Investors may walk after Spains Solar Cut

Solas Power has noted that the Spanish Governent has again placed their financial future in jeopardy by cutting Solar FIT subsidies. In an article in the Financial Times recently it detailed the Spanish position. This again demonstrates Solas Power's choice of Germany and Italy and why we have always stayed away from the Spanish solar market.

For a full account of the article see the linkbelow "...pre-agreed “trade-in tariffs” for the country’s solar-photovoltaic energy producers by 30 per cent, or €3bn...years. Although many other countries have cut subsidies for new solar energy developments, Spain is the first to do so for existing... "

http://www.ft.com/cms/s/0/a2982e50-1a95-11e0-b100-00144feab49a.html

Italian PV systems growth is accelerating above forecasts

A recent announcement from Italy's GSE, revealing that cumulative applications for PV systems reached 7 GW by the end of 2010, appears to confirm IMS Research's earlier prediction that global installations reached 17.5 GW last year, several GW higher than most forecasts; though it also suggests the market researcher’s estimate of 3.5 GW for Italy may have been conservative. However, these numbers from GSE may not reveal the whole truth as they also include partially completed PV systems.
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IMS Research’s previously released ‘mid-case’ estimates for Italy placed installations at a minimum of 3.5 GW in 2010. Subsequent checks with suppliers and integrators on the Italian market now make the market analyst’s believe installations may in fact reach its ‘upper-case’ estimates of 4.4 GW, based on the announcement from the GSE.

The market research firm’s predictions for global installation reaching 17.5 GW in 2010 is somewhat higher than most analysts, banks, and major suppliers estimated; however, the discrepancy had been attributed to Italy; where many others had expected around 1-2 GW to have been installed versus IMS Research’s 3.5 GW. Following IMS Research’s multiple checks on the supply chain and downstream indicated the company has correctly identified that the Italian market had grown much more than most anticipated.

Although the GSE has revealed that cumulative installations reached 7 GW at the end of 2010, implying new installations of some 5.8 GW in the year, it is not totally clear how many of these applications are for completed systems or even for systems that have not even been started. IMS Research’s subsequent analysis of the industry has found that lack of module and inverter availability in Italy would make 5.8 GW impossible and information from suppliers active in Italy has found that many developers have simply applied for grid-connection on partly constructed projects (that may not even have modules installed) in order to benefit from the higher tariff. Based on this latest information, IMS Research believes 3.5-4.2 GW of fully installed PV capacity was added in Italy in 2010.

PV Research Director, Ash Sharma commented on the outlook for the Italian market in 2011: “These massive numbers from GSE will undoubtedly shock the industry and will have serious repercussions for 2011. PV capacity growth in Italy is now well ahead of the Government’s intended roadmap and may now lead to an early intervention to curb growth in this over-heating market. This may then lead to the unwanted consequence of a further boom in demand as developers seek to complete projects in time, as they did in Germany in early 2010”.

Solas Power Outlook

Solas Power has seen that thanks largely to hefty government support, Germany's solar market has become the largest in the world. Germany has installed half the world's solar power every year since 2007, adding 8.8 gigawatts in 2010 alone. The trend is expected to continue in 2011, with German installations providing nearly half the world's 20 new gigawatts, according to data provided by research and analysis firm iSuppli Corp. and confirmed by other analysts.

But things could get shaky in 2012. Revisions to the country's Renewable Energy Sources Act are due in mid-2011. If the powers that be decide to cut "feed-in" tariffs—which encourage homeowners to add their unused alternative energy to the grid—it will put the brakes on Germany's solar surge.

New photovoltaic output is projected to continue growing globally over the next five years, as other key markets offset the relative decline in Germany. Leading the pack will be Italy and the United States. The U.S. market alone will rise almost tenfold, from less than half a gigawatt in 2009 to more than 4 GW in 2014, according to iSuppli. Japan will lead a fivefold increase in Asia. The European Photovoltaic Industry Association also foresees fresh demand from markets such as Canada, China, Greece, India, and the United Kingdom. According to Solarbuzz's 2010 industry report, "even in the slowest growth scenario, the global market will be 2.5 times its current size by 2014."

Solar Update, FIT, Italy,

Photovoltaic market to see sunny 2011

Brightened by the German, Italian, and US markets, photovoltaic solar instillations are expected to rise in 2011, but rollbacks in other countries add clouds to Solas Power's positive outlook.

Global photovoltaic (PV) solar instillations in 2011 will rise by 39.3% on the strength of Italian and US demand, with growth during the year limited only by reductions in government incentives in certain European countries, according to Solas Power.

It has been recently reported that growth in the PV market in 2011 will cool significantly from the 120.5% increase it saw in 2010, but noted that worldwide installations of renewable solar energy systems this year still will increase at a healthy rate, reaching 22.2 GW, up from 16 GW in 2010.

Germany will continue to be the world's largest PV market this year with an estimated 9.4 GW worth of installations. Italy will be second, Solas Power said, noting that it represents an accelerating market that promises one of the world's highest internal rates of return. Indeed, Solas Power said it expects solar installations in Italy this year will double, growing a full 100% to 3.9GW, up from 1.95GW in 2010, compared to Germany's 19.8% expansion.

The United States is expected to come in third, projected to see 2.1GW worth of PV installations this year. However, commentators cautioned that with federal incentives less likely to be renewed in the near term following a shift to a more conservative US Congress, power now will reside more with individual states to carry out initiatives.

Solas Power woud also warn that the German market might see a further reduction in feed-in tariffs (FIT) in addition to the scheduled annual cut intended to bolster the solar industry. Should the country's FIT be cut by mid-year, PV installations in 2011 might end up at the 7GW level, not the more optimistic forecast of 9.4GW without the FIT rollback, the company said.

Solas Power further reported that the PV markets in Spain, France, and the Czech Republic are not expected to expand in 2011, given the serious measures under way to trim the solar investor business in those countries.

German Solar "Gold Rush"; Act now to capitalise on this Opportunity

German Solar "Gold Rush" now on, Invest now.

Solas Power has noted that Germany has mooted that the should cap solar power subsidies, cutting payments for new plants once added capacity exceeds 1 gigawatts nationally in any one year, a panel of experts that advisesChancellor Angela Merkel said.

The Berlin-based panel’s findings, released in a 680-page report today, call on Merkel to steadily reduce aid annually as well as apply a cap on subsidizing “overcapacity.” A jump in capacity is pushing up German power prices and squeezing out investments in other renewable energy sources, the panel said.

“A drastic throttling of solar subsidies in coming years is a must,” the panel said. The subsidies are pushing up power prices at a rate that is “endangering the acceptance” of renewable energy, they said. The government forecasts an added 9.5 gigawatts of solar capacity this year, almost 10-fold growth over what the panel said is acceptable.

Merkel’s government is steadily paring solar aid rates to curb the cost to consumers who pay for subsidies in their power bills.

Solar-panel prices fell about 50 percent in the last two years, spurring a boom in new installations on roof-tops and fields and led to a glut on the German market. The government has so far shied from implementing a cap, which solar power federations claim would dry up panel sales.

The findings of the panel will shore up support among lawmakers in Merkel’s Christian Democrats in parliament who want inclusion of a cap on solar subsidies in a revamp of the renewal energy legislation law this year.

The panel’s recommendation of a 1-gigawatt cap “confirms the policy position” of the Christian Democrats, their economic spokesman Joachim Pfeiffer, said in an interview. “We have to look at solar subsidies as well as a cap in the course of amending the renewable energy law,” Pfeiffer said.

Solas Power believes that now is the time to act if investors are to take advantage of the German FIT system and that the window for opportunity is fast closing.

SRU releases report on 100% renewable energy and capping of subsidies

Solas Power has confirmed that the Advisory Committee on Environmental Issues to the German Parliament (Sachverständigenrat für Umweltfragen – SRU) today submitted its special report on ways to achieve a 100% renewable electricity supply to Federal Environment Minister Röttgen. 100% renewable electricity generation is possible by 2050. Subsidies for new PV systems should be capped.


Last May, SRU presented a report, according to which a 100% renewable, yet affordable energy supply was possible in Germany by 2050. The new 663 page expert opinion looks at 8 scenarios for 100% renewable electricity generation. It contains suggestions for an amendment of the Renewable Energy Sources Act (EEG), so as to obtain a cost-efficient renewable energy portfolio by 2050.

SRU member Prof. Dr. Karin Holm-Müller, an economist, called the EEG a success story, which was copied by other countries. Its supporting pillars, the obligation of grid operators to purchase renewable energy (Einspeisevorrang) and the fixed feed-in tariffs, should continue to apply in the future. However, there was a need to amend feed-in tariff to curb costs, Mrs Holm-Müller said. Feed-in tariffs for the rapidly growing but relatively expensive solar electricity should be reduced and capped, SRU demanded.

Solar tariffs were much too high, the report says. Despite cuts in the past, the industry was growing, and expansion forecasts for 2010 exceeded estimates. This expansion was not cost-efficient. There was still a great cost savings potential in the PV market. Not only did the high PV costs endanger consumer acceptance of the EEG system as a whole, but expenses for solar electricity also limited funds for producing renewable energy from more cost-efficient sources.

Therefore, SRU calls for a cap on new PV capacities. Once the annual cap is reached, funding is suspended until next year.

SRU’s recommendations follow shortly after the Federal Ministry for the Environment (BMU) and the solar industry association BSW Solar jointly presented a proposal of solar feed-in tariffs cuts of up to 15% on 1 July and 1 September 2011. The proposal does not contain a hard cap on solar expansion, which has been strictly opposed by the industry association BSW Solar. The magazine Spiegel therefore said the SRU proposal challenged Minister Röttgen. Thomas Bareiß, energy spokesman of the Christian Democratic Party in the Bundestag, a fellow-party member of Minister Röttgen, has repeatedly called a cap the ultima ratio. In October last year, he told Handelsblatt he favoured a cap of 2,000 MWp.

While the SRU report stresses that it was up to the government where exactly it wanted to set the cap, Financial Times Deutschland said SRU member Prof. Olav Hohmeyer spoke out in favour of a 1,000 MWp cap in an article to be published by the newspaper Die Zeit on Thursday. The economist, who lectures at the university of Flensburg, said he believed that PV would only play a “miniscule role” in the renewable energy supply of the future.

SRU does not consider the extension of the operation times of the German nuclear power stations necessary. Furthermore, it does not consider the construction of new coal-fired power plants using CCS technology necessary.

The report also focuses on ways to accelerate the necessary national and international grid expansion, as well as efforts to link the national transformation process with the European energy and climate policy.

SRU also suggests to accelerate grid expansion by drawing up a national plan for transmission networks until 2030 (Bundesfachplan Stromübertragungsnetz 2030). Besides, the committee recommends to render investments in networks more attractive and to hold tender procedures for important power lines. Also, the great storage potential that exists in Norway with its hydro power plants, should be made accessible, SRU says. To this end the German government should strive for a close cooperation with Norway, SRU recommends.

SRU believes that it is of great importance that the national transitition process towards a renewable energy supply is supplemented by a European climate and energy policy, in particular an expansion of the European transmission networks and a “European Renewable Energy Roadmap until 2030″.

Discussion About Mid-Year Solar Feed-in Tariff Cuts Gathers Momentum

Solas Power News has learned that with massive solar expansion despite regular cuts of feed-in tariffs and rising electricity prices, the debate about further cuts is gathering momentum. However, information about an agreement between the Federal Government and the solar industry is still limited.

According to the news agency Reuters, the ministries involved and the solar industry agreed to bring forward the solar feed-in cuts due at the beginning of next year to July of this year. Cuts could be as high as 12%, depending on the expansion.

Referring to information from dpa, the internet site Verivox, a provider of electricity price comparisons, confirms that additional mid-year cuts of up to 12% are being discussed, but says a spokesperson of Environment Minister Norbert Röttgen (CDU) had pointed out that the details are still to be decided.

A number of papers reported that the solar industry association BSW Solar continues to be strictly opposed to a cap on solar expansion. Thomas Bareiß, energy spokesman of the Christian Democratic Party in the Bundestag, a fellow-party member of Minister Röttgen, has repeatedly called a cap the ultima ratio. At the beginning of the week, Minister Röttgen stressed in the newspaper Weser Kurier that solar feed-in tariffs should pave the way for a market introduction of solar power, but were not intended to become long-term subsidies.

GERMAN FIT TO BE REDUCED FROM 1st July 2011

SOLAS POWER has learned that the Federal Ministry for the Environment (BMU) and the solar industry association BSW Solar jointly presented a proposal to bring forward parts of the regular 2012 solar feed-in tariff cuts to 1 July and 1 September 2011. The July/September reductions up to 15% shall depend on PV capacity installed in March, April and May 2011. The move is due to the continued massive solar expansion and the increasing costs for consumers in the recent past, which triggered criticism from various parties, including consumer protection agencies.


The proposal contains the following main elements:

•The proposed 1 July/1 September 2011 reduction shall bring forward parts of the 2012 degression currently contained in the Renewable Energy Sources Act (EEG);
•For freestanding PV systems, the degression shall be effective 1 September, for other systems it shall be 1 July 2011;
•The July/September reduction will cover the quantity dependent part of the 2012 degression, i.e. the part of the 2012 reduction that depends on the additionally installed capacity in 2011 ( additional 3% above 3,500/4,500/5,500/6,500 MWp);
•For capacity growth exceeding 7,500 MWp, an additional 3% degression shall be introduced. This brings the maximum mid-year reduction to 15% (i.e. 5 times 3%);
•The 9% reduction for 2012 that applies regardless of additionally installed capacity remains unchanged and shall remain to become effective 1 January 2012;
•The 2011 mid-year degression rates will be based on a forecast for which the new capacities of March to May 2011 will be extrapolated for the whole year by the Federal Network Agency;
•For installations starting operation after 1 January 2012, the degression rate shall depend on the actual market growth in 2011 (and not the extrapolated figures used for the July/September 2011 reduction).
Based on this proposal, a hard cap on solar expansion, which had been strictly opposed by the industry association BSW Solar, is off the table for the time being. ”We welcome the decision, which expresses the political commitment with respect to the expansion of photovoltaics, the German production facilities, and the 130,000 jobs created by the industry”, Günther Cramer, President of BSW Solar said.

After having heavily opposed last year’s feed-in tariff cuts, the solar sector itself is in favour of the cuts now proposed, as Björn Klusmann, managing director of the German Renewable Energy Federation (BEE) told the newspaper Frankfurter Allgemeine. Without a further reduction of solar feed-in tariffs, the whole renewables sector might have come under pressure because of the rising electricity prices.

According to BSW Solar, more than 230,000 solar power plants with a total capacity of 7 to 8 GW have been connected to the grid in Germany in 2010. Solar energy meanwhile accounts for about 2% of total final energy consumption. However, almost half of the estimated EUR 13 billion in reallocation charges paid pursuant to the EEG are attributable to solar energy, the newspaper Frankfurter Allgemeine Zeitung writes. With the so-called EEG reallocation charge, consumers have to pay the difference between market prices for renewable energy and the feed-in tariffs pursuant to the EEG.

BMU also proposes to contain the costs of the “Green Power Privilege” (Grünstromprivileg). This relates to an exemption for utilities that supply electricity deriving at least for 50% from renewable energy sources. We will cover this proposal in a separate blog post.

The proposal for the new 2011 feed-in tariff reduction will be presented to the Bundestag for decision, and may be amended during the parliamentary process. Technically, the proposal is likely to be added to an existing proposal to amend the EEG in the context of the European renewable energies directive (Directive 2009/28/EC). This would allow an expedited parliamentary procedure to introduce the 2011 reductions.

Proposal to Change exemption in EEG for utilities

Solas Power has learned that the Federal Ministry for the Environment (BMU) today also published a proposal to change the so-called Green Power Privilege (Grünstrom Privileg), an exemption in the Renewable Energy Sources Act (EEG) for utilities that mainly supply renewable energy.

Section 37 para. 1 sentence 2 EEG stipulates that utilities shall be exempted from the so-called EEG reallocation charge if they supply electricity originating for at least 50% from renewable energy sources. The exemption applies to the total electricity supply of the utility, hence also to conventional electricity. With the EEG reallocation charge, consumers have to pay the difference between market prices for renewable energy and the feed-in tariffs pursuant to the EEG.

BMU proposes to retain the exemption but modify it as follows so as to reduce costs for consumers:

•The EEG reallocation charge exemption will be reduced to 2.0 Cent/kWh. The current normal reallocation charge is 3.53 Cent/kWh;
•The amendment shall become effective on 1 July 2011.
The amendment is essential to avoid a further increase of the reallocation charge, BMU argues. In view of the increase from 2.047 Cent/kwh in 2010 to 3,53 Cent/kWh in 2011, it is to be expected that more and more utilities try to benefit from the exemption. This would lead to a higher EEG reallocation charge for the others, as costs would have to be split among fewer consumers. The proposal of a reduced EEG reallocation charge of 2.0 Cent/kWh i roughly equivalent to the charge in 2010. An potential further amendment shall be examined as part of the EEG progress report due on 31 December 2011 (Section 65 EEG).

GERMANY BACK IN THE FAST LANE

Solas Power has seen from recent reports that German, French and Belgian business sentiment picked up by an unexpectedly high degree at the start of the year, suggesting that Germany’s broadening economic recovery is sustaining manufacturing in other parts of the eurozone.

Germany’s Ifo institute said its business climate index hit 110.3 points in January, up from 109.8 the previous month and its highest level since it started tracking sentiment 20 years ago.

The French statistics agency Insee said its manufacturing sentiment index jumped 6 points to 108, the biggest monthly rise since mid-1999, while Belgium’s central bank said its business confidence tally rose 1.4 points to 4.5. With foreign orders filling Belgian companies’ order books, François Cabau at Barclays Capital said the country’s economic momentum “has a lot to do with the pace of its trading partners – most importantly Germany”.

Economists see Europe’s largest economy growing about 2.5 per cent this year, against forecast French growth of only 1.5 per cent and a Belgian rate of 1.8 per cent as public spending cuts and oil price rises bite.

But some said the uptick in sentiment could be a sign that German demand is sustaining French companies in particular more than expected. The two countries are each other’s biggest export markets.

“German and French companies are powering ahead in Europe, reinforcing the upswing of each other,” said Andreas Rees at UniCredit in Munich. He welcomed the revival “of the good old Franco-German economic axis”.

This would cut Germany’s reliance on exports to Asia, he added. With fewer jobless, stronger private consumption and business investing once more, “one should not exclude” the possibility of German growth nudging 3 per cent.

Carsten Brzeski, economist at ING bank in Brussels, said the Ifo data were “a strong signal” that the German economy would “continue to power ahead” after its stellar growth of 3.6 per cent in 2010.

Last year’s export-led recovery drove unemployment down, spurring private consumption for the first time in years. Now economists are expecting domestic demand to receive a further boost from corporate investment.

“The conditions to initiate a virtuous circle [of growth] have hardly been better in 15 years,” Mr Brzeski said in a note to clients.

The German government on Wednesday forecast that the economy would grow 2.3 per cent this year – up half a point from its autumn forecast – with the average jobless rate falling to 7 per cent from 7.7 per cent in 2010.

Aided by more private spending and corporate investment, domestic consumption would raise GDP by 2 per cent, contributing three-quarters of economic growth, up on a two-thirds share last year.

German FIT Analysis

Figure 1. End-user electricity consumption (gray columns, left Y-axis), and physically measured cumulative feed-in of renewable electricity with EEG incentives (green columns, right Y-axis). 2000 has been measured only from April 1st (BMU spreadsheet). Germany's end-user electricity consumption more or less stabilized in 2005-2008. 2009 has been a global crisis year, with a considerable drop in electricity consumption (Germany: minus 5,6% as compared to 2008). Renewable electricity production under EEG feed-in conditions - almost all fed directly into the net - grew continuously, up till 74,9 TWh in that "crisis" year, with strong to massive (PV) growth of new installations promising more full-year renewable electricity production in coming years. Average growth of EEG production in this period has been 7,2 TWh/year. Year-on-year growth percentage was, on average, 26%.

German Government announces FIT reduction for 2011

Solas Power News - The German Government has reached an agreement with the country’s solar industry to tailor solar photovoltaic (PV) feed-in tariffs to installed capacity.

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