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Autumn 2015 European Energy Innovation 61


decreased at the same pace or Figure 4 Cumulative Photovoltaic Installations in the European Union from 2005 to
sometimes even increased. 2015 (data source: EPIA3, Eurobserver4 and JRC analysis)

Despite the fact that a global 100,000
market exists for the hardware
components of a PV system, Cumulative Photovoltaic Installations [MWp] 90,000 Rest of EU
e.g. modules, inverters, cables, 80,000 Greece
etc., and prices are very similar 70,000 United Kingdom
worldwide, the prices for installed 60,000 Czech Republic
PV systems still vary significantly. 50,000 Belgium
The reasons for these differences France
are manifold and range from Spain
the different legal requirements Italy
for permitting, licensing and Germany
connection to the grid to the
different maturity of the local 40,000
PV market, with impacts on
competition between system 30,000
developers and installers.
In July 2015 the European
average price of a residential 10,000
system was 1.25 €/Wp8 including
installation but without tax and 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015e NREAP
administrative and connection 2005
costs. However, there is a wide
spread in the costs of PV systems Figure 5 Influence of WACC on LCOE
for home owners. A price survey (LCOE of PV-generated electricity for residential systems with a system price of 1
showed that prices for installed 400 EUR/kW, 20% VAT, 2% O&M cost, an annual generation of 1 000 kWh/kWp/year
PV systems between 1 and 10 and a financial lifetime of 20 years.)
kWp in the European Union
varied from quotes as low as EUR 35
1000 per kWp to more than EUR
2600 per kWp. At the same time Capital
different VAT rates between 0%
and 25% applied throughout VAT
the Union. Administrative and
connection costs as well as fiscal O&M
and financing conditions are a 30 Other (fees, permitting, insurances, etc.)
further source of huge differences
in the European Union. These Engineering Procurement & Construction
non-technical costs vary much
more within in the European Balance of Systems
Union than the solar radiation
and can make PV use in sun-rich 25 Inverter
countries less attractive than in PV Module
countries with an average solar
radiation, but low non-technical LCOE [EURcent/kWh] 20
Already at 5 % return on
investment (ROI) the financing 10
costs are the largest single

0 20%
0% 3% 5% 7% 10% 12% 15%


cost factor. Together with electricity.
fees and permit costs, they
comprise about one-third of the The introduction of fixed network
electricity-generation costs from charges or levies to be paid on
a residential PV system for the electricity generated with a PV
first 20 years. The influence of system and self-consumed at
financing costs is shown in Figure the place and time of generation
5. Therefore, reasonable financing further add to a diversification
is key to low-cost photovoltaic of the attractiveness to install
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