Power generated from solar modules in Europe may take until the end of the decade to be competitive vis-à-vis conventional forms of energy, the world's biggest solar association said on Monday, adding that point could be reached sooner in some regions.
Based on a study looking at five major solar markets — Germany, Italy, France, Spain and Britain — Brussels-based European Photovoltaic Industry Association (EPIA) said competitiveness could be reached by 2020.
The photovoltaic (PV) industry still depends on government support, so-called feed-in tariffs, giving incentives to producers of solar power that are then put on the consumers' energy bill.
Governments have been cutting back on the support to force the industry to lower its costs at a faster rate, but that process has also hurt companies in the sector including Germany's Conergy, Q-Cells and Solon.
"The cost of PV electricity generation in Europe could decrease from a range of 0.16-0.35 euros ($0.23-0.50) per kilowatt hour (kWh) in 2010 to a range of 0.08-0.18 euros per kWh in 2020 depending on system size and irradiance level," EPIA said in a report released on Monday.
This compares, for instance, with generation costs of about 0.9 euros for coal in Germany in 2010, according to data from the Organization of Economic Co-operation and Development (OECD).
EPIA said competitiveness could be reached faster in some regions, singling out Italy where — depending on the segment and size of solar system — it would only take another 2-3 years.
"Under the right policy and market conditions, PV competitiveness with grid electricity can be achieved in some markets as early as 2013, and then spread across the continent in the different market segments by 2020," it said.
EPIA's more than 240 members include U.S.-based First Solar, the world's biggest solar company by market value, Germany's No.1 solar company SMA Solar and China's Suntech Power Holdings, the world's top maker of solar cells.
The European Union is aiming to raise the share of renewables as part of total energy consumption to a fifth by 2020.
Germany, which aims for a share of 35 percent by 2020, already derived more than a fifth of its total power requirement from renewable sources in the first six month of the year, data from energy industry association (BDEW) showed last week.