Solar power could compete with conventional electricity within 5 years

Solar energy could become competitive in the short-term with conventional electricity, according to a report by business consultants and accountancy firm KPMG, commissioned by Greenpeace Netherlands.

One large-scale solar photovoltaic factory which produces five million solar panels a year (equivalent to 250,000 homes, each with a two kilo watt system) could reduce the cost of solar power by a factor of four making it price competitive for domestic consumers with electricity produced from conventional sources, says the KPMG report, “Solar Energy: from Perennial Promise to Competitive Alternative“.

A market for this level of production of solar panels would equate to: less than 0.3 per cent of existing roof area of domestic housing and less than 40 per cent for annual new properties in the UK. In the Netherlands it equates to two per cent of existing housing – equivalent to all new housing, and in the US to 20 per cent of new housing, says the report.

In The Netherlands, 5,000 homes have responded to a campaign to fit solar panels in the last 18 months, a Greenpeace Netherlands spokesman told edie. KPMG said that the nature of Dutch building legislation would make it relatively easy to require all new houses to be fitted with solar panels. In Parliament, Dutch labour MPs recently asked the ministers for economic affairs and environment and building to respond to the report’s suggestions – and an official response is expected this month, edie was told.

The report examines whether large scale commercial production of solar PV cells could make the technology price competitive with conventional electricity and what level of investment or government regulation would be required to make this happen. Experts interviewed by KPMG during the compilation of the report came from Shell Solar, BP Solarex, Spire Corporation of the US (which build and supply PV manufacturing equipment) and the Dutch Energy Research Centre.

“The KPMG report demonstrates there are no major technological or financial barriers to creating a large scale solar PV industry. However there is market impasse,” said Greenpeace renewable energy campaigner Karl Mallon.
The report states: “It comes down to a classic chicken and egg problem: as long as demand is small, production of solar energy will remain small-scale and expensive, and as long as production is small-scale and expensive, the price will remain high and the demand small: Catch 22”.

The KPMG report points out that both industry or national governments are in a position to break the solar impasse, stating, “It is clear someone will have to bite the bullet and act”

The report estimates such a large-scale solar PV factory would cost Euro 479 million (US$660 million or £320 million). This is equivalent to half BP’s investment in the new Foinaven oil development in the Atlantic Frontier. In world terms the $660 million represents about half of one percent of the US$89 billion spent on exploration and production from new oil and gas reserves in 1998, says Greenpeace.

“Clearly the investment levels are minor for many of the big oil and energy companies that own solar manufacturing. They have to ask themselves whether they are into solar power for the business or just for the advertising,” said Mallon. “It would be a small step for government to initiate the transition by looking at solar power for the new housing market.”

In The Netherlands 5,000 households are now being installed with solar electricity systems. The Dutch Ministry of Economic Affairs and the Ministry for the Environment, which control building regulations, are currently assessing the KPMG report.

The Greenpeace briefing with case studies from the UK, US and The Netherlands is linked below in .pdf format (requires Acrobat Reader).

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