Solar Power Global and European Trends -...

Solar Power Global and European TrendsKey Developments

Dr. James Watson, CEOIstanbul, GUNDER conference, 30th May 2016

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What is SolarPower Europe?

• ThenewEPIA(EuropeanPhotovoltaicIndustryAssociation)

• Amemberledassociationrepresentingorganisations activealongthewholevaluechain

• Shapestheregulatoryenvironmentandenhancesbusinessopportunities

• SolarPower Europe – The new European Photovoltaic Industry Association (EPIA) – hasbeen promoting solar electricity in the European market for over 30 years. Werepresent our members, who are active along the whole solar value chain and inrelated business sectors.

Title and date 3

Our Members IncludeUpstream Members include: Downstream Members include: National Associations include:

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1GLOBAL STATUS AND OUTLOOK FOR SOLAR

THE GLOBAL SOLAR PV MARKET

>50 GW in 2015

© SolarPower Europe 2016

GLOBAL SOLAR PV ANNUAL GRID CONNECTIONS 2000 - 2015

THE GLOBAL SOLAR PV MARKET

>228 GW by 2015

GLOBAL SOLAR PV TOTAL GRID CONNECTIONS 2000 - 2015


Title and date 7

A SOLAR DAWN IS RISING

COP21 has added urgency: The International Solar Alliance was launched and targets make solar a necessity

Countries across the world already choosing solar since Paris

2EUROPEAN STATUS AND OUTLOOK FOR SOLAR

THE EUROPEAN SOLAR PV MARKET

>8 GW in 2015

EUROPEAN SOLAR PV ANNUAL GRID CONNECTIONS 2000 - 2015



>96 GW by 2015

EUROPEAN SOLAR PV TOTAL GRID CONNECTIONS 2000 - 2015


Title and date 11

Europe: Once the cradle of solar

EVOLUTION OFANNUAL EUROPEAN SOLARPVGRID-CONNECTION SHARESCOMPARED TOOTHERREGIONSFROM2010 - 2015

Title and date 12

Solar a truly global phenomenon

EVOLUTION OFCUMULATIVE EUROPEAN SOLARPVGRID-CONNECTION SHARESCOMPARED TOOTHERREGIONSFROM2010 - 2015

TraditionalMature-TransitionImmature-TransitionEmergingUntapped


STATUS OF EUROPEAN SOLAR MARKETS IN 2015



In 2015

4%Of the EU Electricity demand was

covered by PV


POWER GENERATION CAPACITIES ADDED IN THE EU 28 IN 2015

Source: EWEA, ESTELA, SOLARPOWER EUROPE


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SOLAR POWER OUTLOOK IN EUROPE

THE EU MARKET IS STABILISING AROUND 7-8 GW, THIS TREND IS EXPECTED TO CONTINUE TO 2020

SOLAR POWER A MAJOR PLAYER IN 2030

3A MOVE TO TENDERS IN EUROPE

• Tenders are a procurement mechanism by which public authorities solicit bids for a given amount of renewable energy supply (MWh) or capacity (MW), generally based on price.

• Although tenders and auctions are used as synonyms, price is the only award criteria in auctions (combined with qualifying requirements), while tenders may combine price with other award criterions.

DEFINITION OF TENDER

TENDERS INCREASINGLY USED WORLDWIDE

Source: IRENAbased onREN21– Renewables 2015GlobalStatus Report

EUROPEAN STATE AID GUIDELINES

Since 1July2014,newrules fornewRESinstallations(operatingaid):

Integration inthemarket

•From 2016,RES installations:

•Sell onthemarket andreceive apremiuminadditiontothemarketprice

•Bear balancing responsibilities

•Receive nosupportduring periods ofnegative prices

Introductionofcompetitive bidding

•Transitional phase 2015-2016:•Aid granted through competitivebidding processes foratleast5%oftheplanned RES capacity

•From 2017:•Aid granted viacompetitive biddingprocesses for100%oftheplanned REScapacity (see exceptions)•Process opentoallgenerators andtechnologies (see exceptions)

Special regime forsmall installations

•Installationsbelow 500kW still eligibleforFITs (3MWor3generating units forwind)

•Nocompetitive process required forinstallationsbelow 1MW(6MWor6generating units forwind)

EUROPEAN STATE AID: EXEMPTIONS

Tendersopeninprinciple toalltechnologies,buttechnology-specific approach still possible:

• Long-termpotential ofatechnology• Needtoachievediversification• Gridstability• Systemintegrationcosts• Avoid distortions onrawmaterial markets (biomass)

Tendering asarule butMemberStatescan derogate if:

• Onlyoneoraverylimitednumberofprojectsorsitescouldbeeligible;or

• Thebiddingprocesswouldleadtohighersupportlevels;or• Thebiddingprocesswouldresultinlowprojectrealisation rates.

So far, only 5 countries are using tenders for solar in Europe:

• France: systems between 100-250 kWp and above 250 kWp• Germany: pilot programme for ground-mounted installations

between 500 kW and 10 MW. • [Poland: upcoming tenders for installations above 40kW (bill

approved)]• The Netherlands: SDE+ scheme• UK: « contract for difference » for systems above 5 MW• Spain: Possible introduction

GROWIND TREND IN EUROPE

NEED FOR STABILITY

• TheStateAidGuidelinesareatransitiontool,thekeyremainstohavestability forinvestments.

• ThismeansthatFiT shouldbehonoureduntiltheendoftheperiodtheyaregrantedfor

• Noretroactivemeasuresshouldbeemployed

• Smallscaleofunder1MWmustremaintenderfreeandshouldbeeligibleforFiTs,whichisprecludedundertheStateAidGuidelines(500kwthreshold)

• StabilityofRegulationiskeyforinvestors,developers,society…

4MARKET SEGMENTATION

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DistributedSolar PV

CentralizedSolarPV

Prosumers

Producers

Grid injection, PPA, market design fit for variable generation

Self-consumption, support to the grid, increased competitionat retail level to unlocknew business models, leverage of new formsof financing

ONE TECHNOLOGY

TWO DISTINCT SOLAR PRODUCTS IN EUROPE

SOURCE: Becquerel Institute

ROOFTOP MARKETS DOMINATE IN EUROPE

• Newfinancingmodels appearing:

Ø Third-partyfinancingØ Jointpurchasing

Ø Cooperatives

Ø Crowdfunding

ROOFTOP SEGMENTS LED BY SELF-CONSUMPTION BUSINESS MODELS

PROSPECTS PER MARKET SEGMENT IN THE WORLD

5TRADE MEASURES AND SOLAR

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THE EU – CHINA MODULE AND CELL CASE

TRADE MEASURES IN EUROPE

• MeasuresintroducedinDecember2013,followingperiodofinvestigation(alsosubjecttoduties2012)

• ConsistofMinimumImportPrice(MIP)andduties(combined64%)

• MeasureswereduetoexpireinDecember2015,currentExpiryReviewextendsperioduptomaximumMarch2017whenarulingwillbemade

• AppliesonlytomodulesandcellsfromChina,Chineseinstallationsinothercountriesnotcovered

SOLARPOWER EUROPE APPROACH

• Nopositioninoriginalinvestigation,strictneutrality

• UnanimousdecisionoftheBoard,includingEuropeanmodulemanufacturers,inMarch2015toopposeextensionofmeasures

• SolarPowerEuroperecommendsthattraderelationswithChinaonsolarproductsreturntonormal,undistortedandfairtradeimmediately

• Theneedforastableregulatoryframeworkiscrucial

WHY DOES OUR ASSOCIATION TAKE THIS POSITION?

Module Production continues to decline in Europe – this is not about dumping or illegal subsidy

• Despitethetrademeasures,solarmoduleproductioncapacitiescontinuetoshrink.

• Therehavebeennonewentrantsandnonewproductionlinesinstalled.

EUROPEAN COMMISSION STUDY ON MODULE MANUFACTURING

• AstudybytheEuropeanCommission’sJointResearchCentre(JRC)inJune2015foundthatthemajorchallengeforEuropeansolarmodulemanufacturerstobecompetitivewasachievingeconomiesofscale.

• Thereportstatesthat:

• Multi-gigawattfactoriesareneededproducingmodulesat40Euroc/w(theMIPtodayis56Euroc/w)– noneexistinEurope.ChinaandotherAsiancountrieshavemulti-gigawattsites(4-5GWproduction)(ExecutiveSummary)

• ContinuedcostsavingsinAsianproductionwillcome fromcheaperpolysilicon,thinnerwaferswithsmallerkerflossesandincreasedefficiency(page20)

• ThereisnomentionofChinesedumpingorillegalsubsidyinrelationtochallengesforEuropeanmodulemanufacturersinthereport

THE IMPACT OF TRADE MEASURES

ArtificiallyhighpricesintheEUformodulesandcellsinanerawithouthighsubsidiesslowsdownsolardeployment:

• ItisclearthattheMIPisabovethemarketpriceofmodulestoday.TheEUhashigherpricesthantherestoftheworldbecauseoftheMIP.TheEUispayingmoreformodulesthanitneedsto.

• TodaysolarmustcompeteformarketincomethroughparticipatingintendersintheEU,priceisking.

• Themeasuresmakesolarmorecostlythanitreallyis,thismakesithardtocompeteintenders.ThismeansthatthegoalofsubsidyfreesolarinEuropeisbeingdelayedunnecessarily.

TRADE MEASURES: UNINTENDED CONSEQUENCES

Trademeasuresconsequences:

• IntheEUsystemcostreductionpricepressureiscurrentlyonbalanceofsystems(BOS)manufacturers(Voestalpine,ABB,Zimmermann,etc.)andprojectdevelopers,(BayWa r.e.,SolarCentury,Enel,etc.)becauseofthetrademeasures.

• Theseupstreamanddownstreamcompaniescannotreducecosts.

• Europeanconsumerspaymoreasthecostsofsolarareartificiallyincreasedforsociety. 0.00

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2007 2008 2009 2010 2011 2012 2013 2014 2015

BOS

Modul

CONSIDER ALTERNATIVE MEASURES

IndustrialPolicyasaspecifictooltosupportgrowthofindustry?

TheEuropeanCommissionJRCreportonmodulemanufacturingsuggeststhefollowing:

• GuaranteedLoans

• Accesstoventurecapital

• Publicfinanceforresearchanddevelopment

• Improvedinnovationthroughfunding

Alsobeawareofeco-designmeasuresinEuropewhichwillsetWTOcompatiblelegalstandardsforplacingmodulesandsolarproductsonthemarket– expectedAutumn2016

SolarPower Europe (European Photovoltaic Industry Association)Rue d’Arlon 69-71, 1040 Brussels, BelgiumT +32 2 709 55 20 / F +32 2 725 32 [email protected] /www.solarpowereurope.org

Learn more atwww.solarpowereurope.org

Solar Power Global and European Trends -...

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