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Juergen Soete, Department Manager Solar Technics, EQUANSThe European Commission is ambitious with regards to the amount of investment in renewable assets and regarding the creation of an European PV manufacturing industry in the renewables. Their goal is to reduce the European dependency from the dominating Chinese supply chain, by a selfsecuring strategy . Given the unstable geopolitical environment there is indeed a vulnerability to remedy but there are believers and non believers of the chances to succeed such strategy. Moreover, I believe the greatest barriers to roll out this EC renewables strategy seem to exist within the European community itself and its enormous diversity.
The variety of rules, standards and legislation within Europe is almost hilarious. This is a real potential failure factor to enable competitiveness in the PV manufacturing market
The PV market has been extremely price competitive and went through a tremendous fast lifecycle ., Chinese suppliers reached an extreme efficiency in the manufacturing of modules/ wafers thanks to the mass production approach, with a massive local support in R&D and cheap (subsidized) raw materials. As the PV market is acting in the utility market, a typical commodity market, the main driver to win a position in the market is price. If Europe ever wants to consider any competitiveness, mass production is THE critical parameter to be implemented. This scale should be applied from the production of polysilicon (and sand mining), over wafer production , up to assembling modules. Only on a pan- European level this kind of scale can be achieved. Current trials in the Netherlands, France, Germany and Swiss, remain very marginal and can only service the upper market (non utility scale) due to price differences.
"Industries should NOT compare IRR of PV with their core business investments but evaluate them as a real estate asset, so investment hurdles should go down"
This requisite is in strong contradiction with the variety of policies about PV within the European countries. There are important differences in the way countries allow/ abolish large scale PV projects, local regulations are in place about biodiversity or planning requiring other technologies and structures, regional grid requirements differ strongly, legal sustainability rules differ in combination with subsidy schemes linked to technologies. Considering all these local specifications, in every country a different technical solution with different choices of materials, modules, structures, inverters, etc… is required. How are we creating mass demand volumes in Europe supporting local manufacturing industry in PV ?
A first general idea to boost European PV is to review the existing subsidy schemes. Currently support is still allocated upon financial arguments trying to link total investment costs for PV capex to electricity market prices. In the given environment, the industry should even consider independency and stability of electricity cost prevailing over the cheapest electricity price and a small premium should not be a hurdle for investment. PV achieves often even a lower cost of electricity production than electricity market prices. Industries should NOT compare IRR of PV with their core business investments but evaluate them as a real estate asset, so investment hurdles should go down.
The financial support hence is not needed anymore and should shift towards the sustainability standards we wish to achieve in Europe. In the definition of these standards Europe should consider CO2 emission values for the production of PV modules and include/quantify social responsibility norms. This will put local/European manufacturers in favor forcing to respect social rules and environmental behavior we wish to get applied in the world. For some equipment this will indeed push European manufacturing by increasing some hurdles for import. You can think about inverters and transformers with high value and technical complexity. I am not convinced that Europe will ever be able to take over the module production (new sand mines to be permitted to produce polysilicon, large scaled factories for wafers, …) but it might create incentives to improve Social Responsibility and awareness about environmental behavior from the Chinese suppliers.
A second European hurdle are the technical requirements imposed by the grids. In every country a different set of technical rules is applicable. There are IEC norms on which equipment must comply , but the features to be provided in the global E-design seem to vary in every country. The EPCcontractors are hesitating to cross some internal European barriers because in every country you need a specific partner with local knowledge about the grid. Some harmonization should however be obvious as many of the grids are facing the same problems of congestion, concentration of renewable assets and pollution of the grid. As the European grid is physically interconnected, it makes the cooperation between the national grids more complicated by applying different rules for renewable assets, curtailment rights and obligations regarding delivery of reactive power to optimize power quality.
A more aligned regulation, might speed up the growth of PV and renewables in general, in Europe. It might create a more standardized volume market which can lead to more competitivity of the PV installations.
If Europe really wants to succeed in their Green Deal with also a European renewable manufacturing industry behind it, there should be definitely much more “Europe” in place. This specific PV industry has become a commodity volume market where small niches can never survive without costly support and will never lead to the boost of investments we all need to reach our Climate targets.
