PV Fab Managers Forum: Germany needs €2 per watt for solar market to recover

Share on facebook
Share on twitter
Share on linkedin
Share on reddit
Share on email

Official 2010 PV installation figures for Germany show a booming market with almost 7.4GW installed, an increase of 75% compared to 2009. Once again Germany was by far the largest PV market last year. However, for the market to prosper in 2011, against a backdrop of lower feed-in tariffs, prices much drop fast, according to Henning Wicht, PV analyst at IHS iSuppli, in a presentation at the SEMI PV Fab Managers Forum, held in Berlin earlier this week.

According to Wicht, the ground-mounted market typically requires an ROI for investors of approxiamtely10% to make that sector of the German market attractive to kick-start projects. Based on the German FiT, the cost per watt would now need to be at least €2/W to make investment viable.

In respect to the residential sector, an ROI of 8% is sufficient for homeowners to see the payback benefits of installing PV of roofs. This would require a €2.7/W price to ensure market development for small <30 kW residential systems.

Wicht noted that he was concerned that prices simply weren’t falling sufficiently for the market follow a similar installation trend as seen in 2010, when the second quarter was the peak for installations.

There is weak demand for PV installations in the first quarter, noted Wicht, projecting installations of 450MW for the period.

In his presentation to a packed audience at the event, Wicht pointed to a disconnect within the supply chain that is making it impossible for cell/module manufacturers to cut prices sufficiently to get the market going for the all-too-critical midyear installation cycle.

The problem is that margins are thin for the cell/module producers, while polysilicon/wafer producers are holding on to bumper profit margins. Wafer prices have remained flat as tight supply has continued into 2011.

As chart 1 shows, cell producers are suffering from margins of 4% in general, while module manufacturers fare little better at 5%. However, polysilicon producers are holding on to margins in the 50% range, while ingot/wafer producers benefit from margins in the 20% range.

The market research analyst noted that cell and module production can ramp and add capacity much faster than the upstream elements and that cell and module capacity would reach approximately 40GW in 2011, while the global market is expected to see installations reach approximately 21GW. About 10GW of new wafer and cell capacity is likely to come onstream this year, but the slower ability to ramp wafer production generates the supply disconnect.

This is exacerbated by the use of long-term wafer supply contracts that simply are not flexible enough to match supply and demand requirements on end-product pricing needs.

The problem isn’t being resolved as the major wafer suppliers have all expressed that demand remains strong and pricing remains flat to slightly down in the first quarter, based on comments executives have made during quarterly conference calls in the last few weeks.

Something needs to give for the German market to recover—and it will need to be the polysilicon/ingot/wafer segment.

A price correction in time for the summer installation cycle is looking increasingly unlikely, according to Wicht, but this doesn’t mean the German market isn’t going to recover to 2010 levels.

In contrast to many market and company projections that expect installations to fall in Germany as a consequence of strong FiT price declines, the IHS iSuppli analyst believes that wafer prices could come down as a result of the lower levels of installations in the peak months, giving greater downward pressure on pricing for the second-half of the year and in particular the fourth quarter.

The projections are that from October onward, installations will be significantly higher than the levels seen in the same period last year, which characterised a significant decline in demand after revised FiT pricing was implemented.

These figures have been supported today by the Bundesnetzagentur in Germany. The new data show that 2010 PV installations actually fell far below forecasted rates of 9.5GW installed.

According to the market researcher, the fourth quarter could see installations of approximately 3GW in Germany, compared to approximately 1.3GW in 2010. Overall installations could match those of 2010, coming in at approximately 7.1GW.

Therefore, system prices in Germany should reach €2.0/Watt by midyear for large installations and €2.6/W for residential systems for growth to return. Module prices would be expected to drop to €1.1/W – €1.5$/W range.

Of course, should the current rigid supply chain in the wafer segment continue, the pricing patterns and demand scenarios will be negatively affected. However, in 2012 the significant over capacity expected in the wafer segment should lead to an end of the rigid wafer pricing regime. 

21 September 2021
C&I consumers currently source only about 7% of their power requirement directly from renewables. Indian corporate renewable market has grown rapidly and holds huge growth potential as companies look to reduce power purchase costs and cut carbon emissions. BRIDGE TO INDIA has built significant expertise in the corporate renewable business by working on over 30 consulting assignments and various research reports. We are organizing this conference to bring all stakeholders together and delve deeper into various market aspects. The conference will be held on a virtual platform with excellent networking opportunities for all participants.
22 September 2021
To commemorate the World Energy Storage Day(WESD) on 22 September, being recognized worldwide, Customized Energy Solutions (CES) and India Energy Storage Alliance (IESA) is organising the 5th global conference and virtual expo, which will be held virtually on 22 September 2021. WESD is a global movement initiated by various apex trade bodies working to promote and adopt energy storage, e-mobility & green hydrogen technologies for a sustainable future. The forthcoming edition of WESD is expected to attract global participation with an intent to facilitate bi-lateral trade, market development and new research and innovation, which will invite 100+ countries, 100+ regulators & policy makers, 100+ International speakers,1000+ organisations, 100+ partners & exhibitors and 20,000+ global delegates.
28 September 2021
Solar Solutions International is the largest trade show for solar energy in Northwest Europe. Now the solar market has grown up, it's time for the next step. Solar Solutions International displays more than 500 innovations and over 100 practical seminars concerning the latest in energy storage, smart products, and an ever evolving array of solar panels. As an exclusively B2B trade show, Solar Solutions International offers both exhibitors and visitors the chance to network at the highest level. Duurzaam Verwarmd, the largest trade show for sustainable HVAC technology in the Benelux, is held simultaneously. This way your one visit gets you up to date with all of the developments in both sustainable energy and heating.
6 October 2021
Intersolar Europe is the world’s leading exhibition for the solar industry. It takes place as part of The smarter E Europe – the continent’s largest platform for the energy industry. Under the motto “Connecting solar business,” manufacturers, suppliers, distributors, service providers and project planners and developers from around the world meet in Munich every year to discuss the latest developments and trends, explore innovations firsthand and meet potential new customers.
6 October 2021
The future is bright for a new era of US solar and storage, and the 8th annual Solar & Storage Finance Summit will provide opportunities to discuss solutions to the industry’s challenges and provide a networking platform designed to bring together the top minds in the industry to do business. With a mix of high-level, informative presentations and panels, a stellar cast of speakers and audience members with deal-making capacity, the 2021 edition of the event will be a sell-out success.
18 October 2021
Intersolar South America, South America’s largest exhibition and conference for the solar industry, takes place at the Expo Center Norte in São Paulo, Brazil on October 18–20, 2021, and has a focus on the areas of photovoltaics, PV production and solar thermal technologies. At the accompanying Intersolar South America Conference, renowned experts shed light on hot topics in the solar industry.

Read Next

September 21, 2021
A round-up of the latest news from the US PV sector, including project developments from Ørsted, Candela Renewables and CEP Renewables.
September 21, 2021
New York’s governor has proposed an expansion of the NY-Sun distributed solar incentive programme and revealed plans for two transmission projects that will transport renewable energy to New York City to help the state reach 70% renewable electricity by 2030.
September 21, 2021
German solar installer Enpal has raised €345 million (US$405 million) in debt financing to fund the deployment of more than 15,000 household solar PV systems
September 21, 2021
India added 521MW of rooftop solar in Q2 2021, an increase of 517% compared to the 85MW added in the same quarter last year despite a slight increase in costs, according to a Mercom India report.
September 21, 2021
Private equity firm American Securities has secured a deal to acquire US solar engineering, procurement and construction (EPC) provider Swinerton Renewable Energy and its operations and maintenance (O&M) subsidiary SOLV from Swinerton Incorporated.
September 21, 2021
FIMER has launched two new platforms for the utility-scale solar sector, the PVS-350-TL string inverter for decentralised applications and the PVS-260/PVS-300 modular conversion solution designed for centralised applications.

Subscribe to Newsletter

Upcoming Events

Solar Media Events
October 6, 2021
Solar Media Events
October 19, 2021
Solar Media Events
December 1, 2021