iSuppli forecasts impact of Germany’s FiT cuts in 2010

With the extra feed-in tariff cuts due to kick in in April this year, iSuppli's senior director and principal solar analyst, Dr. Henning Wicht, expects a significant rush to install PV systems before FiT changes cause a dramatic fall in demand. Wicht is projecting installations to reach approximately 1GW in the first quarter, plummeting to only 50MW in April and remaining at the 100MW level in May and June. However, a recovery in demand is expected with a forecast of 2.7GW of total installations in 2010.

“Germany’s decision to cut its solar subsidies in the second quarter will make installations less attractive for the country’s consumers,” commented Wicht. “Because of this, German consumers will rush to make solar installations in the first quarter and then stop in the second quarter. As a result, iSuppli anticipates the German market will overheat during the first three months of the year and then collapse during the next three months.”

Wicht told PV-Tech that the reason for a recovery later in the year was due to an expected decline in module prices greater than previously forecasted. Wicht said, “As a result of the decline in installations, solar system prices in Germany could decline by 7.5% from April through the end of 2010, compared to less than the 5% normal rate of decline.”

Indeed, the crash that Wicht has modelled is actually very short, especially considering the strong recovery in the fourth quarter, which is little different from installation levels experienced in the same quarter of 2009.

Wicht isn’t that concerned about the ramifications of the German FiT cuts on the global market and refrains from drawing parallels with the Spanish cuts and capping that took place in September 2008 and the module overcapacity and plunging prices that followed.

“The massive oversupply and downturn seen in the global solar cell industry in 2009 was largely due to Spain’s decision to change its FIT policies, which led to a collapse in demand,” Wicht said. “Germany’s move could have similar impact on the global solar market during the second quarter of 2010. However there is a major difference: the German FIT does not limit the size of solar installations, whereas the Spanish FIT restricts installations to 400MW to 500MW per year. Assuming that solar system prices will drop more, installations in Germany will have an opportunity to recover, unlike in Spain.”

A final decision on the actual rate cuts is planned to be officially announced within the next 10 days, Wicht noted.