Report: IEA much too pessimistic on solar PV

The International Energy Agency’s assumptions on the growth and cost of solar photovoltaics are in conflict with a range of other institutions and industry data, according to a new report published by the Norwegian Climate Foundation.

Terje Osmundsen: “IEA and Solar PV: Two Worlds Apart” (pdf). Published by the Norwegian Climate Foundation, February 2014.

In some regional markets solar photovoltaics (PV) already competes without subsidies against fossil fuel alternatives, Senior Vice President Terje Osmundsen at the solar power company Scatec Solar writes in the report titled “IEA and Solar PV: Two Worlds Apart”. This situation “will spread to ever more markets as the costs of solar continue to fall and the costs of fossil fuels rise,” Osmundsen says.

In the report, the author, a well-known business leader and commentator in Norway, compares IEA projections on the development of solar PV with a number of other studies and sources and up to date industry data. Among these are the International Renewable Energy Agency (IRENA), the US National Renewable Energy Laboratory, Bloomberg and Citi. Osmundsen finds that the IEA consistently operates with much too pessimistic assumptions about the growth and cost development of PV worldwide and in regional markets.

The assumptions on the cost of PV used in IEA’s World Energy Outlook are “severely outdated”. This leads the IEA to the conclusion that substitution of fossil fuels with solar PV will be slow to materialise and very costly. “It’s time this fundamental shortcoming of the important World Energy Outlook study be corrected,” Osmundsen says.

One example of the gap between IEA projections and other sources is shown in the figure below.

IEA projections for cost of solar PV are much higher than other sources. Here compared with the US National Renewable Energy Laboratory and Citi.

IEA’s views on solar PV are not shared by IRENA, another international, government-backed institution, Osmundsen points out. He concludes the report with an appeal: IEA and IRENA should cooperate on a joint study of the economics of and potential for renewables in the power sector.

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