This opinion piece is part one of Lykke Advice’s new series exploring renewable energy sources in the context of European legislation and policy.
Not just Green, but independent of Russia
Following the invasion of Ukraine, the EU published RePowerEU; a joint European Action plan to develop more affordable, secure and sustainable energy. The largest difference between this new document and its green energy predecessors such as Fit for 55 or the European Green Deal is that it directly villainises Russia and maintains a core objective of reducing Europe’s dependency on Russian oil and gas for the first time. The RePowerEU Action Plan highlights that increasing the roll-out of European renewable energy production will have a critical role to play in Europe’s push for energy sovereignty. Instead of switching to a non-Russian gas and oil supplier, which would shift Europe’s energy dependency elsewhere, domestic EU renewable production does not directly create third-country energy dependencies. This has the bonus knock-on effect that a larger share of renewable energies in the EU mix will reduce the impact of turbulent global energy prices on European consumers. In the case of solar, no country can threaten to block Europe’s access to the sun.
In 2020, renewable energy sources accounted for 22.1% of the EU energy mix, 2 percentage points ahead of the projection. While much of that is owed to wind and hydroelectric power, solar was undoubtedly the fastest growing renewable energy source. In 2020, solar power accounted for 14% of the EU’s renewable electricity, a large increase over 1% in 2008. With the rapid advancements in PV technology over the past decade, solar power’s share in the EU energy mix is expected to rise to the challenge of the European Green Deal.
But of all renewables, why solar?
According to the International Energy Agency, modern PV solar panels already produce “the cheapest electricity in history.” Even then, we continue to see electricity production costs decline as PV conversion efficiency rates increase. Likewise, solar panels can be produced and installed faster than other renewable solutions, such as wind turbines, thus allowing Europe to retract its external energy dependencies quicker than alternative means.
Solar power is also highly adaptable for Europe’s varying needs. Due to the relatively low cost of panels and their versatile assembly options, they can be deployed as anything from large-scale parks that supply cities’ electricity to smaller and more personal capacities for use by private individuals or small, remote communities. Further, solar panels have a relatively low maintenance cost, which bolsters the idea of disseminating them across European homes. As frequently noted by the solar industry, Europe could draw much closer to meeting its climate targets by promoting the placement of PV panels on more rooftops. Some experts are even calling for mandatory panels on all new buildings, which would make them highly compatible with the Energy Performance of Buildings Directive (EPBD).
As we look to the future, we can anticipate PV technology being further integrated with modern infrastructures such as windows, roads, buildings and sound barriers. This is important because energy production from coal mines to wind farms is famously land-intensive. PV technology that can seamlessly blend into our existing urban environment is highly attractive to city planners and overall city aesthetics.
Solar energy has also proven itself beyond an immediate energy source, namely as a source for clean ‘green’ hydrogen. Hydrogen is expected to play a large role in reaching the EU climate targets, as noted in Next Generation EU, due to its versatile potential as feedstock, a fuel, energy carrier and energy storage. With so many possible applications, green hydrogen will undoubtedly reduce greenhouse gas emissions across energy-intensive industries. However, this is only possible to achieve renewably through carbon-free methods such as water electrolysis tied to solar generated electricity, thus creating high-purity green hydrogen.
Challenges facing the European PV industry
One of the largest barriers facing European solar deployment is the speed at which permits and land access are granted for projects. While the Renewable Energy Directive has defined new rules for permits, in practice, it can still take up to 5 years to obtain permission for a large-scale solar project, which is totally at odds with the prompt installation time of the hardware. Far more must be done at the EU level to simplify, standardise and digitalise this process.
Another challenge, and related to the difficulties in acquiring permits, is growing Europe’s PV industrial capacity. The European Solar Initiative makes the case that Europe must re-establish 20 GW of solar PV manufacturing, from polysilicon to module assembly, in the EU by 2025. Failure to do so would leave Europe dependent on importing its PV technology from China, which is little better than being energy-dependent. To meet this target, solar-based Power Purchase Agreements (PPA) could be used, de-risked through credit guarantees, to prove there is a firm and sufficient demand for solar-sourced electricity to encourage further private sector investment. Likewise, large-scale investment from InvestEU and InnovationFunds would dramatically accelerate solar deployment.
The Future of Solar and How Lykke Advice can help your business
Solar energy is reaching its stride in terms of technological capability, price per GW, Europe’s demand for more renewables and more recently, the need for energy sovereignty. By the end of 2022, solar is set to deploy over 30 GW – which includes panels atop 1.5 million European roofs. With a policy framework attractive to private investors, 1 TW of solar capacity could be reached in Europe by 2030.
Given the large role solar will have in the future, the Commission has launched a public consultation on solar energy in the EU, aptly titled the ‘EU Solar Energy Strategy’. As part of the Revision of the Renewable Energy Directive, the Commission proposed that the EU should increase the share of renewables in our energy mix to 40% by 2030. The solar energy consultation was established to determine the most effective methods of increasing the EU’s solar energy capacity and output so that it contributes to the larger renewables target.
Specifically, the Commission seeks input on how to accelerate the deployment of PV technology through demand-side measures. Likewise, the consultation wants to ensure secure, affordable and sustainable solar energy through supply-side measures (including high sustainability standards and supply chain resilience); and lastly, to maximise the socio-economic benefits, potential and value of solar energy for wider society. The consultation will run until 12 April 2022.
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Lykke Advice is a boutique consultancy with experience guiding companies and associations through the latest developments in the European Institutions and ensuring your voice is heard in the legislative process. If you wish to learn more about European energy policy, the EU Solar Energy Strategy or other topics, then do not hesitate to get in touch.