E.P.I.A., the photovoltaic industry lobby group, 10 of the 27 E.U. member states had already achieved their 2020 photovoltaic targets by 2012, and most of the others were close.

With many European consumers squeezed between stagnant or falling incomes and soaring power bills, and governments desperately trying to cut back on public sector spending liabilities, green feed-in tariffs have come under increasingly sharp attack in the past year.

Power utilities have blamed them for rising electricity bills while traditional oil, gas and even nuclear generators have accused them of skewing the competitive playing field — a complaint that ignores the fiscal, regulatory and contractual advantages that they themselves have negotiated with various governments over the years.

Last month, for example, the British government agreed to a 35-year guaranteed price for power from a new nuclear plant to be operated by the French utility EDF. The price set, almost double Britain’s current wholesale electricity price, was effectively a feed-in tariff under another name, supporters of renewable energy say.

“Claiming that a guaranteed feed-in tariff for photovoltaic has to be stopped because it does not fit anymore in the new world is, of course, pure hypocrisy,” said Claude Turmes, a member of the European Parliament from Luxembourg. Mr. Turmes said that President François Hollande of France had backed EDF in its negotiations for a feed-in premium to build the British reactors, even while government policy was shifting away from feed-in tariffs for renewables.

Although cost of living concerns have increasingly been raised by critics seeking to roll back green energy incentives, Ms. Olson, of the Netherlands energy research center, said a cost-benefit analysis of German feed-in tariffs in 2011 made by the German Federal Ministry for the Environment, had found that the benefits outweighed the costs paid by electricity users.

“The €10.9 billion surcharge from the feed-in tariff was in large part compensated by savings on fossil fuel imports of €7.1 billion,” she said. “The presence of renewable energy in the electricity market also brings down the cost of peak electricity by about €4.6 billion. These two factors alone offset the costs, even without calculating in the health and environmental benefits or the jobs created.”

Cutting back on support for green energy now, in response to a short-term oversupply, could seriously damage future investment prospects, clean energy advocates and some financial analysts say.

“Photovoltaic has attracted the largest share of renewable energy investment for the past three years,” said Arnulf Jäger-Waldau, a senior scientist in the renewable energy unit of the European Commission’s joint research center, in an interview. “In 2012, worldwide it attracted $137.7 billion, or €105.9 billion, in new investments.”

“When politicians put in high feed-in tariffs and then abolish them, they create too much uncertainty for the market to grow well. It is better to enact a more modest feed-in tariff directly coupled to the actual cost of developments and maintain it over many years,” he said.

By 2015, present overcapacity on the market should be absorbed, Winfried Hoffmann, president of the European photovoltaic industry lobby group, said in an interview. “Two years from now, we will see a new wave of cost-effective production units,” he said. By then the period of consolidation will be over.

“Many companies will not survive, but some will. If we do not do our homework and prepare the ground today for this next wave and this growing market, then the window of opportunity will be closed,” he said.

Michael Eckhart, global head of environmental finance and sustainability at Citigroup, warned that policy shifts risked undermining investor confidence.

“Don’t let the public policies lag,” he said, “because once we leave, we’re not coming back.”

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