iSuppli details impact on German solar market when feed-in tariff changes hit


With the significant cuts in Germany’s solar feed-in tariffs due July 1, the focus of attention has shifted toward understanding and forecasting what happens next. German trade associations and respected executives and institutions have all warned about the negative impact these changes will have on the German solar industry, but there is little overall consensus in the industry as to what the real impacts will be. However, in a new bottom-up analysis, market research firm iSuppli, believes it has a firm grasp on what will happen next–and it’s certainly a bittersweet pill to swallow.

Germany was the boom market in 2009 and will continue to be so for the next few years, despite tariff cuts and structural changes to the system, according to iSuppli. The market research firm is forecasting Germany will install 6.6GW worth of PV systems in 2010, a 71% increase over its 2009 figures of 3.9GW installed in the country.

“An FIT reduction that will become effective in July will drive a huge surge of installations in the second quarter as consumers strive to capitalize on government benefits before the rebates and incentives decrease,” said Henning Wicht, director and principal analyst for photovoltaics at iSuppli. “However, iSuppli still forecasts strong demand for rooftop installations of solar systems in the second half of 2010 even after the FIT cut, although sales still won’t match the second-quarter total.”

Wicht said that a lull in the third quarter will be short lived as the analyst expects a surge in demand in fourth quarter as consumers realise they need to take advantage of the prime rebates and incentives before another adjustment of the FiT at the beginning of 2011.

The German market will continue its boom status in 2011 with a massive 9.5GW installed. Fears of a collapse in the German market are unfounded, according to Stefan de Haan, senior analyst, photovoltaics, at iSuppli.

He explained to PV-Tech that the continued growth of the German market was due to a combination of key factors driving demand.

“Despite the continued FiT digression in 2011, which we expect to be 13% due to the penalty clauses in place for installations above 3GW – the self-consumption aspects of the tariff changes – mean consumers will continue to see good returns on their investments in solar,” noted de Haan.

The analysts also highlighted that module shortages, especially for high-efficiency models, coupled to the weak Euro will see module price declines moderate, yet should have a limited impact on the total installed figures for 2011.

Although concerns exist as to whether the industry can actually meet such a huge level of new installations both from an inverter and module perspective and the availability of installers, iSuppli pointed to the ability of the German market to install over 1GW in December 2009 alone and therefore even taking into account poor weather conditions in winter, the capacity and capabilities exists for the industry to install close to 10GW in a year.

The problem is that with the continued attractiveness of solar for German consumers, a 43.9% increase in installations in 2011 will result in digression of the FiT of 21% for 2012, which will finally have a significant impact on demand.

This will cap record growth levels, which the market research firm believes will see the market continue to decline rapidly and remain under the 3GW level in 2012 onwards.

The firm also noted that PV installations in Germany and across Europe would continue to account for about 80% of the worldwide market.

Uncertainties about FiT cuts in both Italy and France for 2011 could also spur the uptake of solar in 2010, mirroring events in Germany. iSuppli also acknowledged that new FiT countries such as Greece, Bulgaria, Spain and the United Kingdom appear to be prime investment opportunities.

Though administrative hurdles or installation limits caused in part by the huge demand seen in Germany is limiting inverter and module supplies, the potential for growth remains strong despite a slow uptake now.

Rather than a rapid decline in PV installations after June, as many had previously warned, iSuppli is forecasting several more years of impressive growth in Germany. The ultimate impact of a declining market will only occur after the next two years of growth.

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