Solar Energy Perspectives - IEA

Solar Energy Perspectives: Policies
So far most of the rapid growth of PV has taken place in a very limited number of markets,
all driven by FITs. Germany, Spain, Italy and the Czech Republic account for over 60% of
global capacity (Figure 3.1). About half of global capacity is in Germany alone.
Generous incentives, inconsistent with declining PV costs, have been and still are available
in several countries. This has encouraged intermediaries to appear in the PV development
business, since projects allow for relatively high returns. Final investors harnessed
reasonable returns, while intermediaries captured excessive rewards. While the market
recognised how PV costs have been dropping sharply, regulation often did not follow
a similar path. Potential market changes were not considered at the start and remuneration
levels remained too high.
Difficulties began in Spain in 2008, when installed capacity reached 4 GW, almost
10 times more than the official target at that time. Since 2009 drastic future PV
remuneration cuts have been enforced (-70% of 2008 tariffs), further reductions
programmed, and what industry claims as retroactive regulation applied. 3 Also relatively
high new targets are defined for 2020 (8.4 GW). These adjustments have undermined
investors’ confidence.
In Italy, PV accelerated in 2010, with 3.1 GW cumulative capacities in 2010 and 4 GW
awaiting connection, according to GSE, the public renewables institution. If all this capacity
is connected, 87% of the 2020 targets will be met already by 2011. The Czech Republic and
France have experienced similar unexpected outcomes. Greece may be next, with one of the
most generous FITs in Europe, very good sunshine, and more than 5.3 GW of applications
for PV capacities towards a 2020 target of 2.2 GW. A target of 10 GW by 2025 was set in
early September 2011, mostly for exports to Germany. Last but not least, in Germany, where
some 8.5 GW were installed in 2010, the growth rate still exceeds that which would be
consistent with the 2020 targets (about 3.6 GW/y).
The German FIT, after several revisions and adjustments, is probably the most sophisticated
to date. In 2008 a “corridor system” was introduced that ties the rate of regression in support
level to the recent rate of investments. Despite this, three non-scheduled decreases in support
levels were introduced in 2010 and 2011. They have considerably helped keep the FIT
levels – more precisely, the net present value of all future payments – quite close to actual
PV costs in Germany (Figure 10.4), which due to market maturity are significantly lower than
in sunnier countries. It remains to be seen, however, whether both scheduled and nonscheduled
tariff decreases have provided German policy makers with the greater level of
control on total costs passed on to electricity end-users they were seeking. The most recent
information is encouraging, as PV systems commissioned between March and May 2011 in
Germany were about 700 MW, likely to lead to a yearly increase of 2.8 GW, much closer to
target than in 2010.
Cost control appears especially difficult in the case of PV. PV is extremely modular, easy and
fast to install and accessible to the general public. 288 000 installations of less than 100 kWp
were installed in Germany over 12 months (Figure 10.5) – almost three times the cumulative
3. The number of full-capacity hours at which the tariff is paid was limited. Investors having PV systems that are oversized in relation
to their rated and contractual capacities are likely to be hardest hit.
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© OECD/IEA, 2011