The annual Solarplaza Global Demand Conference (Hamburg, Germany, 9/22) combined optimism, pragmatism, and some healthy skepticism to provide an informative overview of several global markets, reports Navigant Consulting’s Paula Mints.
by Paula Mints, Navigant Consulting
The annual Solarplaza Global Demand Conference (Hamburg, Germany, 9/22) combined optimism, pragmatism, and some healthy skepticism to provide an informative overview of several global markets. The presentations were mostly upbeat, despite the downbeat 2009 market for PV products, and despite difficulties administrating programs in some countries. Highlights from this one-day event include presentations about the markets in Germany, Italy, Spain, France, Greece, the Czech Republic, China, South Korea, and Japan.
Gerhard Stryi-Hipp, head of energy policy at the Fraunhofer Institute for Solar Energy, presented a pre-election overview of the market in Germany, which is currently booming. Stating the obvious, he said that Germany will remain the largest global market as long as no other country offers competitive incentives along with competitive investment conditions. Estimated installations for 2009 are ~2.5GW, which will lead to an additional 1% reduction in incentives for all categories. (Note that with a new conservative government soon taking office, more significant changes are probable for 2011 and perhaps even in 2010.)
Stryi-Hipp also discussed the concept of the EEG (German feed-in tariff), the basic concept of which is to provide an orderly price reduction in conjunction with the reduction in the FiT. With the soft global market (aside from Germany’s current strength), module and system prices are currently quite low, and there has been a high margin switch from the manufacturers and installers to the system investors. Regarding the elections (which were still pending at the time of the conference) he noted that all parties in Germany support the 30%-by-renewable-energy target, but they are also complaining about the FiT burden on taxpayers, and some are calling for a 30% reduction. Though the FiT was evaluated in 2009 and is not slated for re-evaluation until 2013, the reality is that changes can be introduced at any time. The government in Germany will likely not accept a several-gigawatt market annually as the cost of supporting one of this size is too steep, Stryi-Hipp noted. Further, if the market is populated mostly by foreign-manufactured modules, some import controls are likely. Another reality — left unmentioned but nonetheless true — is that markets are almost never orderly and given to outsmarting orderly systems.
Italy’s target of 3GW by 2016 is a political target and not a hard-legislated one, pointed out Gert Gremes, president of the Italian solar industry association (GIFI) and director of PV company Technosot, in his perspective on the country’s PV market. Net metering in Italy covers all energy fed into the grid minus the net cost. The market for PV in Italy is primarily rooftop: 20% BIPV, 53% retrofit, and 27% ground. In 2009, a market of ~400MWp is anticipated, expected to surge to 600-800MWp in 2010.
The future market for PV in Italy after the expiration of the current FiT — currently capped at 1.2GW and to be re-evaluated at the end of 2010 — depends upon banks’ ability to fund projects and on the structure of the new law. The government wants to see an increase in domestic PV manufacturing, and thus stronger use of domestic products, but there are significant barriers to doing business in terms of solar installations and taking advantage of the FiT. It can take six months to one year for authorization to connect to the grid and there is no regulated integration in Italy’s building sector, the country’s grid needs to be upgraded, and the banking (investment) sector remains constrained.
Javier Anta, president of the Spanish solar industry association ASIF, offered a perspective of the market for PV in Spain, where once there was so much hope and activity and now relative silence on the market front. In the past the market was 98% ground-mounted systems, 67% non-tracking, and 87% using crystalline technology. Simply put, the government in Spain wanted to control growth in an out-of-control market, so it implemented a cap on what could be installed in a given calendar year. The government also wanted to lower the significantly high price of modules and systems. Other changes included a switch to a stronger retrofit market and less multi-megawatt ground-mount installations.
Spain’s estimated market size in 2009 is ~150MWp, just a bit shy of the 500MWp cap. The good news is that the deficit transfers to the following year instead of disappearing. On the bad news side of the equation, employment in the solar industry in Spain has plunged from ~40,000 to ~4000 since the country’s FiT was changed. There is a significant queue for registering new projects in Spain and a three-year wait for FiT approval. Optimistically, the building technical code (CTE) requires that a solar system must be installed on certain buildings whether or not the FiT applies; ~10MWp have been installed under this program in 2009. The government in Spain is working to simplify its FiT and its interconnection procedures. In 2012, a new Royal Decree will be introduced that includes a bonus for self-consumption similar to the program in Germany.
France wants ~5.4GW of PV by 2020, and expects demand for PV at 1GW/year by 2013. But the estimated 2009 market in France is 200-250MWp, with ~1.6GW of solar installations on a waiting list to be connected to the grid, some of which will never be connected, noted Richard Loyen, managing director of Enerplan, the French solar energy business association.
Loyen reiterated the country’s focus on building-integrated PV, for which there is a significant tariff of 0.60176-Euro Cents/kWh. A committee approves which projects are considered BIPV, which is defined as building shading, windows, and sidings. By 2020 every new building in France must be self-sustaining (zero consumption). Installers in France must provide a 10-year system guarantee per Civil Code 1792, which ameliorates risk to the system owner.
Stellos Psomas, policy advisor for HELAPCO, Greece’s solar industry association, offered a perspective and optimism as to why the market in Greece remains promising though undeveloped. On the order of 8000 investors in large solar installations remain on a waiting list (some since 2006) with the very first permits filed still not receiving approval, according to Psomas; despite the lengthy and complex Greek bureaucracy, he offered reassurance that some of these permits may be approved in 2010. Greece has upcoming elections and the likely new socialist government is interested in a green economy, but unsure of PV’s role in it — and is concerned that the healthy FiT (40-50 Euro Cents/kWh guaranteed for 20 years, adjusted for inflation, and tax-free) might lead to an unsustainable market such as the one created in Spain.
The market in Greece for 2009 is estimated at 38MWp, and is expected to increase by 189% in 2010 to 110MWp, possibly following the hoped for approval of the waitlisted projects. To reach its target goal of 6.5GW of solar by 2020, the market in Greece would need to be ~800MWp a year, Psomas pointed out.
An estimated 150MWp is expected to be installed in the Czech Republic in 2009 despite an unstable exchange rate for its Koruna currency (the Czech Republic is not a Euro country) leading to a less-than optimal climate for investment. Currently the 18-year FiT for systems <30kWp is 12.89-Koruna cents/kWh, with a green bonus of 11.91-Koruna cents/kWh and an inflation adjustment. In August the current government (its predecessor was ousted in March on a vote of no confidence) proposed a reduction in the FiT, which it views as too profitable, though the reduction has yet to be approved. At this point, the reduction in the tariff in 2010 may be anywhere from 5% to 30%. Adding to market uncertainty is a doubling in the price of land. The Czech Republic has strong nuclear and fossil fuel lobbies, utilities that are hostile to solar, and an 18-month wait to connect to the grid. The country does, however, have a database of projects ready to build.
Stephen Cai, director of the China Electric Equipment Group (CEEG), chairman of the board of CEEG SST, and business CEO of CEEG PV, offered a perspective on the potential strong market offered by China, which has a target of 500MWp of PV by 2010 and 20GW by 2020. While 70% of China’s energy is coal-based, its Golden Sun program has announced that it will subsidize 70% of off-grid installations and 50% of grid-connected installations, and has the goal of installing 20MWp per province.
Cai offered the following advice on how to successfully do business in China: develop strong relationships with local governments, invest in local assets, and work with a local partner. As an example of successful foreign investment, he noted, the Dunhuang PV Power station project went to the lowest bidder: a foreign competitor who worked successfully with a local partner (Best Solar and LDK).
A less-than-optimistic view of the role PV will play in South Korea’s energy future was presented by prof. Donghwan Kim, PV expert at Korea University. The national plan to realize a vision of a low-carbon society developed through green growth involves a goal of 11% energy production from renewable sources by 2030, and 59% of energy production from nuclear energy. Currently, there are 20 nuclear reactors in operation in South Korea, eight new reactors under construction, and plans underway to build 10 more.
Until South Korea’s FiT — which had threatened to become unsustainable — is replaced by a renewable portfolio standard in 2012, strict controls have been implemented to control the PV market. The country’s initial 100MWp cap was too low; companies flooded the market with applications and installations before the program could be exhausted. Realizing that its market was being overrun, the government increased the cap to 500MWp in 2008 and announced a new system. In 2009 there was a 14% decrease in the country’s FiT, and it will decrease again by 14% in 2010; new reductions will be announced each year until the program ends. A strict cap was implemented: 50MWp in 2009, 70MWp in 2010, and 80MWp in 2011. Making PV even more unpopular in South Korea was its domination (>90%) of the budget for renewables. Nevertheless, PV manufacturing in South Korea is growing with Samsung (among others) expecting 50MWp in c-Si production by 2010.
One of the earliest incentivized global markets for solar, Japan’s PV market experienced modest growth in 2008 due to a variety of factors (e.g., the economy and lack of a residential rooftop incentive program), but had a cumulative installed base of 2.1GW, noted Hiroshi Matsukawa, senior consultant with PV market analysis firm RTS Corp.. Japan has a goal of becoming a low-carbon society, and wants a 15% reduction in carbon levels from 2005 levels by 2020 along with 28GW of installed PV — and to this end, Japan introduced a feed-in tariff, which goes into effect on Nov. 1, 2009. Utilities will be obligated to purchase PV generated electricity at ¥48/kWh for ten years. The recent elections in Japan brought a change in the government, though it is still friendly to solar, seeking to reduce carbon levels by 25% below 1990 levels by 2020; this new goal (among other goals) remains under review.
The conference ended with a panel lively panel discussion centered on projections for the market and price levels in 2010. Market projections were in the range of 5-10GW, while many expected the average module prices to drop as much as 25% below already unsustainable and unprofitable price levels.
Paula Mints is principal analyst, PV Services Program, and associate director in the energy practice at Navigant Consulting. E-mail: [email protected].