Please note that some of the information on this page is out of date. It will be re-written shortly to include recent developments in the PV space.
Photovoltaics is the field of technology concerned with converting energy from the sun, also known as solar energy, into electricity. Several techniques can be used to harness solar energy, with solar panels being the most commonly associated with photovoltaic technology.
Investing in Photovoltaics
To date the photovoltaics industry has been plagued by enormous production costs. Overcoming these costs has resulted in the industry being heavily subsidised by governments.
Experts predict that the industry is set to undergo a significant transformation in the near future as manufacturing costs of solar panels decline due to a significant increase in Chinese production. Declining production costs are likely to result in the price of photovoltaic electricity being more competitive with that derived from fossil fuels.
In 2007, 39% of global renewable energy investments were made in solar energy technologies. With estimated revenues associated with solar panels predicted to rise from $20.2 billion in 2007 to $71 billion in 2012, the photovoltaics industry is considered to be relatively stable and is well established in comparison to technologies such as wave and tidal power. New Energy Finance expect the costs of solar PV to drop by 50% by the end of 2010 compared to 2008 levels; this could mean that grid parity is reached in sunny countries with high feed in tariffs by 2010.
The current and forecasted market conditions are only one of the many significant drivers of the UK solar energy sector. With the European Photovoltaics Industry Association (EPIA) agreeing to provide 12% of Europe’s electricity by 2010, a huge opportunity exists for the UK photovoltaics industry to contribute to this target. In addition, the Renewable Energy Framework Directive requires 20% of energy to come from renewable sources within the EU by 2020. This level could be increased depending on the outcome of global climate talks in Copenhagen in December 2009.
Other UK industry drivers include:
Climate Change Act 2008: This Act is one of the main pieces of legislation which will play a significant role in the mass-commercialisation of PVs in the future. The Act sets a target to reduce greenhouse gas emissions by 80% by 2050 through actions abroad as well as within the UK. Additionally, the Act aims to reduce national CO2 emissions by 26% by 2020. The Act will soon be revised to require an 80% reduction of all greenhouse gas emissions by 2050. Renewable energy technologies such as solar energy will be central to reducing CO2 emissions in order to achieve the ambitious targets set.
Renewables Obligation: This scheme requires electricity providers to source a certain percentage of their electricity from renewable sources, rising from 9.1% in 2008/2009 to 15.4% in 2015/2016. Tradable Renewables Obligation Certificates (ROCs) are gained for every MWh of electricity produced from renewable sources. Beginning in 2009, the scheme will differentiate between technologies as well as the amount of certificates they are eligible for. Specifically, photovoltaic technology is due to receive the most support amongst technologies, with two ROCs available for every MWh of energy produced.
Micro-generation Strategy: This UK government scheme aims to reduce the difficulties faced by micro renewables, i.e. renewable energy technologies that produce low carbon energy for local use, such as solar panels for domestic premises. The Strategy has removed the requirement to obtain planning consent for residential micro renewables, thus making micro renewables increasingly attractive to the consumer. This strategy will begin to encompass distributed generation as means of strengthening the grid.
Carbon Emissions Reduction Target - This target recently came into force in April 2008 via the Electricity and Gas (Carbon Emission Reduction) Order 2008. The target requires energy providers to invest in emissions reductions through the use of processes that will aid in increasing the energy efficiency of households. Energy providers are rewarded for the use of micro renewables in order to increase their attractiveness.
Energy Excellence - An International Marketing Strategy for the UK’s Energy Business: This strategy promotes the UK’s expertise within the energy sector, including photovoltaics, to attract and promote the UK’s energy industry on a global scale. Global marketing of the UK’s industry aims to attract talented and ambitious investors, individuals, and organisations into the UK.
Code for Sustainable Homes: This code lays out the requirements for achieving sustainable housing. The code rates houses on a scale from 1 to 6, with 1 being marginally better than current building requirements and 6 reflecting homes that emit zero carbon. Considering that all houses built in the UK must achieve a rating of 6 by 2016, renewable energies will have to play a significant role in achieving this. Homes that represent a rating of 6 will also be exempt from stamp duty helping to motivate developers to find new and innovative solutions, including solar energy technologies, to creating zero carbon homes.
Climate Change Planning Policy Statement: This Government strategy requires incorporation of climate change mitigation strategies within local developments and planning. Specifically the strategy states that planning decisions should incorporate and consider renewable or low carbon energy within new developments.
Environmental Transformation Fund: Recently introduced, this fund allocates a total of £1.2 billion to environmental initiatives involving a range of issues both nationally and internationally from 2008 to 2011. £400 million of this fund is allocated to “accelerate the commercialisation of low carbon energy and energy efficiency technologies” within the UK. Specifically £47.4 million has been allocated in 2008/2009 to aid in commercialisation of technologies such as photovoltaics.
Feed in tariffs (FiT): The FiT scheme aims to encourage distributed generation of energy by providing a higher than market rate for energy that is fed back into the Grid rather than consumed. This is a guaranteed income for 20 years under the current proposals, which are in the process of being finalised. The FiT is due to be launched in April 2010 and will be available for installations under 5MW in size.
As issues of energy security and climate change become increasingly central, governmental financial commitments such as these will play a significant role in creating appealing investment opportunities within the photovoltaics industry.