In this open letter to all COP21 participants, REC, the largest European brand of solar panels, outlines how clean, viable and cost competitive solar energy is today, and what policy action is needed from governments to maintain the momentum of solar for a safe climate:
The power sector is the biggest single contributor to global energy related CO2 emissions, accounting for a massive 40% worldwide.1 It therefore makes sense to focus greater effort on clean energy if – as a planet – we hope to deliver change of a magnitude that will drive down CO2 emissions to keep the already present climate change at an acceptable level. Yet with global energy appetites rising unabated, sources have to be affordable and efficient as well as clean in order to be compatible with economic growth.
Solar energy fits the bill. It’s the cleanest energy around, with the lowest impact on the environment. REC has shown that a leading energy payback time of around one year is possible for solar panels. Solar installations are also quicker to set up than any other renewable energy sources – a vital consideration in regions such as Africa, where there are still more than 600 million people without grid access. Here, solar can be a clean, reliable source of energy to replace the still widespread diesel-powered generators and their harmful emissions.
Cost is also decreasing at an impressive rate. Of all the renewable energies, solar is getting cheaper the fastest. With photovoltaic systems now costing half what they did just six years ago, solar energy is achieving grid parity – the cost level at which solar is competitive with conventional sources of electricity – in more and more regions. A recent Deutsche Bank report2 found that solar has reached grid parity in roughly half of 60 countries studied, including large markets such as the USA, Japan and Germany, with China and India close behind. Deutsche Bank also noted that prices could fall up to 40% by 2020, giving solar even greater appeal. According to an analysis by IRENA, the generation costs (LCOE) of the most competitive solar utility are already at USD 0.08 per kWh. Germany’s Fraunhofer Institute predicts solar will be the world’s most common energy source by 2050, powering 40% of global electricity needs, at generation costs as low as 2-4 eurocents per kWh.
These numbers show there is a transition in progress from policy-driven to economics-driven decisions. Yet solar still needs stable and reliable targets, mechanisms and commitments by governments. Policy changes and reversals create uncertainty and slow investment. Germany, formerly the undisputed leader in solar energy adoption, shows how grim the impact can be: owing to policy changes, new solar capacity in 2015 is predicted to be 35% lower than that of 2014. Germany will fall short of its climate targets and is losing its leadership role in the groundbreaking field of energy transition.
REC calls for the following policy action:
- Reduce hidden subsidies for fossil fuels for a fair comparison of economics. Fossil fuel industries received USD 550 billion in subsidies in 2013, four times more than renewables.3
- Establish a structural reform of the carbon market to ensure a real price for CO2 emissions and consider climate costs of fossil fuel energy of up to USD 0.13 per kWh.4 The average price for global energy-related CO2 emissions in a carbon market is USD 7 per tonne of CO2, while in markets with fossil-fuel consumption subsidies the incentive is equivalent to USD 115 per tonne of CO2 on average.5
- Commit to more ambitious targets for significant increasing solar share in the electricity mix. Otherwise we will fail on commitments to keep the global temperature rise below 2°C.
- Promote residential and commercial solar self-consumption more strongly. These green investments should be honored.
The solar industry creates thousands of jobs every year, in an innovative field with a sunny long-term future. According to estimates by IRENA, the PV industry is the largest renewable energy employer worldwide with 2.5 million jobs.6 Government action remains key to driving the industry forward and encouraging adoption.
1 International Energy Agency, Energy and Climate Change, 2015
2 Deutsche Bank Markets Research: Report on the solar industry, 27 February 2015
3International Energy Agency, 2015 World Energy Outlook
4IRENA, Renewable Power Generation Costs in 2014
5International Energy Agency, Energy and Climate Change, 2015
6IRENA, Renewable Energy and Jobs – Annual Review 2015