“Despite the strength of end-market demand, which was one-third higher in Germany in the first half of 2010 than in the second half of 2009, the first PV module price increases of 2010 only emerged in June,” says Alan Turner, Vice President of European Market Research for Solarbuzz.
“Even then, the increases in Euro terms only partially compensated for the deteriorating price picture in Dollar terms caused by the Euro’s dramatic decline against the Dollar. Such is the strength of supply growth in the PV industry.”
The German solar PV market reached 3.87 GW in 2009, representing a growth of 109% over the previous year. This growth could have been larger had it not been for a shortage of inverters hampering sales from September 2009.
In the German solar PV market, the largest customer segments were: Investor groups (42%), agricultural (18%) and commercial (14%). Private residential solar PV systems accounted for 13% of the market, and utility and Government customers played a smaller role.
Spain the rotten apple in the solar PV basket
The European solar PV market grew 16% in 2009, but had it not been for Spain, the total growth would have been 126%,
“This highlights the vulnerability of the overall market to policy review in the larger markets balanced against the growth of emerging markets,” says Solarbuzz.
With the recent boom-bust-boom cycle for solar PV due changes to incentives, especially in Germany and Spain, Solarbuzz says “few would project stability over the next five years.”
Several countries are cutting spending, also on renewable energy incentives [see UK cuts renewable energy spending], and further cutbacks are now casting a shadow over the solar PV industry.
According to current forecasts, the new mechanism of tariff adjustment in Germany will take effect in 2011-2012, and could subdue the German solar PV market.
Government cutbacks across Europe could put further pressure on price reductions for the solar PV industry, Solarbuzz predicts.
“Exposure to individual markets remains a high risk strategy. The policy risks are simply too great and downstream solar companies need to look for a geographical portfolio that balances materiality and growth to secure their long-term position,” adds Turner.