Arno Behrens is head of energy and research at the Centre for European Policy Studies (CEPS).
He was speaking to EurActiv's Frédéric Simon.
General Electric and Total have recently been involved in large takeovers in the solar photovoltaic sector. Does this signal a wider trends towards further M&As in the solar sector?
With constant pressure on the solar industry to become more competitive, further consolidation of the sector is unavoidable, also in view of increasing competition from China.
This will involve mergers within the industry, but also take-overs from other power and energy companies. As regards the latter, serious engagement in the solar sector is crucial in order to avoid strategic take-overs to the benefit of their core business models.
What does that tell us in terms of the maturity of the solar market? Is it now on track to enter the energy mainstream?
The solar market is still in an early stage and not able to compete with wind power, let alone fossil fuels. However, costs have been considerably reduced over recent years and further decreases are expected to raise the competitiveness of solar installations further.
Without subsidies, however, solar installations will have a hard time entering the energy mainstream for quite some time to come.
On the other hand, solar will play a role in achieving the EU’s renewables target, this may explain the increasing interest in the sector as 2020 approaches.
Do you see falling subsidies in Europe as a negative signal or as a sign that the sector is getting closer to grid parity?
Both. Costs of solar installations have decreased considerably, which means that the sector is becoming more competitive. However, depending on the energy sources used to produce electricity and the location of the solar installation, grid parity (without subsidies) is still far away, especially in Northern Europe.
Reducing subsidies may incentivise further increases in competitiveness. However, there needs to be caution that industries that were built up with the help of the subsidies are not exposed to competition from non-EU countries too fast.