The Power of The Sun
Why photovoltaics have become an important pillar of the energy turnaround and what advantages it has over other technologies.
Lition Energy recently announced the launch of a unique and innovative solar product — Germany’s first commercially live blockchain-based marketplace for small-scale solar panel owners.
This article takes a lood at why photovoltaics are playing a critical role in Germany’s energy turnaround.
Photovoltaics (PV) and Solar Thermal Energy
The sun is the largest available source of energy we know of, and what’s more, it is free. Solar energy is used in Germany with the help of photovoltaics (PV) and solar thermal energy. In photovoltaics, solar cells convert the sun’s radiation directly into electrical energy. In solar thermal energy, solar collectors generate heat from sunlight.
In recent years, the expansion of photovoltaics has increased sharply, making it an important pillar of the energy turnaround and a component of the German energy system. Most recently, photovoltaics generated 47.5 TWh of green electricity in Germany. This is around 8 % of the total amount of electricity generated in Germany. On sunny days, PV electricity was even able to cover up to 50% of our current electricity consumption at times in the past.
With the coalition agreement, the German government has set itself the interim goal of increasing the share of renewable energies to 65 % of gross electricity consumption by 2030. According to calculations by the Fraunhofer Institute (ISE), at least 5–10 GWp of PV capacity would have to be installed annually to achieve this. Unfortunately, this quota has not been met by far in recent years [2].
The solar lid limit is expected to be reached already this month.
In addition, the so-called solar lid endangers the further expansion of PV. The solar cap limits the promotion of solar plants up to an installed capacity of 52 GW. It is predicted that this limit will already be reached by the end of July 2020[3]. This would mean that from July of this year there would be no more subsidies for solar systems. If the subsidies were to be stopped, the demand for solar systems would collapse by half of the previous level and thus fall far short of the necessary expansion quota [4].
Although the German government has agreed to abolish the solar cap after long negotiations, there is no precise timetable for this. A quick decision would be an important signal to the PV industry and citizens*.
Why photovoltaics should be further expanded is made clear by comparing it with other power generation technologies in terms of costs and CO2 emissions.
Costs of Photovoltaic Electricity
The cost of electricity is made up of different components. The electricity price for end consumers not only includes the actual costs of energy generation, which account for around a quarter of the price for a household, but also other elements such as grid fees, electricity tax and the EEG levy. In order to compare generation technologies, only the costs of generation should be considered.
A good benchmark is the so-called electricity production costs. These take into account the specific acquisition costs for the construction and installation of the plants, operating costs during the period of use and financing costs, and relate these to the amount of electricity generated over the period of use. However, cost comparison with fossil and nuclear power generation is made more difficult by the fact that external costs due to environmental, climate and health damage or risks as a result of pollutant emissions are largely ignored. [5]
The annual operating costs of a PV power plant are comparatively low at approx. 1% of the investment costs, and the financing costs are also favorable due to the current low interest rate level. The dominant cost component of PV power plants is the investment costs. Since 2006, these have fallen by an average of approx. 13 % annually and by a total of 75 %. This is due to technological progress, economies of scale and learning effects.
Photovoltaics a cheap method of power generation
Not only in comparison to conventional power generation technologies, but also to other renewable technologies, photovoltaics is a cheap method of power generation. Large solar plants on open spaces already generate electricity for 3.7 to 6.8 cents per kilowatt hour. In contrast, the cost of electricity from lignite-fired power plants is 4.6 to 8 and hard coal-fired power plants 6.3 to 9.9 cents per kilowatt hour [6].
The electricity generation costs of smaller rooftop PV systems are between 7.2 and 11.5 cents per kilowatt hour. Taking all types of PV systems together, the electricity generation costs of PV in Germany are significantly lower than the average electricity costs for households of around 20 cents/kWh excluding VAT [7].
Studies assume that the system prices for PV and thus also the electricity production costs will continue to fall in the coming years. According to these studies, in 2035 these are expected to be between 2.2 and 3.9 cents/kWh for ground-mounted systems and between 4.2 and 6.7 cents/kWh for small rooftop PV systems (see Figure 2). From the year 2025 onwards, small PV roof systems in southern Germany are even expected to generate electricity more cheaply than coal-fired or combined cycle power plants (7.05 to 11.40 cents/kWh), which are also newly installed in 2025 [9].
The CO2 balance
Photovoltaics is also competitive in terms of its CO2 balance. Not only in comparison to conventional power generation technologies, but also to other renewable technologies.
A decisive factor in assessing the impact of power generation technologies on the climate is a comprehensive consideration of all emissions released, not just direct emissions, during operation. A life cycle analysis can take into account both the direct emissions and the indirect emissions that occur in the so-called upstream chains. The life cycle phases can be divided into the manufacturing phase, consisting of raw material extraction and processing, production of the preliminary products and module production, operation and dismantling (recycling) of the PV system.
The assessment of the climate balance should also take into account which fossil energy sources have been substituted by renewable energy sources. For this purpose, the power plant use must be analysed for the real case (with renewable energies) and for the fictitious case (without renewable energies). From this, the displacement of conventional power generation by renewable energies can be determined.
With a strongly fluctuating generation profile and pronounced daily and seasonal differences, PV mainly replaces coal-fired (60%) and natural gas-fired power plants (39%). Due to its position in the German (and European) merit order, PV systems only displace electricity from lignite-fired power plants to a small extent. Electricity from nuclear power is not displaced by PV.
For every kilowatt hour generated by PV, a net saving of around 630 g CO2 equivalents is achieved. This results in an annual saving of around 29 million tonnes of CO2-equivalent greenhouse gases through PV. Compared to Germany’s total annual emissions of 866 million tons, this is a reduction of over 3%. PV thus makes a relevant contribution to the reduction of greenhouse gas emissions.
In conclusion, it can be said that photovoltaics is a cost-effective generation technology that makes a decisive contribution to energy system transformation.
Sources:
· [1] BMWi auf Basis Arbeitsgruppe Erneuerbare Energien-Statistik (AGGEE-Stat); Stand: Februar 2020
· [2] Fraunhofer ISE: Aktuelle Fakten zur Photovoltaik in Deutschland, S. 5; Stand: 26.03.2020
· [3] BSW Solar
· [4] https://www.erneuerbareenergien.de/der-solardeckel-wird-abgeschafft
· [5] Fraunhofer ISE: Aktuelle Fakten zur Photovoltaik in Deutschland, S. 5; Stand: 26.03.2020
· [6] Fraunhofer ISE: Stromgestehungskosten erneuerbare Energien, S. 16; Stand: März 2018
· [7] Entspricht einem Nettoarbeitspreis bei einem durchschnittlichen Endkundenstrompreis von 29 €Cent/kWh veröffentlicht von BDEW 2017
· [8] Fraunhofer ISE: Stromgestehungskosten erneuerbare Energien, S. 28; Stand: März 2018
· [9] Fraunhofer ISE: Stromgestehungskosten erneuerbare Energien, S. 24; Stand: März 2018
· [10] Umwelt Bundesamt: Emissionsbilanz erneuerbarer Energieträger, S. 33; Stand: November 2019
