SMA: radical changes are expected in solar sector

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Sunny Tripower SMA
by Dario Rossi

Developments in the photovoltaics industry will continue to be significantly influenced by the terms and conditions of the various national incentive programs. A significant shift in demand towards markets outside Europe is already becoming apparent in 2013. In addition, self-consumption of solar energy is increasingly gaining importance due to the rapidly rising costs of procuring energy in many countries.

The first nine months of 2013 were affected in particular by notable changes to subsidy conditions in European markets and the still unresolved debt crisis in Europe. Furthermore, the trade dispute between the EU and China with regard to introducing punitive duties on Chinese modules caused great uncertainty and led to an additional decline in demand. It was not until July that China and the EU agreed on a minimum price for imports and an annual quantity limit. In Germany, the ongoing degression of the feed-in tariff is resulting in a sharp drop in demand for photovoltaics. At the end of June, the German Federal Government agreed to lessen the cut to solar subsidies, but is still planning for the subsidy to cease at an installed capacity of 52 GW. Due to increased energy costs in Germany, the costs of self-generated power from small and medium-sized PV systems are already cheaper than the costs of electricity. Self-consumption is therefore becoming increasingly important. At around 2.7 GW, newly installed capacity fell by 56.5% year-on-year (Q1–Q3 2012: 6.2 GW). In Italy, the feed-in tariff as part of the Conto Energie V solar subsidy program expired on July 6, 2013. The upper limit of €6.7 billion was reached. Demand has already declined considerably in the first nine months of 2013 and will be less than half of that of 2012 in 2013. Positive impetus came from the Benelux countries, Great Britain and Eastern Europe which continued to back stable subsidization of photovoltaics. However, this cannot compensate for the decline in volume in Germany and Italy. U.S.

The U.S. is continuing to record positive growth stimuli. The factors driving growth include portfolio standards stipulating that American electric utility companies must include a share of renewable energy in their portfolios. In addition to tax incentive programs that support the installation of PV systems, new business models such as solar lease companies increasingly led to higher demand for residential systems. However, demand for photovoltaics was negatively influenced by the shortage of modules that had arisen in the reporting period. This was due to the quota allocation by many Chinese PV module manufacturers.

Japan is one of the world’s most attractive and fastestgrowing PV markets measured by market volume in 2013, and IHS estimates that it will also be the photovoltaic market with the strongest sales in 2013. Significant cost reductions, attractive incentive programs, high environmental awareness, low bank interest rates and the high electricity demand due to the shutdown of most of the Japanese nuclear power plants are the main drivers for further, possibly even stronger growth. In addition to the residential market, the segment of large-scale PV power plants is also developing very positively. Medium-sized systems are also becoming increasingly important. Owing to the special grid infrastructure and the strict certification requirements, the Japanese market has high entry barriers.

In 2013, China is developing into the largest PV market with growth rates of up to 10 GW. It can offset the impact of the EU ’s punitive duties with growing domestic demand. By 2015, the government plans cumulative installed capacity of more than 40 GW.

In newly industrialized and developing countries, energy requirements, and thus demand for photovoltaics, are growing. In South Africa, photovoltaics is in some cases already an economically attractive alternative to other methods of generating energy. Therefore, a market that is not reliant on subsidies is rapidly increasing in importance alongside a subsidized market. In addition to the complex REIPP state incentive program and an increasing requirement for local added value, the South African government is planning a feed-in tariff and the introduction of net metering. The Thai government has doubled its target for the expansion of solar energy within the country to three GW by 2021. The PV market is developing very positively as a result of the excellent solar irradiation and the existing incentive programs Chile offers ideal conditions for generating power from photovoltaics. In addition to strong solar irradiation and high electricity prices, the country has a growing energy demand and low construction costs, meaning that PV systems can already compete with traditional power sources without government support. However, long waiting times for environmental impact assessments and approval procedures on the part of public authorities considerably slow down the implementation of PV system projects .

source: SMA, Quarterly Financial Report - January to September 2013

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