Techno-economic analysis of key renewable energy technologies (PV, CSP and wind)

This report shows the results of a techno-economic analysis of key renewable energy technologies: Solar Photovoltaics (PV), Concentrating Solar Power (CSP), and Wind Energy Technologies (wind). For this purpose, bottom-up company-data were collected, market supply and demand factors addressed, the regulatory framework examined, and EU industry compared against its main competitors. Personal interviews with 10 key industrialists from these sectors were undertaken to generate first-hand feedback from companies. The information generated was validated in a workshop with selected study participants, industrialists and policymakers. The three technologies hold potential for tackling major energy issues and creating jobs and economic growth, but electricity production costs associated with them are still higher than for conventional technologies. Appropriate regulatory and framework conditions are a prerequisite for introducing PV, CSP and wind into the market and to become competitive. The time horizon for this to happen depends on whether these industries can reduce costs and how conventional energy prices evolve. The 2009 EU Renewable Energy Directive has set targets for increasing the average share of renewable energies in final energy consumption, and PV, CSP and wind will play a key-role in achieving these targets. Their application will however create multiple challenges for the existing electricity grid in terms of integrating the new capacities, energy storage and distribution. Although these challenges have been recognised and gained political momentum at the EU level, the degree to which they will be resolved within the coming decades depends on how quickly they are implemented in the Member States and the interplay of all new super- and smart-grid components. Competition is an important driving factor for improving the three technologies cost-effectiveness as they also have to compete with other energy technologies and against the various technology options throughout the whole supply chain. An important question here is to which degree externalities are included in the cost calculation. If externalities in conventional energy generation are taken into account, some renewable technologies (wind) already have a competitive edge. The CSP sector is the less mature industry, not yet at the stage of mass manufacturing. In terms of R&D investment, the study shows that the EU companies lead in CSP and wind energy and the non-EU companies (USA and Asia) lead in PV. However, these results, based on 2008 figures, need careful interpretation since recent patterns of investment in renewable energy show significant changes. This is due to the effects of the economic crisis and to different investment reactions by emerging and developed economies. By spring 2011, there is evidence of stronger R&D activity in some non-EU countries, namely in China, South Korea, India, Japan and the US. Also a number of companies with significant R&D investment were not included in the study either because they had only recently been created or because they did not disclose specific R&D investments in renewable energy. A conclusion on this matter is that the EU does not currently seem to under-invest in these technologies but recent trends indicate a likely challenge on this over the medium term. So as to stimulate R&D for PV, CSP and wind energy, policy should check if there is a balance between policy support for technological development and policy instruments promoting market penetration. Regarding the specific support and Feed-In Tariff (FIT) schemes implemented in the EU, it is necessary to understand their actual impacts, i.e. which part of the value chain obtains the most benefits.