PHOTOVOLTAIC SOLAR ENERGY IN PORTUGAL
STATE-OF-THE-ART AND PERSPECTIVES OF DEVELOPMENT
SUMMARY
Global energy supply has become a major issue for the world’s development. Since the
industrial revolution (1860), our lives have become increasingly more dependant on the use of
energy, and more particularly on electricity. Global warming, together with its increasingly
harmful effects, is a direct consequence of this dependency. In this scenario, solutions that
could provide a clean, sustainable and unlimited power source are needed. Photovoltaic
technology (PV) is among those that show the best potential to provide that so much needed
clean energy.
The energy source (the sun) is virtually endless: every hour the earth surface receives more
energy than humans produce in an entire year. Although its expression in the global energy mix
is still very limited, photovoltaics has been growing at a rate of 30% per year, and studies show
that in the mid term it can achieve a 30% penetration rate in the global electricity mix. This fact
shows the enormous importance that the world photovoltaic industry could have in less than 30
years, and the tremendous business opportunities that lay before those who can position
themselves better in the market.
This thesis aims at showing that photovoltaics really is a viable option to overcome the new
challenges facing worldwide energy production, and that Portugal can and must actively
participate in the construction of a strong cluster in the field.
Presentation of Photovoltaics:
The photovoltaic effect is not new to the scientific community. In fact, it was first observed by
Edmond Becquerel in 1839. In 1877, the first photovoltaic device was put in place (0,5%
efficiency conversion). Since then, many scientific developments have allowed PV to be an
economically and technically viable solution for many applications, from satellites to remote
telecommunication systems and pocket calculators. These are called autonomous systems,
since they produce electricity for one specific need, with no other input needed. Such systems
are composed of photovoltaic cells wired in series or parallel to form modules. Metallic terminals
concentrate the electricity produced from the sun radiation converted, and then send it to an
inverter, where DC is turned into AC. Batteries can then be placed to ensure the availability of
electricity when there is no sun. A charge controller is also required, to ensure that batteries are
not overloaded or totally unloaded.
The technological scenario for PV is complex: many technological options are under use or
development, and they all present similar efficiency/cost ratios. They are also far from
technological maturity, and all present very significant cost reduction opportunities. As a
consequence, there is a dispersion of efforts in R&D between all the options, as it is still not
clear which technologies will have the best characteristics in the future. Present technologies
can be divided into three main groups:
- Crystalline silicon cells (1st Generation): they dominate the market, with a 90% market
share worldwide. The single crystal silicon was the first technology, and still dominates the
market. It typically presents efficiencies in the range of 15% to 18%, and is used in all kinds of
medium to big terrestrial applications. The multicrystaline (or polycrystalline) silicon is a cheaper
but also less performing option, and can be photosensitive in two sides (Power cells);
- Thin film cells (2º Generation): responding to the need of reducing silicon
consumption, thin film cells are also lighter, allowing new applications in facade buildings. The
most important technology is amorphous silicon, used in professional electronics and solar
watches or calculators. A 5% to 7% conversion efficiency is compensated by a lower unit cost,
and the ability to absorb diffuse lightning. CIS and CdTe are other technological options, but
contain dangerous materials like cadmium;
- New solar cells concepts (3º Generation): they promise higher efficiencies and lower
costs, but are still at an early development stage, and should have a small relevance for the
overall market in the next 10 to 15 years. Nanocrystalline technologies belong to this group.
The number of applications for autonomous systems is constantly increasing, due to a
spectacular reduction in the production costs. As a result, some of those markets are already
mature. Nonetheless, their part in the world energy consumption is infinitesimal. The new and
bigger challenge facing PV is now related to its use in mass electricity production, in connection
to the common electrical grid. Technically, the only difference to the autonomous systems is a
connection to the grid, instead of the use of batteries. Economically, the barriers that must be
overcome are still high: it is still very expensive to produce photovoltaic electricity, when
compared to other mass electricity sources. Nevertheless, it is generally agreed that those
same levels of cost can be achieved in the mid term.
Perspectives for mass electricity production:
A country’s energy production capacity relies on different technologies, each having unique
characteristics. The comprehension of the importance of a balanced electricity mix is essential
for determining the significance that PV could have in the future.
PV produces electricity when the sun shines. It is therefore a variable source, its typical load
diagram responding to the peak industrial and commercial demand. Its main competitors are
electricity sources that produce for peak loads, which typically present higher generation costs.
Wind energy, usually linked to PV, is actually complementary: the high initial investment makes
it compulsory that all the electricity produced is sold to the grid. Therefore, wind cannot supply
peak demands, but only complement the base needs.
With higher than average generation costs, but lower investment costs, gas energy is the most
used power source for peak loads. A gas power plant can quickly be switched on and off, and
typical plant size is smaller than for fuel or coal. The final target for PV is therefore to present
costs that are competitive with gas power. Dams with storage reservoir can also supply peak
loads, but the unpredictability of rains in Portugal and their high share in the national electricity
mix make it important to use a source with a different pattern of variability. Only having these
two main options proves that there is room for a new electric power source, with the
characteristics of sun power.
A new, more serious and direct competitor to PV is under development: solar thermoelectricity.
It produces electricity by concentrating solar light onto a point or axis, where a fluid is heated.
The fluid is then used as in a conventional thermoelectric power plant. Although it is still at an
early development stage, this option already presents lower costs than PV, in the range of two
to three Euros per watt, or even below in big CLFR plants (50 MW). The counterpoints are that
it presents a much more limited development and cost reduction potential (most of the
technology -turbines- is already mature), higher operation and maintenance costs, and it can
not be so efficiently used for microgeneration. Therefore, grid parity is not enough for this
technology to be a viable option, and competitiveness with mass production technologies must
be targeted. Nevertheless, solar thermoelectric technology can still have a role in the future of
electricity generation, and should be further studied.
Prevision for IEA Countries – Advanced International Policy Scenario
Unit: TWh
2001
2010
2020
2030
2040
Total Consumption IEA
15578
19973
25818
30855
36346
Biomass
180
390
1010
2180
4290
Large Hydro
2590
3095
3590
3965
4165
Small Hydro
110
220
570
1230
2200
Wind
54,5
512
3093
6307
8000
Photovoltaic
2,2
20
276
2570
9113
Solar Thermoelectric
1
5
40
195
790
Geothermal
50
134
318
625
1020
Marine (Waves, Tides)
0,5
1
4
37
230
Total RES
2988,2
4377
8901
17109
29808
Percent RES
19,2 %
21,9 %
34,5 %
55,4 %
82,0 %
Source: EREC, 2005
Knowing how mass electricity production works, it can also be understood that PV can only be
part of the solution: the security and reliability of electricity supply will always demand several
sources, having different characteristics and load patterns. International organizations such as
EPIA and IEA are very optimistic though. IEA estimates that its member countries will have an
82% renewable electricity penetration in 2040, with 25% of the total coming from PV.
Those numbers imply that PV will reach grid parity before 2020, and that it will be the electricity
source with the most remarkable cost reduction. The use of dams with reverse pumping
systems associated to big PV installations can be a solution to minimize the impact of the
unpredictability of this source.
Reducing costs:
The study above shows that photovoltaics can have a very significant role in the construction of
a new scenario of electricity production. But that will only happen if generation costs can be
brought to an economically viable level. That means, in a first stage, reaching grid parity for
small system sizes, the stage where photovoltaic electricity costs the same for the domestic
producer as the electricity bought to the grid. This already happens in extreme cases, where
grid electricity is very expensive (Hawaii), sun conditions are perfect (Sicily), or the market is
already very mature (Japan). In most cases however, system costs still have to decrease almost
40%. The second stage will be to reach parity at an industrial level, in competition to the
traditional power sources. That will presumably only happen in the medium to long term.
Those cost reduction objectives can mainly be achieved by a significant reduction in materials
cost, an increase in the cells conversion efficiencies, or an overall cost reduction due to
economies of scale in the industry and a mature and competitive market. The world is currently
working on these four fronts:
- There has been a shortage in the supply of silicon, the most common material for
producing solar cells. This was due to a very strong increase in the demand for PV systems.
Industrials have reacted, and in the coming three to four years, new factories will bring more
silicon to the market, produced by more cost-effective methods. Some technological
improvements are also allowing decreasing the amount of silicon needed for producing cells.
These two factors will help bringing the prices down in the short term;
- Conversion efficiency has been increasing very consistently since the first cells were
produced. New technologies that are currently under development already present a good
efficiency/cost rate, and there is still room for strong improvements, even in the most mature
technologies such as the multicristaline silicon (see main document part 4.b);
- Economies of scale can allow very strong cost reductions in the production of the
whole PV system. A recent study promoted by the EU, MUSIC FM, has showed that a 500 MW
production facility could bring prices down to one Euro per installed watt, achieving therefore
competitiveness with some of the most conventional electricity sources. This is the main reason
why governments are subsidizing the creation of artificial PV markets;
- An efficient market is essential to promote efficiency all along the value chain.
Increasingly, projecting and installing PV systems still represents a significant part of the final
system cost, which can strongly be reduced by market efficiency and maturity. Some
governments have understood this, and are implementing measures that promote efficiency in
their support policies (see the cases of Germany and Japan).
The study of learning and experience curves can be a measure of the technological maturity,
and brings more strength to the idea that PV can reach and even overcome the cost reduction
targets. Studies have shown that there are three different cost evolution patterns for Renewable
Energy Sources (RES), depending on their technological maturity. Solar technologies, and more
particularly PV, have the steepest learning curve, typically presenting a cost reduction of 20%
for every doubling in the production volume. By crossing this pattern with the forecasted
increase in production for the upcoming years, a reduction of 30% to 50% in each of the next
two decades can be expected, which is much faster than what is expected for any other
technology currently in use. Last available data confirms a 6% decrease rate in recent years,
corresponding to a 50% decrease every ten years.
Custo (USD/Wp)
MW produzidos
60
300
40
200
20
100
0
0
1976
1980
1984
1988
1992
1996
2000
Record of past Cost Decrease and Market Growth
Source: NET Ltd
Photovoltaics in the World:
To better know the potentialities of PV as a business, analyzing its market worldwide is
essential. The world PV market is growing at the fastest rate among RES. It is expected to
reach 11 MW of installed capacity in 2010, multiplying by eleven the 1 MW that was in place in
2000. The growth rate is at levels of 30% per year since the 1990’s. Nevertheless, the market is
and will be very concentrated in the most advanced countries on the upcoming years: four of
the five biggest PV companies are Japanese, and almost 40% of the world installed capacity is
in the country. Grid parity has been reached for small systems, and 39% of the world cells are
made in Japan. The success is based on a very well structured long term development
program, and a net-metering system that subsidizes PV electricity production. Germany leads in
installed capacity, after having installed 960 MW of new capacity only in 2006 (55% of the
world’s total for the year). The barrier of 2 GW has been broken, and the industry is catching up
on Japan. The success of its support system is such that the government is preparing a
decrease in tariffs granted to PV electricity producers to prevent the market from overheating.
Many other countries have recently put in place support programs. The Spanish market has
increased 200% in 2006. New countries are expected to join this movement and play an
important role in the medium term. This is the case for the USA, Italy, China, India and Brazil.
Today, grid connected systems dominate the market (81% in 2005), and the importance of
autonomous systems will tend to decrease even more. Crystalline silicon still represents 90% of
all applications, but this number is expected to decrease to 80% in 2010, in favor of amorphous
silicon and other technologies. In 2030, it is expected that the market will be equally split
between crystalline silicon, thin film, and new concepts. In the industry, the main players are
semiconductor companies (mostly Japanese), who already controlled silicon technologies. This
is the case of Sharp (world leader) and Kyocera. Energy companies such as BP and Shell are
also present, but the market is already strong enough to support totally dedicated firms, such as
Q-Cells (world leader in cell production), Isofoton (Spain), Suntech Power (currently building a 1
GW module mounting factory) and Schott Solar. Big projects, that take advantage of the
conditions offered by governments, have been flourishing: 100 MW will be installed in
Dunhuang, China, and 62 MW in Moura, Portugal. The silicon shortage, that forbade the market
of growing at an even faster rate in recent years, will be solved with new production capacity
entering the market in the next 2 to 3 years.
Energy scenario in Portugal:
The Portuguese energy frame has many particularities that must be taken into account when
deciding how to approach the new PV market. It must be taken into consideration that the
Portuguese energy autonomy, for instance, is among the lowest in Europe. Only 12,8% of the
energy consumed in the country in 2005 was produced within its borders, and this number
varies considerably every year, as it is very dependant on hydropower production. The energy
efficiency is also very poor, as the country spends much more energy than the European
average to produce less richness. Portugal is the only country in the EU where this scenario has
gotten significantly worse. As a consequence, this tendency has increased significantly the
need for imports of all kinds of energy products (in 2003, the bill reached some impressive 5%
of the gross domestic product), even electricity.
Worsening this scenario, the primary energy consumption increased 43% between 1990 and
2003, and the greenhouse gases emissions grew 37%, to levels that are already 10% above
those stipulated in the Kyoto protocol. The price of electricity is also relevant: the 5% tax applied
is the lowest in Europe, but the final prices are above the average and 18% above Spain for
domestic clients (31% above when excluding taxes). This is due to an expensive electricity mix,
which is not well adapted to peak loads, and also to the lack of competition in the production.
Reacting to this scenario, and to the increasing pressure of EU RES penetration targets, the
Portuguese government has set a plan to develop the excellent conditions that the country
offers in terms of RES availability. It has even set the target to reach 45% RES penetration in
the electricity mix by 2010, the third highest in the EU. This is planed to be accomplished by
reaching 5100 MW of installed wind energy capacity, 150 MW of PV, 50 MW of marine
technologies, and by increasing the use of hydropower (Portugal only explores 40% of its
hydraulic potential, but is expected to explore some 70% in the short to medium term).
These numbers would be expected to set a new wind energy industrial cluster in the country,
together with two other experimental clusters in PV and marine energies. The first problem is
that the initiative comes too late for wind, as the market is already reaching a high degree of
maturity and is controlled by more advanced countries (such as Denmark, Germany and Spain).
The second one, as will be seen further ahead, is that the bid in the other two industries is
limited and has no serious development plan behind it yet.
The photovoltaic sector in Portugal:
Portugal had in 2005 only 3 MW of installed PV capacity, and 80% of these were off-grid
systems. Compared to most advanced countries, the autonomous systems market was at a
normal development stage, contrarily to the grid connected market, where almost everything
was still to be done. That scenario is about to change, as the 150 MW projected for 2010 (128
MW are already attributed to promoters) will place Portugal as one of the main PV electricity
producers per capita in the world. In absolute terms, we will belong to the European “tier 2”.
With a licensed capacity of 64 MW, Moura will represent half of the target alone, and big grid
connected systems will dominate the generation market.
Portugal has the best yearly solar radiation
in the whole Europe (Cyprus is the only
exception), with values reaching 70% more
than those of Germany. That means a huge
advantage for the country, as the electricity
produced in Portugal can cost 40% less
than in the European giant. Adding to this
fact, many others make it important for
Portugal
to
efficiently
explore
opportunities that PV can offer.
the
Global Solar radiation/Sq. Meter in
Europe
Source: Joint Research Centre, EU
The first and more obvious ones are environmental: the use of an endogenous, universal and
free resource to produce greenhouse gases free electricity can help the environment, but also
improve the equilibrium of the national electric mix and its behavior during peak hours. The
increase in grid liability, the decrease in the production variability and losses during
transportation, and the reduction of use of the bigger power plants are also factors that can
benefit the electricity production frame. As for architecture, the BiPV (Building-integrated
photovoltaic) solutions can replace other facade materials, help on the buildings’ thermal
efficiency, reduce maintenance costs and even provide positive aesthetic effects (color
variations, transparency effects, and no reflection surfaces).
But the most important and positive effects that PV can bring to a country like Portugal are the
social and economical ones: the creation of a new, high added value industrial cluster, the
generation of new jobs, the reinforcement of an image of social responsibility and technological
capacity of any institution or even of the whole country, are some of the benefits that can be
numbered. The effects may be felt in the whole economy, as new associated services are
needed, and the economic structure of depressed and old-fashioned regions can be renewed,
creating new development centralities and inverting the tendency of migration of populations (it
is expected that the PV cluster will employ two million people worldwide in 15 to 20 years).
Modularity is also an important advantage of PV: it allows very short construction periods and
reduced maintenance costs. In a macro point of view, it is also relevant to state the advantage
of diversifying the energy sources and decreasing the need for imports, and of the huge impact
that this technology may have in the future for less developed countries, mainly in Africa. In
short, PV can benefit the industry and the economy (with long term effects), the security of
energy supply (medium term), and the environment (long term).
Portuguese legislation
The national tariff system guarantees a fixed price to RES producers, which ensures the return
on investment, by pondering the avoided costs of installing new factories, the electricity
produced, and the environmental benefit. Presently, PV is paid at 0,447 €/kWh for small
installations (<5 kW), and 0,317 €/kWh for bigger ones, guaranteed over 15 years or until 21
GWh/installed MW are produced. This regime is limited to a 150 MW total cap, and new
licenses are now on hold, as the maximum has almost been reached.
In the past, another regime aimed at developing the concept of producer-consumer
(microgeneration), by ensuring a fixed premium to the electricity sent to the grid, but was a total
failure. The main cause was that the law for grid connections was almost the same for a 3 kW
PV system or for a 1000 MW power plant. Reacting to this excess of bureaucracy, a profound
revision of the law is now in study, and the government is preparing to launch a new program
“Renewables on the Hour”, that is expected to come out in the next months.
Companies in the PV Sector
It is interesting to verify that Portugal has some know-how capacity, with several universities
having specialists who study PV: it is the case of the Universities of Coimbra, Aveiro, and
Minho, who have competencies in amorphous and multicristaline silicon, but also CIS. The
problem is that funding programs for investigation in energy were non existent until 2002, and
that up to now PV doesn’t even receive 1 million euros, out of an overall investigation budget of
580 million.
At an industrial level, the scenario is the same as in the market: only one silicon panels
mounting plant exists, producing 20 MW per year. Mounting is the less demanding and lower
value added stage of the value chain. There is also a national producer of sun tracking systems,
but no production of silicon wafers or cells. There are though some deactivated silicon mines in
the North, and their reactivation should be studied. Two companies, EarthLife and Solar Plus,
have projects for building solar modules plants, where the modules would be entirely produced.
These projects should be supported, as they allow controlling a significant part of the added
value.
In the tertiary sector, the lack of a serious microgeneration market strongly limits business
opportunities. Only isolated cases of companies that are fully dedicated to PV exist. There are
more companies that produce PV electricity, taking advantage of the granted tariffs.
Unfortunately, that is their only focus; therefore the outcome for Portugal in terms of developing
the sector is small.
Barriers to the sector’s development
A set of problems that affect the sector’s healthy development can be identified. Some of them
are specific to Portugal, others refer to PV in general. The most important ones affect the
market: the high price of PV, the consequent increase in the mix cost, the lack of trained
technical personnel, installers and system integrators, the lack of promotion and dissemination
of the information, the low interest of domestic clients, the inadequacy of financing options, and
the small involvement of potentially interested parties (banks, utilities, civil constructors, etc.) are
some of them.
At a technological level, the intermittence of the source has already been referred. A shortage of
PV systems in the market was also felt in recent years, and the low quality of inverters at an
early development stage stained the reputation of microgeneration as a solution that can be
applied in mass. The 3 to 4 years energy payback time also helped, but the truth is that CO2
emissions are 97% lower for PV than they are for fuel.
Bureaucratic problems are particularly serious in Portugal: adding to the very low R&D budget,
granted tariffs are not integrated in a broader strategy aimed at creating a cluster, and the grid
connection system is totally inappropriate. New licenses have been stopped for over two years
now, and the 150 MW ceiling limits the effort put into PV to a useless initiative, with no
structuring impact for the economy. Finally, the competition with the wind energy lobby for the
same funding destined to RES helps limiting the funds for PV, and the lack of stability in
regulations brings uncertainty to the business.
Critical diagnosis of the Portuguese situation:
In the present PV market moment, first movers are growing and positioning themselves for the
future. Followers, whether they are companies or countries, must act fast in order not to lose the
“opportunity window”. In this scenario, and knowing that the real potentialities of PV are in the
medium term and not in the present, immediate mass electricity production can never be an
objective on its own, but only a mean of achieving a better positioning for the future. The
following SWOT analysis for the sector in Portugal summarizes the main factors affecting it.
SWOT analysis for PV in Portugal
Strengths
Weaknesses
- Solar radiation
- Lack of market experience
- EU is world’s market leader
- Weak national industry
- Spanish development
- Budget restrictions
- Excessive regulation/Immobility
- Very weak current strategy
- Small and peripheral market
Opportunities
Threats
- International groups want to invest
- Competition with other RES for funds
- World market growth perspectives
- Decrease in costs can decelerate
- Revision of Japanese and German law
- Thermoelectric development
will accelerate companies’ internationalization
- Chinese industry, competition
- Need to fulfill Kyoto protocol
- Need to restructure the industry,
modernize regions, create jobs, etc.
- Lack of mobilization of the
entrepreneurial tissue and population as a
whole
- Construction sector strong and
internationalized
- R&D Capacity
The country’s current strategy lays essentially in the objective of reaching 150 MW in 2010, by
creating an artificial, highly subsidized market. For consumers, the cost of PV electricity is 4 to 6
times more than wind electricity, and 6 to 10 times more than the one produced with
conventional sources. This tremendous cost has no positive consequence, as most of the PV
power plants licensed until now have a very little amount of national contribution. The
conclusion is that the present strategy is wrong, as it is responsible for a loss of wealth for the
country.
Recommended strategic guidelines:
Current strategy, as it is conceived, should immediately be abandoned. The first and easier
alternative would be to forget PV for now, and only invest in it when it is economically profitable.
We would then import almost all the equipments, as happened recently in the latest wind energy
plants installed. The 150 MW needed until 2010 would be produced by new wind or hydro
capacity, at a much lower price. The thesis defended is that this would represent the
unacceptable loss of a tremendous opportunity. Therefore, a suggestion for a second
alternative follows.
The new strategy for PV that is proposed aims at creating a whole new economic sector in the
country, from R&D to industry and services. The creation of an artificial end-user market will no
longer be an objective, but an instrument to develop the PV cluster.
Key Elements of the new Strategy for PV Development
Knowledge
Knowledge is the first key element in the strategy. In a technology that is evolving so fast,
competitors must keep the pace of technology, and control the know-how. For that to happen in
Portugal, R&D in the area should be a top priority, and its budget should be adapted
accordingly. The national research institutes should cooperate and interact, and be encouraged
to network with top international institutes. A new technology transfer centre must be created,
possibly in the scope of INETI, to promote the interaction between all the stakeholders. This
would include one good laboratory and a start-up incubator, and companies should be
encouraged to participate in the venture. This would create a reference point for the sector
nationwide, and would help on the technology transfer and knowledge dissemination.
In another plan, there is the need to create professional courses for all the steps of the value
chain and workshops can be promoted to disseminate knowledge. Those measures and all the
ones that aim at increasing the level of knowledge of the population, have various effects: they
create a more professional, competitive and mature market; they also help decreasing system
costs, by the effect of experience; in the long term, they allow the control of the best industrial
technologies. More and better professionals mean more companies, and therefore more
business.
Artificial Market
The induced market’s main function is to stimulate the growth of the cluster. There cannot be an
industry nor services without a market that generates business, and R&D would be useless if
not applied. One thing was made clear during the study of the market: big PV power plants do
not stimulate the national market, unless they are associated to other structuring investments.
Microgeneration should therefore always be the priority. The 150 MW target should be
abolished, and replaced by a yearly 40 MW cap (value estimated to give the market a minimum
critical mass). This cap should be upgraded every year, until reaching 100 MW/year in 2015 for
example. The objective of having 1 GW of installed capacity in 2020 could be fixed. The whole
purpose of this new scheme is to create a sustained market, which generates business for
companies every year.
The tariff scheme applied to PV must also be revised, although maintaining the same level of
return on investment. It should incorporate an annual regression system, which mimics the
systems cost reduction. That forces the market to keep dynamic and focused on optimization,
cost reduction, and search of new ideas and technologies.
Key Elements of the PV Market
Bureaucracy
A bureaucratic system based on the German one must be implemented: standardized
equipment models are previously certified, so that they don’t need to be individually licensed.
For systems smaller than 5 kW, for example, standard procedures and requirements for grid
connection and building integration have to be created, as projects approval procedures,
maintenance contracts, and information on the products. The goal is to have a very simple and
functional bureaucratic model.
Financing
The high initial costs of PV microgeneration equipments require specific financing solutions,
created by banks or utilities. New banking products like loans granted by the installation’s cash
flow generation, or equipment leasing contracts, should be evaluated and created. Everything
must be articulated with the systems’ pre-certification process.
Promotion
Increasing the general level of awareness will allow the involvement of a larger number of
business stakeholders, who will interact to create innovative solutions. Measures that educate
the community in general are needed, as targeted promotion initiatives in fairs or directly to civil
constructors, for example. A complete database, accessible to all, must also be created
(internet), with all kinds of information on the solar source, systems productivity, return on
investment calculation tools, applicable legislation, financing options, and other relevant
information. The idea is to facilitate the promoters’ initiative, by reducing their risk and their cost.
Energy
As the technology is still far from cost competitiveness, the electricity output should only be
seen as a mere positive consequence of the sector’s development process. A new, regulated,
100% green tariff can be created, its subscribers paying a premium price calculated on the
basis of a 100% renewable electricity mix. They would then receive a certificate emitted by REN
(the national electric grid operator), that they could use to promote themselves. That would give
more visibility to the RES market, and at the same tame reduce the burden in tariffs for the
common end-user.
Services
As Portugal has strong industrial disadvantages, the tertiary component of the value chain is
particularly relevant: it can be started in a smaller scale, and is much more flexible and
adaptable to new realities. Service companies can also be in diverse markets at the same time,
and explore complementarities.
The proposed microgeneration market will allow the mobilization of the small investors’
entrepreneurship, and will create a tissue of small and medium enterprises. That will bring
critical mass to the system, new jobs, and a growing national value added to the final product.
The sector can even become a services exporter. Contests and incentive programs to the
creation of start-ups in the area must be created, and the civil construction sector should be
involved (it has a high financing capacity, and can help in the internationalization of companies).
The business incubator to be installed in the technology transfer centre must also support and
incentive the entrepreneurial spirit of the population.
Good service companies will generate more business and better solutions, and will encourage a
better industrial sector. There can even be some cases where industry and services mix
themselves, with multidisciplinary companies working in both areas.
Industry
The greatest amount of value added in PV is in the industrial production of equipments. It is an
essential part of this plan to create conditions for the development of a strong industrial activity
related to PV. In my view, it would be a mistake to finance a microgeneration market and feed it
with imports.
Know-how and production scale are fundamental, and are controlled by the most advanced
firms in the world. One of the ways to overcome difficulties is the already referred bid in
knowledge. Another one would be to create incentives to companies that invest in Portugal,
taking advantage of the internationalization and growth movements that are taking place at the
moment. That investment can be negotiated as an exchange for the licensing of new power
plants, but mistakes of the past (such as Serpa and Moura) can not be repeated. Direct
subsidies to industrial companies, using for example the PRIME program, must also be used.
That would be an excellent way to favor national production against imports.
Geostrategically, a cooperation agreement can be signed with Japan, which would turn Portugal
into an advanced platform of the Japanese PV industry in Europe. The strong Spanish growth
also brings excellent exportation opportunities, providing that investment conditions are better
here than on the other side of the border.
Quantification of the Measures proposed
The current situation involves 150 MW of PV. These could be evaluated at 500 million euros
(3.3 €/W), plus some 30 million euros in accessory investments. That means an annual
investment of 132.5 million euros, if made between 2008 and 2011 (4 years). The cost for
consumers depends on the electric output, but can be estimated at 56 million euros (assuming
1500 MWh/MWp, 225 GWh per year are produced, and cost on average 25 €cts/kWh more
than the reference end-user tariff).
In the proposed strategy, and considering an average cost of 4€/W (microgeneration systems
are more expensive), the annual market of 40 MW would generate 160 million euros in
business, which seems a number attractive enough to start with. This would allow having an
installed capacity in the range of 400 MW to 1000 MW when the market reaches self-sufficiency
(in 8 to 12 years), presenting no problem for the grid and having little weight on tariffs, even not
considering the tariffs’ regression mechanism.
Adding to this value, the investment made by the Portuguese state would add to:
- 10 Million euros/year in R&D;
- 50 to 100 Million euros plus 10 million euros/year: creation and maintenance of the technology
transfer centre and the start-up incubator. This value can be co-financed by private companies,
and by start-ups installed in the incubator. EU funding can also be a solution;
- 5 to 10 million euros/year: support to the creation of SME’s, creativity contests, etc. The
involvement of venture capitalists and business angels could dramatically decrease this value,
and bring better results;
- The support to the industrial sector can not be quantified at this stage. It should be further
studied by the API (the national investment agency), the technology transfer centre, and the
interested companies.
A broader view:
A new economic sector can be a tool for creating new development centralities. In PV, the
associated service business must be centred where most people live, in big cities. But the
industrial plants, associated to R&D centres and big power plants, can take support in new
development axis, in the centre or interior of the country. Alentejo, as the sunniest region and
also the poorest, should host the PV sector, if that would be possible. Big projects, such as
Serpa and Moura, can be an starting point, if industries come associated. All the dynamics
created can also be associated to tourism (which is boosting in the region). A museum of the
sun, or of the solar technologies, can be created, as a reference point for general public
education. A department for renewable energies should be created in the Instituto Politécnico
de Beja, as professional courses specialized in PV.
The projected cluster has a strong capacity for generating wealth and fixing populations, two
factors of extreme importance for a region like the Alentejo. The choice for the location of the
technology transfer centre must take these elements into consideration. The region offers
space, good communication routes (new autoways, the port of Sines, proximity of Spain), and
excellent conditions for producing solar electricity.
Although the implementation of the proposed strategy requires a certain amount of effort and
investment from the government, I am convinced that it will be worth it. A well structured and
well coordinated strategy is the only option to tackle such a demanding new market with
success, and to put the country’s economy in the development track. Therefore, this same
model can be further adopted in other similar situations, starting with other new renewable
energy sources that are currently in the development stage. PV could benefit if its development
strategy was repeated for solar thermal energy, thermoelectric power, and marine technologies.
These technologies all present complementarities, and Portugal has significant competitive
advantages in all of them, that should be explored to the limits.
Emanuel Proença