February 2000

Climate change will fundamentally alter the world in which we live. It threatens to melt the polar ice caps, raise sea levels and cause extreme weather like severe droughts, storms and floods - some of which we are already seeing. Thousands of people will die, and billions of dollars in crops, homes and businesses will be destroyed if no action is taken. Our only chance is to reduce our emissions of greenhouse gases such as carbon dioxide, which come mainly from motor vehicles and power stations using fossil fuels (coal, oil and gas). Current estimates suggest that if we continue to burn fossil fuels at the current rate we will pass the "safe" limits of climate change within just 40 years. At that point climate change will occur so fast that ecosystems are unable to adapt and mass extinction of species begins to occur. If the current rate of growth of greenhouse gas emissions continues, we will reach that limit in only 30 years.

The use of renewable energy such as wind and solar power is essential if we are to reduce greenhouse gas emissions before it is too late. A vast array of proven renewable technologies are now cheap and ready to be installed, provided those who control the energy industry break their dependency on carbon. This factsheet looks at solar photovoltaic cells, which convert sunlight into electricity, and how we can get to the point where they are installed on every rooftop around the globe.

Solar PV which is integrated into roofs and facades of buildings has the potential to turn grid connected homes and buildings from net users of energy, into net generators. Solar power can thus replace a substantial part of the current residential, commercial and public sector electricity demand[1]. Since these sectors are responsible for about half of global electricity consumption, switching them from fossil fuels will make a major contribution to lowering greenhouse gas emissions.

The global business analysts KPMG analysed the current status of the solar photovoltaic industry and its potential for expansion. They concluded that the technology was ready for mass production, but business and governments were not ready or willing to take that step.

The KPMG solar report[2] demonstrates that the price of solar electricity could be as low as conventional energy in homes in the developed world across the globe. Today, PV is still five times more expensive than it could be if it was mass-produced.

The price of solar power could be made competitive for houses and buildings on the national grid by increasing the scale of production of convention PV technology to 500MWp (megawatts peak) per year - about three times the size of world sales in 1998.

Rather than waiting for technological breakthroughs, or using long term subsidies, KPMG concluded that rapid up-scaling of manufacture can deliver the required price reduction more readily.

KPMG estimates that construction of 500 MWp/year production will cost in the order of US$660 million.

The investment required to break the solar "catch 22" is equivalent to one half of one percent of the US$89 billion spent by oil companies on exploration and production from new oil and gas reserves in 1998[3].

For a company like BP Amoco, the solar factory is only a 10^th of what is spent on looking for new oil and gas each year[4].

The KPMG report explains that it is not technology or financial barriers that are holding PV out of a mass market, but a simple 'demand and supply' vicious circle As long as demand is small, production of solar energy will remain small-scale and expensive, and as long as the production is small-scale and expensive, the price will remain high and the demand small: catch 22."

The KPMG report notes that only two players can break that impasse - government which regulates energy and building, and the industries which own the technology, such as BP Amoco and Shell. The onus now rests with these two groups to break the solar impasse.

If the solar impasse/"catch 22" is not broken, then solar PV will gradually become cost competitive and reach a mass market. But this may take 30 years, whereas KPMG shows that it could be achieved within a few years rather than decades.

Based on the PV price calculated by KPMG, people in Germany, Japan, Austria, Denmark, Belgium and Spain would be able to procure solar energy at prices similar to that of conventional power. This would instantly open up a potential market of 160 million people[5]. Based on a 'business as usual' scenario, five years later solar PV could start to match the price of domestic electricity in many other OECD countries.

Taking the case study of the Netherlands, if every new house had to have a solar roof, this demand alone would justify the production levels for a 'super-factory'.

The International Energy Agency (IEA)[6] has pointed out that the transition to renewable energy is inevitable. If the change is delayed there is a greater overall cost to society, and the technologies stay more expensive than they need to be.: It will require consumers to pay more in the interim, and governments to spend more in subsidies than otherwise would have been required, AND governments, business and consumers will be forced to pay for the ever-increasing impacts of climate change while we wait for the solution - renewable energy - to be implemented.

Based on the "Breaking the Solar Impasse" briefing which can be found at: http://greenpeace.org/~climate/renewables/index.html.

 

Endnotes

[1] IEA, Key World Energy Statistics, 1998.

[2] Solar Power : From Perennial Promise to Competitive Alternative.

[3] Oil and Gas Journal, Report of Salomon Smith Barney, April 5th, 1999.

[4] BP Amoco 1998 Annual report, $USD 6.318 Billion on Exploration and Production.

[5] OECD Demography Statistics 1997. IEA, Key World Energy Statistics, 1998.

[6] IEA: The Evolving Renewable Energy Market, 1999.