Solar Energy Perspectives - IEA

Chapter 12: Conclusions and recommendations
• The concentration of the recent development of one particular solar technology –
photovoltaic – in a small number of countries has brought costs down but raised concerns
about policy costs as installations went faster than expected. Probably the best chance to
see the risks of unwanted “bubbles” dissipate, while pursuing continuous development
till competitiveness, rests in deploying the technology in a greater number of countries
and regions. The progressive building-up of solar deployment in the United States, the
Chinese decision in July 2011 to implement a feed-in tariff for PV systems, the law to
support renewables passed in Japan in August 2011, the ambitious targets announced by
Algeria, Chile, India, South Africa and others in the last few months, all suggest this is
already happening.
The deployment of solar energy on the scale envisioned requires finding solutions to
a particular financing problem, which extends beyond purely economic considerations. By
nature, renewable energy technologies are capital intensive and need major up-front
investment with long returns. The costs of capital represent a significant share of levelised
costs of energy (covering all investment and operational costs over the system lifetime).
Emerging technologies are also riskier, although the greater economic risks are linked to the
volatility of fossil fuel prices. Technology and market risks increase the cost of capital, making
investment into solar energy technologies more expensive, unless governments or long-term
investors step in to provide cheaper access to capital.
Efficient support systems, whether feed-in tariffs or power purchase agreement rooted in
renewable portfolio standards, are needed to provide long-term secure payments for
investments and to reduce capital expenditures. The bulk of solar incentives will be to cover
repayment of these capital investments; only a small proportion should be considered
subsidies or, rather, learning investments required to bring solar technologies to competitiveness.
Their success would provide broad access to an inexhaustible source of energy and help give
more than a billion people around the world greater opportunity and economic freedom. By
contrast, fossil fuel subsidies only serve to perpetuate a system that is ultimately not
sustainable and distributes energy production and its benefits by chance. G20 governments
have already committed to eliminate fossil fuel consumption subsidies. They should also
consider eliminating production subsidies for fossil fuels. The money spent on these subsidies,
estimated USD 312 billion worldwide in 2009 (IEA, 2010b) would be much more wisely
invested in the development of renewable technologies.
An integrated approach to solar energy deployment should not only concern energy
administrations around the world. Its successful implementation will also require a full
understanding of the various solar technology options and their implications by all
stakeholders, including householders, property owners, architects, city planners, industrialists,
transport company executives, local authority officers and officials and many, many others.
This requires a deep and prolonged educational effort, to which this publication is aimed at
contributing.
Future work
New technology options are constantly emerging. As Edison observed long ago, turning them
into productive resources and methods always requires further work (“Genius is one percent
inspiration and ninety-nine percent perspiration.”) In solar energy, such options include solar
fossil hybrids, small-scale solar thermal electricity and solar fuels, and solar-enhanced
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© OECD/IEA, 2011