While it was easy for the German government to abandon nuclear power in 2011, it proves much more difficult to replace the old energy mix with a new strategy. That’s because energy policy is never limited to the one resort of the energy minister. In fact, energy policy touches so many sectors. That’s not surprising, since the provision of energy is intrinsically linked with economic wealth of nations..
End of October 2011, the UK announced an unexpected and severe cut of its feed-in tarff for small solar installations. The department of energy and climate change (DECC) called it a consultation. However, since the date the new tariffs were valid from (12/12/11) preceded the date of the end of the consultation, it can hardly be called such thing. In fact, there has been a court challenge regarding the legality of the process. While the outcome of this ongoing legal battle may change things slightly, it will most likely not change the conclusion of this article.
A consolidation of the solar photovoltaic (pv) industry has long been predicted. However, unlike other industries like the pc industry or the telecommunications industry before, the consolidation in the pv industry appears to happen thru shutdowns and bankrupties rather than mergers. Three thin-film based U.S. module manufacturers became insolvent in 2011: Evergreen Solar, Spectra Watt and Solyndra, while Solon ceased manufacturing in Arizona. In Germany, Conergy has suspended cell production and been taken over by its creditors. In fact, the failure of Solyndra is perhaps the most spectacular venture captial- backed bankruptcy of all times with $1bn VC investment and also a $535m loan from the U.S. government. On the other hand, we haven’t seen any spectacular mergers of the likes of HP-Compaq or Vodafone-Mannesmann in other industries.
Rising cost of capital for solar pv projects in some euro-zone countries, caused by the EU debt crisis, will mean that many projects will no longer be financially viable. Instead, investors in solar may switch to African or South American countries that have more sunshine to compensate for higher cost of capital.
With so many places on earth where photovoltaic power plants could be built, it is not always immediately obvious where the best opportunities are for investors or project developers. For instance, lack of sunshine in one country may be compensated for by a high feed-in tariff. For a first-look, crude comparison of two opportunities, projects may be scored on 5 dimensions: Irradiation, tariff, system performance, capital expenditure and a general assessment of political stability & local knowledge of the team.
How complexity of feed-in tariffs add to the price of solar power.
Among politicians it has become fashionable to state that solar power is too expensive, no doubt as a pre-cursor to drastic cuts, as witnessed in many countries. Understandably, people demand more transparency and to know how much more they pay for electricity due to renewables. The reputation of being too expensive is damaging the solar industry and the technology as a whole. If it’s so expensive, why do we support it?