Conditions for a Good Tariff

Conditions for a Good Tariff

Assuming that the tariff will be set at a level that reflects the local insolation levels, there are two main considerations besides price for a tariff that will enhance its success.

SEOUL, SOUTH KOREA (November 30, 2009) - The precondition of a successful tariff is that the price of the tariff reflects the local insolation and product install price. As regions like Spain or California receive as much as twice the amount of sunlight over the course of the year than the U.K. or Germany their tariff can afford to be lower. If you can produce twice as much power for the same cost of panel, the price per unit generated decreases proportionally to get a good payback time.

According to Tomas Martin, a Solar Analyst for the Wind Prospect Group and writer and researcher in Lithiated nanodiamond thermionics at Bristol University, assuming that the tariff will be set at a level that reflects the local insolation levels, there are two main considerations besides price for a tariff that will enhance its success. Firstly, the incentive should be consistent over a number of years, giving stability for smaller investors in a way that market driven systems do not. In addition, any cap on installations should be low enough so as to prevent an unsustainable rush to install as seen in Spain, but high enough that sufficient demand is satisfied to grow the industry, something which grant systems do poorly. If governments are serious about expanding photovoltaic capacity, the cap for PV should be at least several hundred megawatts a year in the long term. A cap that grows incrementally each year as the tariff price decreases would be one way of ensuring industry growth.

So if feed-in tariffs are so attractive, why have some countries implementing them, such as Greece and Italy, not seen installations on the scale of Spain and Germany despite high insolation levels? Martin explains that the key stumbling block in these circumstances is typically bureaucratic; if a panel is going to have a favorable payback time but due to planning processes won’t be installed for eighteen months, companies become a lot more reluctant to enter the market. France is a good example of this effect, with hundreds of megawatts of photovoltaics installed in the ground by the end of 2008 not producing power due to administration delays by the utility responsible for connecting them to the electricity grid.

The access to grid connection and planning permission queues should be accelerated to prevent hold-ups through administration costs. Grid connection is currently less a problem in solar compared to wind due to the relatively small quantities of capacity typically being installed. The lower demand for grid access in sunny regions and cities rather than traditional power corridors will initially allow easy connection for many projects. As the number of installations grows, this will likely become less simple and steps will need to be made that installations are not left unconnected as in France.

More than anything, feed-in tariffs are successful because they offer stability and guarantee in a fast-moving climate. If structured well, a feed-in tariff can give a payback time and rate of return favorable for both homeowners and investors, making financing much easier, concludes Martin. Smoothing the planning and grid connection processes to make installations easier and faster ensures the success of an incentive.

In order to find out the latest information on trends and policies in the PV industry, it is more important than ever for solar professionals to watch the market closely and have access to best-practice ideas and technology. EXPO Solar is the best single-source opportunity to have this access and commensurate networking. Across three days, February 3-5, 2010, over 600 market leading companies will be on hand at EXPO Solar 2010 to discuss your specific requirements, and offer tailored support and advice.

EXPO Solar 2010 will be held February 3-5, 2010, at the Korea International Exhibition Center (KINTEX), South Korea.

REGISTER NOW!

Join the ranks of the market leading companies clammering to exhibit at EXPO Solar 2010.

For more information on EXPO Solar 2010, please visit www.exposolar.org.

Source: EXPO Solar

Contact: Ms. Jeanny Lim

PR & Communications Executive

EXPO Solar

Tel: +82-2-719-6931

E-mail: swied@infothe.com

Mr. Jimmy Cheong

International Marketing Executive, Europe & Middle East

Tel: +82-2-718-6931

E-mail: interexpo@infothe.com

Mr. Sydney Suk

International Marketing Manager, North America & Asia

Tel: +82-2-718-6931

E-mail: interexpo@infothe.com

Can CPV Reach Commercialization?

PV Wafer Production: Cost Reduction How-tos