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14/05/2017

Ludovic Deblois' Column - Photovoltaics in France, the best is yet to come

Solar electricity is growing fast, both in France and around the world. After years of hard going, the French solar power industry has regained confidence in the future for a number of reasons.

Are we at a turning point? Although the Trump administration is trying to turn back the clock on climate change and other environmental issues, there are many indications of a paradigm shift on energy. The biggest beneficiaries of this change are the wind and solar power industries.

Solar photovoltaics went through a long and brutal crisis period, but that all seems to be behind us. By the end of 2016, continental France had 7.1 GW of total installed solar power. In fact, continental France has already beaten the initial objective of 5.4 GW by 2020 set by the Grenelle environmental forum in 2007, and is keeping up a strong pace. Syndicat des énergies renouvelables(SER), which represents the country’s renewal energy players, estimates that France could have an installed power of 10 gigawatts by the end of 2018, and 18 to 20 gigawatts by the end of 2023.

According to Enerplan, an association of solar energy professionals, “this would mean at least 10,000 additional jobs in France by 2023 compared to 2016,” for a total of more than 21,000 jobs. “A more ambitious scenario . . . would generate 16,000 additional jobs by 2023.”

What’s more, “growth in the industry will produce significant environmental benefits (more than 5 million fewer tons of CO2 emissions/year in 2023) and more tax revenue for communities (€183 million/year),” adds Enerplan.

Temporary or lasting phenomenon?

According to provisional data from SER, a total of 63 gigawatts of power were installed around the world in 2016. This is a big jump compared to 2015 (+29%). The total amount of installed power in the world is now around 288 GW, and the International Energy Agency (IEA) believes this figure could reach 547 to 654 GW in 2021That would be an increase of 190 to 230% in six years. In 2015, photovoltaics ranked second only to wind power in terms of new electric power generation capacity brought on line in France, Europe, and the United States. So it seems that the growth is here to stay.

Who benefits from this situation? China now ranks first in terms of total installed power (43.2 GW peak power), outstripping Germany, the historical front runner, and aims to reach the staggering figure of 140 GW by 2020. Japan, the United States, and India are also fast growing markets. The European Union remains the top region in terms of total installed power, with nearly 95 GW, and plans to reach 120 GW by around 2020. The United Kingdom has the most dynamic market in the region, ahead of both Germany and France. In reality however, only cautious estimates are being made for the EU.

Competitiveness is the name of the game

Although the difficult years from 2010 to 2014 are now but a not-so-fond memory, they were a big blow. Solar panel prices dropped 80%, largely due to Chinese suppliers. Electricity costs remained high (more than €220 per MWh) and many projects were abandoned because of the severe economic crisis, which put heavy pressure on government budgets, and therefore feed-in tariffs. Many major manufacturers took a serious hit: Q-cells in Germany, Suntech in China, and Photowatt in France. France paid heavily, with the number of direct jobs in photovoltaics being cut by roughly 75%, from 32,500 in 2010 to 8,227 in 2015, according to SER data.

However, things are now back on track. We have entered an era of competitive solar power. France Territoire Solaire calculates the cost of production of photovoltaic electricity at around €70 to €100 per MWh for solar power plants, whereas production costs for the French nuclear industry is €42 to €59.8 per MWh (5).

However, SER estimates that the price of photovoltaic power has dropped from €0.30/kwh in 2006 to €0.07 /kwh in 2016 and that that prices could decrease by another 59% by 2025.

Say goodbye to subsidies

On the global scene, the International Energy Agency reports long-term photovoltaic power supply contracts at record low prices (7). The French environment and energy management agency, ADEME, says, “The drop in the cost of photovoltaic facilities has led to a significant decrease in the cost of photovoltaic power production (LCOE), which is approaching (or has already reached) network parity in some countries. The increased competitiveness of photovoltaic power has led to new development scenarios (onsite consumption, sale on the open market, etc.).” ADEME even considers that a subsidy-free development model could become possible for the industry in France by 2020. This indicates that the industry is on track for the long term.

A long road ahead

Of course, photovoltaics still have a long way to go, and it will not all be smooth sailing. However, the Paris Climate Agreement (December 2015) gave the industry a needed boost. In France, renewable energy accounted for “only” 14.9% in 2015. The initial benchmark at that time was set at 17%, required to bring renewable energy to 23% of gross final energy consumption by 2020, the target set by the European Union. In 2015, solar — electric and thermal combined — contributed 0.7 million TOE (tons of oil equivalent) to the country’s renewable energy budget (23 MTOE). Worldwide, renewable energy accounted for 2.7% of primary energy consumption in 2015, with photovoltaics representing about 0.7% of this figure.

France is banking on innovation

As for photovoltaic equipment manufacturing, China continues to dominate the industry, with a stable 90% market share. Furthermore, it still shows sign of overcapacity, a situation that will keep the pressure on other manufacturers and their prices.

To survive in this context, French manufacturers have chosen the only viable path, namely innovation. “The technological advances of French manufacturers . . . are significant in a number of technology sectors,” says ADEME. “These include silicon wafer technology (e.g., ECM), high performance silicon cells (e.g., Photowatt/Sunpower) . . . CPV cells and modules (e.g., Soitec/Heliotrop), trackers (e.g., Exosun), integrated structures (e.g., IRFTS), and network flexibility software (e.g., Alstom Grid/Energy Pool).”

For its part, CEA Liten is conducting cutting-edge research on crystalline silicon, used in photovoltaic cells to reduce manufacturing costs and increase the cell’s energy production. Armor has invested nearly €40 million in organic photovoltaic film technology (Beautiful Light Project). Downstream from this sector, a number of French companies are continuing to grow, either independently (Fonroche, Akuo Energy) or within large groups such as Solaire Direct, acquired by Engie.

Meanwhile, the French environment minister, Ségolène Royal, has issued a 210 MW call for tenders for innovative technology development.

Solar buildings, onsite consumption

The development of positive energy buildings has also been a driver for growth in the industry, both in the residential and tertiary sectors, which alone accounted for 69% of final electricity consumption in 2015Building-integrated photovoltaics (BIPV) can help them reach energy self-sufficiency, or even become energy producers. This market has a promising future, which some estimate will reach $26 billion by 2022. What goes for buildings, also goes for transportation: smart, self-sufficient windows could supply solar energy to smart vehicles.

Most shopping centers currently being built or renovated follow this logic. For example, the Grand Pineuilh shopping center in the Gironde region is aiming for an annual production of 570 MWh of solar electricity, thanks to panels shading part of the parking lot. Most of the energy (99%) is earmarked for onsite consumption.

The digital energy revolution

Onsite consumption represents the next new thing in the industry. Although technically possible for the past several months in France, it is slated to expand in 2017. To support the sector’s economic viability, the French environment minister just launched a call for tenders amounting to 150 MW a year for three years for renewable energy electric power facilities producing energy for onsite consumption. In Germany, 50,000 dwellings are already equipped for onsite consumption. This figure will probably double in the next few years. In France, according to Enerplan, “more competitive photovoltaic equipment on buildings should get onsite consumption off the ground in high consumption market segments.”

“Through centralized or decentralized applications, for direct connection to the grid or for onsite consumption, the emergence of positive energy buildings and regions will make solar photovoltaics . . . a part of our immediate environment for a long time to come,” SEC predicts. “This alongside smart networks, increasingly low-cost storage solutions, electric vehicles, and ICT — the core of what could be called the ‘digital energy revolution.’”

Even oil companies love solar energy

In case we needed more proof of how popular solar energy has become, even the big oil companies are starting to go all in. Ben van Beurden, CEO of Royal Dutch Shell, recently announced that his company would be investing $1 billion (£800 million) a year in renewable energy. Not that much compared to its overall investments ($25 billion a year), but it shows solar energy is making progress.

Following its acquisition of major player SunPower in 2011, Total is planning on investing $500 million a year in solar energy. Italy’s ENI, although still heavily into oil, is also investing heavily in renewable energy, particularly solar energy. And French natural gas group Engie bought Solaire Direct in 2015.

Clearly, solar energy is on a roll.