1 February 2012 | Linton Nightingale
Energy, Asia, Europe

 

Solar energy could become cheaper than fossil fuels from 2020.

Solar power costs are tumbling due to economies of scale and huge competition from China.

In Germany, solar is now nearly as cheap as conventional energy. Germany is the world’s biggest market for photovoltaics at 24,000MW installed capacity.

The downside to this has been the collapse of some manufacturers, who have been priced out of the market. Solyndra in the United States and Solon in Germany both went broke recently as they failed to keep up with competition from other countries and China in particular. Solyndra had over half a billion dollars in loans and are now used as evidence that incentives don’t work and waste government money.

The plan in Germany is for subsidies to disappear completely in a few years anyway, as the cost of producing photovoltaic energy almost reaches parity with conventional methods. With capacity more than doubling in two years, the country is now seen as the testing ground for the technology.

The feed-in-tariff subsidies in 2004 were at 57 eurocents/kWh; they are currently at 24 eurocents/kWh. These subsidies have led to around one million rooftop power plants being installed. Consumers are however, forced to pay around seven billion Euros per year to finance the incentives. The general feeling is that these subsidies will be lowered soon, reducing the rates as the country reaches grid power parity next year.

Some predict that subsidies will be unnecessary worldwide after 2020, as solar becomes cheaper than fossil fuels for the first time.

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