From 1972 to 1992, photovoltaic module costs have dropped one hundred fold.15 Due to its scale,the Crete 50MW solar power station is, in a single stroke, a significant breakthrough on current costs. It is:
Conventional forecasting tends to be based on incremental changes, and assumes that costs will not, or are not able to reach competitive points for a number of years. Solar photovoltaics is already the most cost effective energy source for most of the world's population without access to electricity, yet the barrier is one of institutional blockages, not price inferiority.
Traditional forecasts also assume the market grows at business-as-usual rates without any dynamic change. For example, the Chairman of Shell estimates that PV will not become fully competitive with conventional power generation until the year 2015.16 The disruptive impact of the Crete power station to business-as-usual wisdom by 'dynamically reducing installation costs' shows that costs are no longer a barrier to deployment of large scale photovoltaics. The barrier is the failure to create real markets and the political and industrial support for such implementation.
Consequences of cost changes
' a lot will depend on how fast Amoco/Enron and others will be on line to bring the costs down. I think the growth can be astronomical in the following five years because you can start replicating these 10MWp, 20MWp plants and further driving costs down. We feel the market is there for PV with module prices getting down under $2' 21Thomas Surek, US National Renewable Energy Laboratory, June 1996
It is commonly accepted by the US Utility Photovoltaic Group (UPVG) and others that $3/Wp is a crucial turning point that will create a self-sustainingii domestic market of 9,000 MW per annum22 which in turn creates the launch pad for a vast market. The Chairman of UPVG, Andrew Vesey estimates that when $3/Wp price is attained, it could launch a $27 billion market23.
What is of great significance is how we reach that point of $3/Wp. The UPVG estimates that 'purchases upward to 400MW may be required before costs reach the break-even point'. Therefore, if the equivalent in MW size of only eight Crete solar power stations are constructed, it would create a $27 billion market for photovoltaics.
The Solar Energy Industries Association also estimates that 350-500MW of purchase is needed before achieving 'sustained markets requiring no artificial market support'24 The range of estimates translates into total 'subsidies' of $500 million before the cost gap is plugged.
Allen Barnett, President of US photovoltaic company Astropower estimates that if installed costs can be reduced to $2.50/Wp, photovoltaics can reach a $100 billion market.25
US DOE Director for Photovoltaics James Rannels says: 'By our calculations, PV is cost-effective now in five states'26 The DOE sponsored report released in 199627 showed that PV for residential use is economic in 19 US states (mainly in the south west and north east) when priced at $3-4/Wp and that PV is economic in five states at a cost of $4/Wp and above (Hawaii, California, Arizona, New York, Massachusetts - not all high sunshine states).
The report concluded: 'there are cost-effective grid-connected PV application today', and that 'policy instruments such as buy down of loan interest and capital cost are effective mechanisms for reaching cost effectiveness in the top US markets'.28
The US DOE estimates that with an industry manufacturing capacity of 200MW per annum, module costs will go under $2/Wp by 2000. Module costs were $8/Wp in 1992 and $4.10/Wp in 1996.29 (Module costs are approximately 50 per cent of the overall solar installation30).
The Greenpeace Germany solar market campaign
The Crete campaign is the second concerted Greenpeace push to intervene in the market for solar photovoltaics. In November 1995, sparked by the move of the last German photovoltaic producer ASE to abandon domestic production, Greenpeace Germany began its solar campaign.
A report was commissioned from Ludwig-Bölkow 31 to show that costs could be reduced with an increase in manufacturing capacity. Greenpeace embarked on a consumer campaign to challenge the myth that there was no domestic market, and began a nationwide, mobile 'Cyrus' solar demonstration house tour; sent over 40,000 leaflets mailed out to public enquires; powered radio station broadcasts and demonstrated at political and utility headquarters to demand support for the photovoltaic industry.
Within four months, 4,000 people expressed an interest to buy a solar home system, representing a purchase interest of 100 million DM. Over 20 cities and communities in Germany offered plant sites for new domestic manufacturing. As a result of the consumer demand, Greenpeace issued a public bid for tender, where the costs of a 2kW solar home system was reduced by 40 per cent in one year.
Around 400 newspaper stories and 69 TV reports later, analysis of the impact of the campaign was undertaken by the Fraunhofer Institute in December 1996.32 Their analysis revealed that the approved market increased 300 per cent to 6MW, making Germany the fourth largest purchaser in the world for that year. However, it also showed that the market could have reached 9MW, 10 per cent of global annual sales, but floundered on government red tape.
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