The threat of catastrophic climate change and the growing economic benefits have made it imperative to transition to a sustainable energy system based on renewable energy (RE). In the future, PV and wind power will be the main pillars of our RE-based energy system, with Germany alone requiring at least 300 GW of PV and an equal amount of wind power [source: Fraunhofer-Institut für Solare Energiesysteme ISE].
One major concern facing key players in politics and business is our heavy reliance on imports for crucial elements of the PV value chain, primarily from China and Southeast Asia. Recent developments in the United States and Europe, aimed at eliminating imports produced by forced labor and reducing carbon footprints, have further highlighted the need for self-sufficiency and domestic production. The political and geostrategic risks associated with relying on imports from authoritarian countries have also become more evident in the wake of recent events [source: Eicke Weber, European Solar Manufacturing Council (ESMC)].
In light of these challenges, efforts are being made to revive domestic PV production in Europe. Industry associations such as the European Solar Manufacturing Council (ESMC) and SPE have teamed up with the EU Commission to form the European Solar Industry Alliance (ESIA). This alliance aims to rebuild the entire value chain of the European solar industry, including silicon feedstock, wafers, cells, modules, and power electronics [source: Eicke Weber, European Solar Manufacturing Council (ESMC)].
The revival of domestic production, however, faces two major challenges: capital expenditure (cap-ex) and operational expenditure (op-ex) costs. While funding and support from local, national, and European sources can help cover the cap-ex costs, the real challenge lies in making domestically produced products competitive in the market. The availability of low-priced products from Asia, some of which are offered below manufacturing costs, presents a significant barrier. To address this, ideas such as op-ex subsidies and premiums for domestic products are being discussed, but they come with limitations [source: Eicke Weber, European Solar Manufacturing Council (ESMC)].
One approach that has proven successful in the US is the implementation of Renewable Energy Portfolio Standards (REPs). These standards legally oblige utilities to increase their electricity generation from renewables, with penalties for non-compliance. A similar approach, known as Domestic Renewable Energy Production Standards (DREPs), could be applied in the European context. By gradually increasing the percentage of domestic PV installations required, installers would be incentivized to invest in domestic production. For example, a DREP standard could mandate that 10% of installations be domestically produced by 2026, ultimately reaching 40% by 2030 [source: Eicke Weber, European Solar Manufacturing Council (ESMC)].
Implementing DREPs has several advantages, including transparency, predictability, and the absence of government support payments. However, potential challenges may arise with regards to World Trade Organization (WTO) rules and the issue of direct premiums for domestic production. Nonetheless, addressing these challenges is crucial to fostering a self-sufficient and resilient PV industry [source: Eicke Weber, European Solar Manufacturing Council (ESMC)].
FAQ:
Q: Why is it important to transition to a sustainable energy system?
A: Transitioning to a sustainable energy system is crucial due to the threat of catastrophic climate change and the economic benefits associated with renewable energy.
Q: What are the main pillars of the future renewable energy-based system?
A: The main pillars of the future renewable energy-based system are power generation from photovoltaic (PV) and wind sources.
Q: Why is there a need for domestic production of PV modules?
A: There is a need for domestic production of PV modules to reduce dependence on imports, address concerns of forced labor, lower carbon footprints, and mitigate geostrategic risks associated with relying on imports from politically aggressive countries.
Q: What challenges does the revival of domestic PV production face?
A: The revival of domestic PV production faces challenges in terms of capital expenditure costs and making domestically produced products competitive in the market.
Q: What approach has been successful in the US for promoting renewable energy?
A: The implementation of Renewable Energy Portfolio Standards (REPs) has been successful in the US by legally obliging utilities to increase their electricity generation from renewables.
Q: How can domestic PV production be incentivized in Europe?
A: Domestic Renewable Energy Production Standards (DREPs) can be implemented, gradually increasing the percentage of domestically produced PV installations required by installers.
Q: What are the advantages of implementing DREPs?
A: The advantages of implementing DREPs include transparency, predictability, and the absence of government support payments.
