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According the Federal Network Agency, only 3.35GWp of PV systems were installed in Germany in the first nine months of 2011. In comparison to last year, this represents a market volume decrease of 40%. In 2010, 5.53GWp were installed in September alone. Market experts currently estimate that the total additional installations in 2011 will amount to 5.5 GWp. This would mean that the German market would be in a state of regression for the first time, at 25% below the installation rate of the previous year.
Till von Versen, solar market expert and research analyst at EuPD Research, will be evaluating these newly published figures, as well as further market developments for 2011 in the following guest article. Till von Versen explains how the German sales market is likely to change and what differences should be expected in the future from the point of view of the end customer, the installer and the manufacturer.
The End Customer – Delayed Purchase Decision but No General Discouragement
The political and economic framework in 2011 is not discouraging towards those who wish to purchase a PV system. The rate of return has remained at a relatively high level and the Fukushima disaster has prompted many people to invest in PV. The current financial crisis also does not seem to be presenting a significant obstacle. Accordingly, consumer indices, such as that of the Gesellschaft für Konsumforschung, are currently not showing any signs of a decline in the German population’s willingness to invest. According to a study from the German Institute for Agriculture in 2011, the financial situation and investment potential of agricultural customers – a customer group which has been growing over the last few years – has not only remained stable but also risen. When regarded rationally, investment in a PV system can be seen as a safe investment, especially in troubled times.
It is very possible that the reasons for conservative demand figures are of a psychological nature. Research results from consumer markets show that scarce commodities are evaluated higher and thus demand rises accordingly. Special and limited editions aim specifically for this effect. Should similar effects be seen in PV then new challenges would arise from a communications perspective. One possible response would be an emotion-based sales approach.
According to EuPD Research’s latest surveys, the reason for the reduction in sales does not lie in any general discouragement among consumers or in market saturation, but rather in a delay of the customer’s investment decision. One current study carried out by EuPD Research and Photovoltaikforum GmbH examining customer purchase decisions shows that in November, 309 systems have currently been realized, a further 112 are planned for this year and only 19 potential customers have decided against the investment.
Installer Expectations: Moderate
The European Installer Monitor, carried out by EuPD Research among various trades in the most significant European sales markets, gives a valuable insight into the market assessment of PV installers. For this study, more than 353 installer companies are surveyed in Germany alone. Among other questions, the installers are also asked to evaluate their business in the current year. Around 30% assume that their own installed capacity will increase and 23% assume that the volume will remain the same. The majority of 47% assume that there will be a decrease in PVinstallations.
However, the installer’s assumptions differ greatly between various trades. Whilst specialist solar installers assume at the most a marginal decrease in their installed capacity, HVAC installers, roofers and electricians see their futures more pessimistically and assume a drop of around 20%.
Manufacturers Lower Prognoses
According to branch estimates, the total new installation in 2011 should amount to 5.5GWp. Many leading manufacturers have already decreased their shipment forecasts, but these still lie significantly above those of last year. For example, Trina Solar have lowered their prognosis from 1.8 to 1.4GWp. However, compared to last year, this still amounts to a plus of 40%. Suntech plans sales of 2.2GWp for 2011 - a plus of 630MW in comparison to last year. Other manufacturers are providing similar figures. Even with full warehouses, the current prognoses still do not correspond to a forecasted decline of 25%.
These comparatively high manufacturer shipment forecasts can be explained by strengthened foreign sales markets. For example, Italy absorbed with 7.7GWp a very large part of capacities produced in 2011. Calculating without overhang from 2010, 6GWp would still remain. However, examples such as SunPower which announced record shipments for Germany show that strong sales must have been made here. The reports for the third quarter 2011 will certainly bring this matter to light.
Market Developments Point to an Increase
During the EU PVSEC in September of this year, there was talk of a mild boost in the market. However, according to EuPD Research’s current evaluations, the effects of this boost could only be felt in October. After a continuous drop throughout the start of 2011, module and system prices experienced a slight increase in October (see figure 1). The stabilization of prices indicates increased installation in the last quarter.
Last Year’s Level as a Possible Scenario
If developments in each segment are considered according to size, then growth is expected in the segment of large scale plants above 1MWp. The numbers of completions announced indicates growth in the double digit range. Newly installed capacities could be between 1.6 and 1.9GWp.
Analysis involved in the European installer survey indicated that installations in the segment up to 1MWp in 2011 could reach last year’s level. The figures for smaller system categories are based on statements given by installers regarding growth rates from the installer monitor. The results are weighted according to the capacity installed by various trades. This gives a figure of 5.84GWp of newly installed capacity. Thus, the figure for the market as a whole (including the large system sector) would amount to between 7.4 and 7.7GWp. In order to reach this figure, a volume of between 4.1 and 4.4GWp would need to be installed or registered in the last quarter of 2011.
Implications for the following year
In contrast to last year, the EEG (German renewable energy law) has been changed in one important point. The bi-annual digression is no longer calculated based on the months March, April and May, but between October and April.
On the one hand, a strong last quarter is a scenario many manufacturers have been hoping for, but on the other hand, this change in the subsidization laws could have negative consequences for the middle of the year. A total market figure of around 6GWp would mean a decrease in sales volume of 45% for 2011 due to a decline in prices. This would lead to a mid-year digression of at least 6%. If the German market reaches the figure achieved last year – a possible scenario according to installers – a reduction of at least 12% will occur.
Developing a price policy for 2012 will not become easier. It is to be hoped that the federal network agency will announce the installation figures in time for the industry to gain at least some planning security.
