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.

Germany

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

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.

Spain

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

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.

Greece

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.

Czech Republic

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.

China

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).

Korea

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.

Japan

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: pmints@navigantconsulting.com.

Source

Stelios Psomas is a leading Greek PV consultant and author of the market report "The Greek solar PV market, the next Mediterranean PV tiger". He started campaigning for PV in Greece in 1995 (as a Greenpeace energy campaigner) and since then he has pushed for the introduction of feed-in tariffs and the opening of the market. This is mainly done through his role as a policy advisor for the Hellenic Association of Photovoltaic Companies (HELAPCO) and for Piraeus Bank, a leading bank in PV financing in Greece.

What are your expectations for the development of the PV market in your country in 2009?

In 2009, only mature projects that were already authorized last year are going to be realized. This translates into approximately 38 MWp of newly installed and operating systems for 2009.

Why do you think the Greek market will finally take off in 2009, after several years in which the feed-in tariff and other incentives looked great but market growth was relatively small?

This is a crucial year for the Greek PV market. Many of the bureaucratic problems that have hindered the development of the market are being resolved, and many new projects are being authorized. That opens a window for more aggressive development in the coming years.

What do you see as the most important market segments in your country for the near future: residential, commercial, or utility scale projects?

In 2009, as well as in the coming 2 years, the most important segment will be the ground-mounted systems with an average size of 100 KWp. MW-size systems will take the lead after 2011. Due to a very promising FIT regime for rooftop systems that was introduced last June (0.55 €/kWh guaranteed for 25 years plus relaxed authorization procedures), we also expect the residential and small commercial market to flourish in the near future.

What is your view on market development over the next three years?

Based on current trends, my best guess is 100 MWp in 2010, 145 MWp in 2011, and 160 MWp in 2012. I must stress though that I consider these estimates to be conservative.

What will be the impact of ongoing module price decreases for market growth in your country? Is there a risk that the feed-in tariffs will be adjusted? Will buyers wait for even better prices, or is market growth related to administrative procedures rather than to the price of modules?

To the joy of investors, prices are going down very fast. So far, it is indeed the administrative procedures that drive the market, not prices. If there is any adjustment in the near future, I guess it will be related to the grant scheme (up to 40% of total system cost), which is now available for commercial systems on top of the feed-in tariffs. I believe that this extra incentive will be abolished in the next couple of years.

Chinese companies seem to lower their module prices severely in order to gain market share. How do Greek customers look at Chinese module brands?

A couple of years ago, people were reluctant even to discuss Chinese modules. Now, the best-known brands are welcomed by investors, especially for MW-size projects. In the medium-size segment, European brands still dominate the market.

When do you expect to see grid parity in your country and in which market segment?

Grid parity is expected in 2013-2017 for rooftop commercial applications, in 2015-2017 for residential systems, and after 2014 for utility scale systems.

How will the Greek solar energy market look in your country in 5 years from now?

Mature. I expect Greece to be within the top ten markets worldwide over the coming years. The potential of the country is huge.

Are the chances good for thin-film solar modules on the Greek market?

Yes, because thin film generally operates better in warm climates. The only limiting factor at the moment is land restrictions, because applications have been issued for certain plots of land in the past with crystalline modules in mind and not thin film. In practical terms, it will be difficult for many investors to change applications they’ve already filed in 2007.

What do you see as the major driver for solar energy in Greece over the coming decade?

The major driver is bureaucracy, which is dependent on political will. If politicians get the message, the market will boom.

Stelios Psomas will be a speaker at the Third Global PV Demand Conference (www.globaldemandconference.com ) on September 22 in Hamburg (Germany). At this major PV-expert event, leading speakers will discuss the demand dynamics and market forecasts in the world's major PV Markets. Stelios Psomas is also the author of the recently launched report “The Greek PV market,” exclusively published by Solarplaza. This comprehensive report provides all the details and insights required for starting and empowering PV business activities in Greece. This unique 70-page document includes an explanation of all the new regulations, a market analysis and forecast, an overview of the Greek supply chain, and a directory of all relevant Greek PV players. The report can be bought online on shop.solarplaza.com

The Greek solar PV market is ready for take-off, following Spain and Italy as the next interesting Mediterranean top spot. Greece is set to become one of the global top ten biggest PV markets in 2010. This optimism is driven by the generous feed-in tariff in combination with a sunny climate. Even the problems of bureaucracy seem to have been resolved after two years of struggling.

In addition to the attractive feed-in tariffs, state subsidies of up to 40% are available for most commercial applications. The return on investment will be in the range of 15-30%. Smooth and relatively healthy and steady market growth is foreseen. Residential roof-top PV systems below 10 kWp will become an important market segment, with a feed-in tariff of €0.55/kWh guaranteed for 25 years.

Over the last two years, potential investors have filed more than 8,000 applications for commercial PV systems, with a cumulated capacity of 3.7 GWp. Only 30 MWp had been realized by mid-2009, while the annual market for 2009 is forecast to be in the region of 35-40 MWp. Over next two to three years, the market is predicted to exceed100 MWp annually. Grid parity is not expected before 2014-2018, as retail electricity prices are comparatively low in Greece.

The Greek PV industry is developing rapidly (both upstream and downstream). Hundreds of PV companies are already active in Greece, including major international players. New manufacturing facilities are being built, offering highly persuasive arguments in favor of continued political support. Public and media support for solar PV is strong, especially since the introduction of the rooftop PV program in June 2009. "After years of promises, I really believe Greece is now ready to become a major PV market in the world," says Stelios Psomas, a leading Greek PV consultant and author of the market report "The Greek solar PV market, the next Mediterranean PV tiger".

Solarplaza and Stelios Psomas, following consultation with the Greek government, published the market report this week. It includes a detailed description of the market status and forecasts, regulation, procedures, supply chain data and all relevant information for companies looking for new PV business opportunities in Greece.

More information is available at shop.solarplaza.com.

An attractive feed-in tariff incentive and rapidly decreasing solar module prices have made Italy the most attractive PV market in the world. This year, Italy is set to become the world's second largest PV market after Germany, the undisputed leader.

GSE, the state-run Italian power management agency, expects that total installed PV power will reach 900 MW by the end of 2009. This represents 100% growth compared to 2008, with approximately 70,000 new-build PV installations in 2009. GSE expects the market to grow further to 1500 MW in 2010, resulting in a compound annual growth rate of 135% for the PV market in the period 2006-2010.

In 2008, total revenues approached 1.15 billion euros, an increase of 150% over 2007. The Italian feed-in tariff for solar energy produced is €0.372 per kilowatt hour for roof projects of between three and 20 kiloWatts. In addition, solar energy produced can be sold to the utility at €0.08/kWh. Total remuneration is comparable to what was available in Spain during the market boom in 2008. In Italy, however, solar module prices are almost half the level they were last year. These favorable conditions have attracted many new companies, and led to a fragmented market with more than 600 players. Unlike the ground-mounted large power plants developed in Spain in 2008, most PV installations in Italy are roof-mounted projects which are located in the northern part of Italy. This is because of regulatory and grid connection issues in the sunnier south of Italy, where developers have scheduled larger power plants.

The market cap of 1200 MW cumulative installed PV power is expected to be reached by late 2009 or early 2010. This will leave 14 months for projects to be completed. What will happen after this remains an unknown. Plans have been presented to extend market stimulation with lower feed-in tariffs. Some experts, however, believe that new incentives in southern Italy will no longer be necessary in 2011, as grid-parity could be reached due to high grid electricity prices.

At the third Solarplaza Global PV Demand Conference on 22 September 2009 in Hamburg, a representative and market expert from the Italian PV Industry Association will discuss the current market situation, and present forecasts for the booming Italian market. More information is available at www.globaldemandconference.com.

Germany has been leading the way towards a healthy solar energy market for some years now. Despite the global economic crisis, and a decreasing feed-in tariff, the German market has been reporting growth figures of around 20-30% per year, and solar energy companies in Germany are reasonably optimistic about the near future.

German installers certainly have sufficient reason to be optimistic with lower prices for solar energy systems sparking new consumer interest. According to the results of the BSW’s recent business climate index, solar companies’ commercial expectations are at their highest level since measurement began back in 2005.

"Many companies had a bumpy year, but can now see light at the end of the tunnel," said BSW-Solar CEO Carsten Körnig of the results. In 2008, Germany installed approximately 300,000 new solar systems with a total peak power of about 1.5 gigawatts.

Another study of German citizens showed that one in five home owners is thinking about buying a solar system in the short-term. The solar industry is one of the few industries to have reported growth this year. Sales of solar energy systems grew by ten percent in the first quarter of 2009 compared to the same period last year.

A proof of sustainability will be the upcoming elections in September. Will the successful feed-in tariff survive the possibility of a new government coalition with the FDP? Furthermore, a bright prospect for the German solar market does not automatically mean prosperity for the German solar industry. In the current oversupply situation, heavy competition is expected from Asian countries, with some manufacturers selling modules at below cost price.

The future of the German market, and the dynamics in other top ten markets, will be discussed at the third Global PV Demand Conference in Hamburg on 22 September 2009.