Solar Power in the European Context: Conversion Efficiency and the Issue of Carbon

Abstract

The European Union is committed to increasing the use of renewable energies across Europe. One of the ways this is to be done is through the promotion of solar photovoltaics (PV), a method with significant environmental benefits. However, the high costs of electricity generated through PV have constrained the market reach of this option. This paper takes the form of a policy discussion, analyzing the fundamental issues concerning this type of energy, and its place in the European alternative energy market. Furthermore, a scenario is drafted to estimate how efficient solar panels should ideally be to make electricity produced by them cost-competitive with conventional, grid-tied energy sources.  The study considers both a conventional scenario and another, with carbon capture costs incorporated into the final electricity prices. It is observed that in order to be competitive with conventional fossil-based electricity, photovoltaic conversion efficiencies should be around 34%. Incorporating carbon costs would further help promote solar PV, making it more price-attractive compared to emission-intensive electricity generation based on fossil fuels. The final part of the paper sheds light on the new developments on European PV, mainly in regards to the 2008 European Commission Climate Change Package, its implications and reactions from the industry.