16 June 2008 | Luca Del Buono

 

Soaring oil prices have led to such a boom for solar power that the industry could operate without subsidies in just a few years, according to industry leaders.

At the solar industry trade fair in Munich over the weekend, there was growing confidence that the holy grail known as "grid parity" - whereby electricity from the sun can be produced as cheaply as it can be bought from the grid - is now just a few years away.

Solar photovoltaics (PV), which convert sunlight into electrical power, have long been dismissed as too expensive to make a meaningful contribution to the battle against climate change.

But costs are falling as PV production booms, and with electricity prices rising rapidly in line with soaring oil and gas prices, demand for solar panels is increasing sharply.

Germany, the world leader in PV thanks to its "feed-in tariff" support, installed 1.1 gigawatts of capacity last year - the equivalent of a large power station. It now has nearly half a million houses fitted with PV panels. The feed-in tariff pays people with solar panels above-market rates for selling power back to the grid.

"High oil prices have boosted demand even more. The market will probably expand another 40% this year," said Carsten Körnig, of the German solar industry association, referring to both PV and solar thermal systems, which produce hot water.

He said his previous assumption - that grid parity would be reached in Germany in five to seven years - now looked very conservative since it allowed for only a 3% rise in electricity prices each year. In many countries increases of 20% a year are becoming the norm.

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