Solar energy to compete with fossil fuels – Ernst & Young

21st June 2011

The real benefit of this fall in costs means that a system currently reliant on UK government subsidies to be cost effective could stand on its two financial feet within a decade according to the consultancy.

Ernst & Young, whose report was sponsored by industry body the Solar Trade Association says this means solar energy could play a big role in helping the UK meet it C02 emission targets.

The Committee on Climate Change, the UK government adviser, recently concluded that solar power was too expensive and that the UK should buy in solar power from overseas.

But the lead author of the Ernst & Young report, Ben Warren, says:"Being a laggard has never been very successful in terms of capturing the greater share of the value added for the economy … if you create a sustainable market, you will achieve cost savings and drive economic benefits in terms of tax income and job creation."

Website Energy Efficiency News points to indications that prices are falling even more sharply than E&Y suggests.

It says according to Applied Materials' third annual solar energy survey, the cost of photovoltaic panels now stands at an even lower level of $1.25 per Watt and is expected to reach $1 a Watt soon.

The news appears to be backed up by this report from Smart Planet

It suggests that prices at a recent trade show – the Inter Solar Trade fair in Munich saw prices fall by some 50 per cent during the duration of the show.

One of the key goals of solar power is grid parity where solar costs as little (or as much) as fossil fuels.

It quotes IHS iSuppli analyst Mike Sheppard saying: "At $1.00 per watt we will have achieved grid parity in many regions; however that is not the only prerequisite for the solar market to grow. There must be other elements that favor PhotoVoltaic such as a need at the grid level for distributed power generation in order for us to see the real adoption in a market without subsidies."

But falling prices are not traditionally seen as good news for business.

With China seen as one of the leaders of solar technology, Bloomberg went to leading Chinese solar firm Yingli Technology for a response.

Chief Executive Officer Miao Liansheng told Bloomberg that declining solar panel price "isn't a bad thing, it's a good thing. He said falling profit margins were a positive development because sales will continue to rise and the downward pressure on prices will help more people use solar power.

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