Questions and answers about solar energy

How will the costs for photovoltaic systems change?

When does solar electricity become economically viable?

The generation costs of electricity produced with solar power are often not compared with the conventional electricity generation costs but with the electricity price, which the end user pays "at the plug". There are good reasons for this.

Compared to plant such as biomass power stations or wind turbines, solar electricity has the special characteristic that it is generated directly there where it can be consumed. More than 90 percent of all photovoltaic systems are attached to buildings. The owner or tenant of the building usually purchases the electricity at normal end customer tariff prices. A kilowatt hour of electricity currently costs around 20 cent. This price has been rising for years. Compared to this, the prices for solar electricity are falling due to the annually falling remuneration. Therefore, so-called "grid parity" is reached in; this is the intersection with the end user electricity price in around 2015. This is the time from which, it will no longer pay the normal tariff customer to feed solar electricity into the grid and receive the reduced remuneration but instead they should consume it in their own household and therefore save expensive energy from the mains socket.

This applies, of course, to solar electricity generated near to consumption, not for large-scale open space plants. Home owners will dimension their photovoltaic system according to their electricity consumption and will no longer feed electricity into the grid according to the Renewable Energy Law (EEG). If no electricity is fed into the public grid, all grid usage charges and taxes do not apply to self-generated and consumed solar electricity. The remaining quantity of electricity, above all the night-time requirements, will continue to be drawn from the grid. The largest electricity consumption occurs during the day, which is very compatible with the photovoltaic system generation peaks. The result is a high proportion of independent solar energy supply. The proportion can be increased still further if appliances such as washing machines and dishwashers are deliberately programmed to the times with the most solar electricity. Therefore, in the near future, for most of the photovoltaic systems on houses, commercial and administration buildings, the end user electricity price will determine their economic viability.   

How will the costs for photovoltaic systems change?

An important factor for falling system prices is the degression requirement in the Renewable Energy Law (EEG). It specifies that each year the remuneration for solar electricity falls by a certain percentage rate. The manufacturers therefore have an incentive to achieve lower costs, more efficiency and innovations. To date the annual degression was 5 percent. Taking into consideration the inflation rate, this means that solar electricity must be generated 7 percent more cheaply each year. The EEG does not specify at which point of the value added the cost degression is reached. Theoretically the photovoltaic system prices could therefore remain the same, the margin of the wholesale trade, tradesmen and operators would then fall instead. In practical terms the cost cutting possibilities exist at the production level only, as it is hardly possible to cut down on costs at the expense of tradesmen and operators. The system prices have therefore already fallen in the meantime.

Regardless of how high the degression is in detail, an incentive to cut costs always exists on the manufacturers' side. The profit margins can be increased through innovations, higher efficiencies, material savings and more cost-effective production. The commercial calculation and a longer-term orientation therefore ensure technical progress is achieved by the manufacturers.

Is there enough sunshine in Germany for the effective use of photovotaic?

Around 10 square metres of solar collectors is sufficient to cover a quarter of the heat requirements of an average detached house in our part of the world. A photovoltaic system with the same size supplies one quarter of the electricity requirement. The path from the heat or electricity generation to the consumer is extremely short. Photovoltaics can be flexibly integrated in buildings, in consumer goods and in vehicles. Energy supply could not be any easier or more decentralised than that.

Theoretically, the world's energy requirements could be completely covered by solar energy over an area of 700 times 700 kilometres in the Sahara. The challenge lies in utilising this potential technically and economically. Solar power stations in the Sahara would first have to bridge the very wide distance to the electricity consumers – a challenge unsolved to date. Initial experience with solar thermal power stations in California and Southern Spain is very promising. They already provide electricity generated by the sun regionally at competitive prices. By using heat accumulators this electricity is available with the same output around the clock.