Eleni Despotou est la secrétaire générale adjointe de l'Association européenne de l'industrie photovoltaïque (EPIA).
Elle s'est confiée à Frédéric Simon pour EurActiv.
There is no EU-wide support scheme for renewables at the moment. And we've seen countries recently roll back some of their national support schemes for solar, in France and Germany, for example. How has this affected your industry?
Saying that there is no European framework is not exactly true because there is the Renewables Directive, which gives the member states the possibility to have a support mechanism.
But of course, for the time being the markets are driven at national level. As we are still in the precompetitive phase, we rely on support mechanisms. But which kind of support mechanisms? We are definitely prone for support mechanisms which are sustainable, that decrease over time and provide security to the investor, providing a fair margin to industry and investors. So definitely, we don't go for stop-and-go policies.
You have mentioned Germany. You probably know that Germany is the pioneer in the photovoltaic sector. It is the first country in terms of new added installed capacity – this year, reaching 7.4 Gigawatt (GW) of installed capacity, which is almost half the installed capacity in Europe, for a total of almost 30 GW.
So the market is still growing in Germany, although the support decreased faster than foreseen. This shows that to kick off a market you need a support mechanism that is foreseeable in the future. The government, looking at how industry was able to reduce the prices and costs, decreased the subsidies even sharper, but still the market is going.
So you think this is proportionate to the market development, to the gains in efficiency that the PV sector has been making?
Yes, in efficiency and cost reduction, because in the last five to six years we have had 65% cost reduction and we foresee to have another 50% in the years to come.
So you think that this is in line with what you were expecting, for Germany at least?
Was that different for France?
In France, the government wishes to create an industrial basis covering the whole value chain. The strategic segment in which the French government bets upon is the building integrated. With the moratorium which has been recently imposed on the PV projects, France applies stop-and-go policies that have been proven not to be effective in case a market is to be kicked off and a sector to be developed.
You know Germany is the only country for the time being that has really a very stable framework. What is happening in other countries is that you often have stop-and-go policies. Governments may introduce a law and then probably, there is something wrong in that law from the beginning – you may have very generous incentives in order to kick off the market. And then once the incentive is too generous, that of course creates some speculative bubbles…
This was the case in Spain, for example…
Yes, but then the introduction of retroactive measures in Spain does not really arrange things. So we used to have a leader in 2008 which was Spain and today it is just far behind – it is not a Gigawatt market, they don't even reach the cap.
Of course, depending on the country you have different specificities. There are countries where a very good feed-in tariff is in place but the market is not taking off, because of administrative barriers and high installation and administrative costs.
Can you cite a few examples?
Greece is the pioneer on bureaucracy, for example. You have a generous and important feed-in tariff but the market has not kicked off, because of the multitude of procedures and the administrative barriers. Moreover, other factors like access to finance could influence the market development as well.
Portugal could be another case. You know, in every country you have more or less still administrative barriers and costs, so the only country that is the benchmark is Germany.
EPIA together with national PV associations are realising a project called PV Legal, financed by the European Commission, that aims to identify and remove administrative barriers with some positive results.
Returning to the specific French example, is that in your view an example of a stop-and-go policy?
Yes. Spain is the same, with other effects and other concerns because you have to consider the energy mix of this country. You need to consider the strategic priorities of this country related to energy, you need to consider the financial situation of this country, especially after the financial turmoil, etc.
So concretely, on the ground, how has the impact been felt? Have new installations in France been stopped?
It was a moratorium. Everything stopped, the market stopped, which means that if you are an investor, you have invested your money, you have your business plan and you expect something to come back, but you have completely failed. Or you have taken all the necessary steps of administration in order to take your license to connect to the grid, and then you are not connected because everything gets stopped.
Have some companies gone bankrupt or are some thinking of moving?
Yes, it happens as well, consolidation of markets and industries is a process that occurs in every sector on its way to maturity.
What was the impact of the financial crisis on the PV market? Were you shielded from these market changes by the feed-in tariff?
The PV markets and industry have been affected like every other industry, especially as far as the cost of money is concerned. Borrowing money from banks has become more difficult. They are more reluctant to give loans and the cost is higher.
Acess to finance has become one of the first barriers to overcome when one envisages installing PV. We had positive growth but of course certain difficulties, especially for small companies.
On the grid parity issue, which is the Holy Grail in the renewables sector, how much closer have you got in recent years?
We have accelerated the path to grid parity, and the learning curve that we have seen for at least ten years is following the same path.
Reaching grid parity depends on different factors such as the geographical situation, irradiation, the market segment and the price of electricity. We have recently done a study which assesses the expected time when grid parity is reached in different countries in different market segments.
It shows that Italy can reach grid parity by 2015, Germany in all market segments by 2017, Spain 2016, the UK around 2019. It is expected that grid parity will be reached in the major markets in Europe before the end of the decade.
Of course everybody asks the question that follows: does that mean that after grid parity you won't need any support?
So allow me to ask the question: will the solar PV industry need support after grid parity?
You know it has been proven that feed-in tariffs are the most efficient support mechanism to kick off a market. So we can distinguish three phases: the pre-competitive era, which is now, then the grid parity phase, and the post-grid parity era.
We define ourselves as being between the first and second stage, so we need a feed-in tariff in order to kick off the market, but a feed-in tariff which really has a decreasing rate and follows the markets trends in order to phase it out.
Let's say, by 2020 we believe that we may phase out financial support mechanism as such. However, we would need some other mechanisms – and for the moment, we are trying to define them – to trigger investments, installation and probably financial support as well.
Even after grid parity?
Yes, even after grid parity.
One would imagine that, once grid parity is reached, then renewables would have a natural competitive advantage over fossil fuels, because they're clean.
For us, the critical point will be the moment where an investor that has all the choices for an energy portfolio chooses PV instead of gas, for instance. And this is the moment for us which is the most critical.
And what can make the balance tip in the post-grid parity phase?
Everything is related to cost. If we are able to reduce costs fast and be sustainable without any support mechanism, that is what our industry tries to do. But we are saying that, at the same time, we need to phase out support mechanisms by 2020.
What about the environmental impact of PV panels? Is there much water used for washing those panels, for example?
Not really, except if there is a sand storm from North Africa – it might happen if you are in Greece or Italy for instance – you might have some sand. But apart from this no, water consumption is not a real issue for PV as it could be for other technologies.
Overall, photovoltaics have an excellent environmental footprint. We care about the whole value chain from mining to the final production and even recycling. We have an in-house association called PVcycle and we established our own recycling scheme.
For us there are questions about the utilisation of land, such as agriculture land or high productivity land, etc. We are against putting photovoltaics in high productivity land. However we are promoting large systems in areas such as deserts or former mining or industrial sites, where land cannot really be exploited. These can be excellent fields for large-scale PV farms.
Another important point is energy payback. Our energy payback time is about six months when solar panels are situated in the south of Europe, up to three years maximum. So we recover in maximum three years the energy that we have utilised to produce solar PV cells.
On water, we are doing an assessment within the sustainability working group at EPIA. We are leading the task force of the International Energy Agency of Photovoltaic Power Systems programme that we are leading together with US colleagues.
So we are evaluating the utilisation of water in order to promote PV. But we don't have specific concerns. We have a very, very small, close to zero maintenance cost. So we are trying to be as sustainable as possible.
What about raw materials supply?
First of all we are recycling our products so you can recover about 80% of what is in the module. There are a few concerns about indium. which is used in one specific technology. But this technology is really has a very small share of the total. And regarding lead, there are already substitutes. There are few manufacturers that are producing lead-free modules.
Have lead-free PV cells now become an industry trend?
From a global perspective, are you looking at regulatory developments in countries like China or the United States? Are you concerned with production lines moving away from Europe?
Yes, we are seeing a migration of factories from Europe to Asia already. This is happening and it's really quite important. We have done an analysis of the value chain from mining to the end product and recycling. And in order to identify where the added-value is in Europe for instance, we have found that the segment where the Chinese are coming into play is the module part, which is the assembly part.
But to reach the assembly part you have different steps. And in those previous steps, you have lot of European added-value, namely on the wafer part and on the equipment part.
And so of course installation is done mainly by local national, regional installers. So there is still a lot of European added-value and from our side we don't advocate for any local content requirements. We advocate a global level playing field, fair competition rules and everyone should have the same possibility to compete on the markets.
Is it a heavy, predictable trend that assembly lines are likely to move to these low-cost countries? That's been done in many other sectors…
I cannot predict what will happen in Europe. What we believe is that there is still a lot of added-value in Europe. You have countries like Germany that have managed to make a real global business, and PV is a global business. In our association, we have Chinese, American and European companies. We are a global association.
But typically the research and development is often done in Europe. And maybe we should accept as a fact of life that assembly should now move to low-cost countries?
I cannot state something like this. I can only say that definitely on the research side we have to make a lot of efforts to increase the R&D expenditures as well as to accelerate the path from research to implementation.
Decisions take too long before they are implemented. For example, on the SET-Plan [Strategic Energy Technology Plan], we have been discussing for three years, and we still don't really have implementation even though the plan as such is promising. Three years, after the launch, financing modalities are not defined and industry priorities are evolving fast.
So I believe there are still things Europe can do, especially on the industrial policy side. And how to incentivise companies, European companies, to remain there. Or even create the necessary legal framework for companies, whatever their origin, to invest in Europe.
But you're talking here more about industrial policy, not technology or research.
Everything is inter-linked. When we speak about development, at EPIA we have a double mission, which is: develop markets and develop the industry sustainably. So this is what we are trying to do, first in Europe and then of course open the markets globally.
On China, this is for us a kind of sleeping giant because its development will depend on the framework. If China decides to go solar it will go for it. There is some movement towards this direction. On wind for instance, they have exceeded Europe in installed capacity. And I believe it should come for solar as well.
In the US, you know that they decide this more at the state level. In California they have agreed to have a 33% renewable target by 2020 if I'm not mistaken. So targets are extremely important because they are driving the development and they are pushing states to implement adequate policies.
Targets are one thing but then there's actual implementation. China has no targets but it is moving forward anyway…
China doesn't have any market for the time being. Of course they have a very aggressive policy for industry and exports, which is also true for other sectors, not just PV.
Any coming regulatory issues maybe at the European level?
For us an important point is to keep the support schemes in place and that the national member states should have the competence to deal with this. No harmonisation until competitiveness is reached – that is a must for us.
From a regulatory point of view, we are following the Commission's communication on grid infrastructure and energy infrastructure, which is a priority for us in 2011. We have participated in the consultation of road to 2050 and produced a position paper and elaborated a scenario based 100% renewables.
The Commission has identifies the need to invest in transmission and distribution networks. And for us distribution networks are quite important.