Analysis | July 06, 2012
Germany's revised solar subsidy
Revisions to Germany’s ever-changing solar subsidy policy have finally been set; the final version however, is likely to further weaken already shrinking demand in the European PV market, at least in the short term.
EnergyTrend, a research division of TrendForce, previously predicted Germany would include an overall subsidy cap in its new policy, and indeed lawmakers have done just that. The German government has set a target cumulative installation capacity of 52GW by 2020. At the end of the first quarter of 2012, Germany’s solar installations amounted to 26.6GW, and the policy calls for a targeted growth corridor of 2.5 to 3.5GW per year. Installations in excess of these figures will not be subsidized. The revised policy also creates a new category for rooftop systems from 10 to 40kW, which will receive subsidies of €0.185/kWh. Systems smaller than 10kW or between 1MW and 10MW will be removed from the market integration model, and systems between 10kW and 1MW will be subsidized for 90% or power produced. Ground-mounted systems smaller than 10MW will continue to receive 100% subsidy. Although the impact of the new policy on Germany’s solar market will be mild, TrendForce believes that in the long run it will weaken Germany’s overall influence in the global PV market. As demand from Italy and other major European countries continues to shrink as well, when Germany enacts its 2.5 to 3.5 GW yearly installation cap in 2013 the global market will be see a total capacity reduction of 3GW. If market growth in China, Japan, and the U.S. is unable to make up for the cutback in Europe, the global PV industry will face an even tougher challenge beginning in 2013. Aside from negatively affecting the German and European solar markets, the new policy has caused manufacturers to adopt a conservative outlook toward the PV market in the second half of the year. According to TrendForce surveys, the current level of demand may be maintained in the third quarter, but prospects for the fourth quarter are far less optimistic. Furthermore, as end clients are placing more priority on price than efficiency, TrendForce has noted that demand is warming for standard products (efficiency between 16.8% and 17%). However, this turnaround has yet to benefit prices, and spot market figures continue to face pressure. Turning to this week’s spot prices, July negotiations are currently underway, but related vendors indicate prices have barely increased at all so far; most figures stayed flat, and some vendors even admitted to offering lower price quotes. Polysilicon prices from the four major PV makers fell in the US$20-22/kg range; some second-tier suppliers offered prices lower than US$20/kg, but no deals were concluded at such figures. Average polysilicon price has yet to stabilize, falling 0.71% to US$21.07/kg this week. As for silicon wafer price, although some manufacturers have all of their July capacity taken up, they still offered discounted prices to major clients. Average multi-Si wafer price fell to US$1.06/piece, a 0.65% decrease; mono-Si wafer price, dually affected by the exchange rate and high-efficiency products, average price dropped 0.67% to US$1.475/piece. As a result of a bear market, this week’s solar cell price trend saw a reversal with average price falling by 0.43% to $0.463/Watt. Also affected by the bear market, module price fluctuated this week, arriving at an average of US$0.745/Watt, a decrease of 0.27%.