EC puts true cost of energy in the spotlight
Entitled ‘Energy subsidies and costs in the EU’ the study proves that solar energy is cost effective today, and is improving competitiveness at a rate that conventional technologies will never be able to achieve.
The European Photovoltaic Industry Association (EPIA) says the EC study’s finding should be a wakeup call for policymakers to prioritise the most cost effective energies. The EPIA has called upon the policymakers to stop protecting the past and begin to shape the future, which is clearly based on renewable energies on the evidence of the report.
"Despite decades of heavy subsidies, mature coal and nuclear energy technologies still rely on similar levels of public support as innovative solar energy is getting today. However, support to solar electricity is already coming down, in line with the rapid technology cost reduction, as opposed to coal and nuclear energy which remain locked into subsidies as they have been for the last 40 years," commented Frauke Thies, EPIA Policy Director. "With its increasing cost-effectiveness, solar is set to overtake conventional technologies in the short term".
The EC study pointed out that since 1970, conventional energy generation (in particular nuclear and coal) has benefitted from substantial direct and indirect subsidies. The study recognized that significant support to solar power was introduced only recently and probably reached its peak in 2012.
The study calculated that the total aggregate external costs of all energy sources added up to around €200 billion in 2012, with an uncertainty range from €150-310 billion. If these costs were taken into account, total costs of energy from nuclear, gas and coal in 2012 would by far exceed those of solar.
If broken down into support given per unit of energy generated, direct support for solar was around €110/MWh in the peak-year 2012. When external effects of different energy technologies are taken into account, the total societal costs per unit of coal were almost the same or even higher compared with those of solar, including in 2012.
The study showed that the costs of producing a unit of electricity of large-scale solar power generation was around €100/MWh in 2012, already comparable with those of natural gas and nuclear, demonstrating the increasing economic attractiveness of solar.
The Commission also released a progress report on the Internal Energy Market that reveals slow progress.
"The Internal Energy Market report confirms that limited progress has been made towards transparency and flexibility. Europe still has a long way to go to achieve a real internal energy market that provides fair conditions and a level playing field for solar power and other innovative solutions in the electricity sector," concluded Thies.
In the run-up to the European Council on 23-24 October 2014 which is expected to decide on a Climate and Energy package for 2030, 16 energy businesses and associations, including EPIA, have sent a Joint Letter to the EU Heads of State and Government calling on them to agree on a binding renewable energy target of at least 30% by 2030.
The letter states:
Investing in European renewable energy projects will be critical to the cost-effective realisation of our decarbonisation targets. Unlocking these investments will also be the backbone of any meaningful long term strategy to deal with Europe’s mounting energy security challenge.
A greenhouse gas target alone will not be sufficient to drive the investments in renewable energy and infrastructure which are necessary to decarbonise the power sector by 2050.
We thus believe that a binding renewable energy target of at least 30% by 2030 is both realistic and desirable. Such a clear objective, backed up by a supportive regulatory framework, would constitute an important signal. By providing the necessary certainty for businesses across the energy sector, it would reduce the cost of investments and foster innovation, thus efficiently driving the transition of Europe’s energy supply.
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News articles:
EPIA predicts solar photovoltaic electricity will become competitive energy source in Europe by 2020
Photovoltaic power to become mainstream energy in all Sunbelt countries by 2030
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