Germany has always faced many twists and tales with regards to its solar subsidies in the last 2-3 years. The reason is that the targeted solar panel installations are always more than what the government is trying for . While the German government is reaching for around 50 GW by 2020 , more than 20 GW of solar panels have been installed in by 2011 itself with a monstrous 3 GW surge of solar modules in December of 2011 itself. This means that Germany needs only about 3 GW of solar panel installs per year while it did around 7.5 GW in 2010 and 2011.

There is urgent need to reduce the solar capacity addition in Germany because

a) It is requiring almost half of the $21 billion renewable energy subsidies in 2011 while generating 3% of the total power

b) Too much solar power while put pressure on the power grid as at the peak afternoon hours solar can generate almost 10% of Germany’s power requirement which means shutting down other sources

c)   German Solar Panel producers have stopped benefiting from German domestic growth. Most solar companies in Germany have been decimated by Chinese competition and around 20000 solar jobs and 5000 companies have shut down.

The German economy and environment minister are on the same page saying that the German Feed in Tariffs will have to be reduced as the returns on putting solar panels is still very high.There are a number of proposals that are being considered on top of the 15% expected cut in FIT in July of 2012.One is a 30% cut instead of 15%.Others are a 2% cut each month in 2012 to let the solar developers adjust for the change. Expect solar demand  in Germany to be very high as installers get aggressive to keep ahead of the subsidy cut.

German Solar December Surge

The German Solar Energy Market is biggest in the world and has installed the largest number of solar panels for the last few years. 2012 promises to be no different with Germany again set to the biggest solar market for solar panel manufacturers though Italy would give good competition. The German Solar Subsidy program has been the best in the world unlike the start and stop feed in tariff programs of Spain,Czech,UK,Australia and other places. A stable step in cut of feed in tariffs has helped solar energy prices coming down by more than 50% in the last few years though demand has only increased.

The influx of cheap solar panels from China has let the December 2012 explode to almost 2-3 GW according to the German solar association BSW. The high rates of return of over 10% due to super cheap Chinese solar panels at 80-90c/watt has been the major reason for the explosion in demand which could be the biggest month in Germany ever. While German Solar Market has remained robust as ever,the German solar panel producers like Solon, Sunways have been vanquished with a number of major solar companies failing and getting acquired. The Asian solar companies have been the major beneficiaries of this demand growth in Germany and Europe.

Reuters

Germany’s large number of solar installations is still expanding too rapidly and must be restricted if the market is to be kept sustainable, German Environment Minister Norbert Roettgen said on Wednesday.Roettgen said while the government had aimed for new installations of about 3 GW last year, the figure had reached 7.5 GW, despite cuts to subsidies over the last two years in what is the world’s largest solar market.”We need to reduce new installations,” he said at an annual energy conference organised by German newspaper Handelsblatt. “Seven gigawatts (GW) a year is a no-go.”

The returns are still high in 2012 with existing FIT , so the German government may have to plan additional cuts with plans of

 a) cut of 2% FIT every month in 2012 to slow down the installations and bring down the solar system IRR

b) a cap on feed in tariffs to solar systems of  3 kilowatts only .This will prevent larger solar installations and building of large solar farms

Note Germany Feed in Tariffs have always followed many twists and turns each time as installations have always exceeded expectations.

The German Solar Feed in Tariff cut scheduled for July 2010 has got another twist with the Upper House of German Parliament Bundesrat not passing the Law in its current form.The one-off German Feed in Tariff cut has seen enough twists and turns to make a person go giddy . It all started with the new German government deciding to cut the highSolar FIT which was leading to outsized returns for investors installing solar panels in Germany leading to a situation similar to Spain’s  2008 solar frenzy .The reason was that the solar module prices had gone down by almost 50% in 2009  with the FIT rate ( higher subsidized electricity rates given to generators of renewable energy) going down by the only scheduled 10% .So in addition to the annual 10%  2010 cut , the German government decided to add another 16% Feed in Tariff cut byMay 2010 which led to a huge uproar from the industry.This led to a lot of bargaining between the industry,the coalition partners of the German government and the various industry lobbies.Ultimately the law went in with almost the same percentage of cuts but the cut was delayed from May to July . With the German Lower House Bundestag passing the government proposal , the Bundesrat’s approval was only supposed to be formality.However it seems that the Eastern German states which have the most to lose in terms of jobs and taxes from these cuts want to reduce the quantum of the cuts which in their original form would lead to a ~35% cut in one year.The law which is supposed to go into effect by July 1 might see more delays as it leads to more negotiations.

The German Solar Energy Market is biggest in the world and has installed the largest number of solar panels for the last few years. 2012 promises to be no different with Germany again set to the biggest solar market for solar panel manufacturers though Italy would give good competition. The German Solar Subsidy program has been the best in the world unlike the start and stop feed in tariff programs of Spain,Czech,UK,Australia and other places. A stable step in cut of feed in tariffs has helped solar energy prices coming down by more than 50% in the last few years though demand has only increased.

The influx of cheap solar panels from China has let the December 2012 explode to almost 2-3 GW according to the German solar association BSW. The high rates of return of over 10% due to super cheap Chinese solar panels at 80-90c/watt has been the major reason for the explosion in demand which could be the biggest month in Germany ever. While German Solar Market has remained robust as ever,the German solar panel producers like Solon, Sunways have been vanquished with a number of major solar companies failing and getting acquired. The Asian solar companies have been the major beneficiaries of this demand growth in Germany and Europe.

The massive rise in demand will imply that according to the EEG ,t here will be a 15% cut in July 2012 after a 15% cut in January 2011. This would bring the solar FIT prices quite low and provide a restraint to the galloping German solar energy installations which is reaching more than 25 GW .

More information on the German market

German’s Solar Energy Market is the biggest in the world by a fair margin.Germany installed almost 6 gigawatts of solar panels in 2010 taking the total installed capacity to almost 16 GW which is 40% of the world’s total installed solar capacity.Note Germany’s Photovoltaic Solar Electricity now forms almost 10-15% of the total electricity production in the country at peak time.Note Germany’s solar industry got a renewed boost when 7 old nuclear plants were shutdown following Japan’s Fukushima Nuclear Disaster recently.Previously Germany had decided to extend the operating life of its Nuclear Plants despite stiff opposition.Germany Solar Subsidy which is framed under the Renewable Energy EEG law has made Germany one of the world’s leaders in Wind,Solar and Biomass Energy.Germany’s Manufacturing Industry has benefited from the strong domestic market with many of the world’s top solar panel companies located there.Solar equipment,inverters and cell companies are also present in large numbers.Recently Germany amended its Feed in Tariff Law to slowdown the exponential growth in solar panel installations.This is over and above the regular reduction in solar subsidies done each year.

Read more about the German FIT Drama in 2010 and 2011

Germany’s Solar Surge Leaves Biggest Market Steady in 2011

German solar power installations surged in December as developers rushed to finish projects before subsidy reductions, keeping the market for new facilities powered by the sun near the record achieved in 2010.Developers installed panels with 2 gigawatts to 3 gigawatts in capacity last month, meaning installations for the full year will be near the 7 gigawatts recorded in 2010, the BSW-Solar lobby group said in an e-mailed statement.

Spain has started cracking down on Solar Power Plants which are making huge profits through illegal Feed in Tariffs which they should not get.Note Spain had seen a massive boom in solar installations in 2008 due to unusually large ROI driven by high Feed in Tariffs.FIT are electricity rates which are higher than wholesale electricity rates paid to renewable energy power plants in order to make them competitive with cheaper fossil fuel power plants.Seeing a huge increase in the subsidy burden Spain has pretty much killed the solar market in 2009,however the problems of Fiscal Deficit has made Spain reconsider the tariffs being given to even older solar power plants.After a lot of controversy,Spain changed the FIT rules in the middle of the game through a retroactive FIT Law drawing howls of protest from solar investors like pension funds which have sued the government.

Spain is now also pursuing the solar industry by cracking down on power plants which connected after 2008 but got the FIT for 2008 power plants.Almost 304 solar power plants have been deemed illegal.Spain is reviewing the all the 9000 plants and till now almost 30% of the plants being reviewed have had their subsidies stopped or FIT changed.Don’t know why it took Spain 3 years to crack down on subsidy fraud when everyone knew that massive solar fraud had taken place during the boom as everyone rushed to put up a solar power plant during the solar gold rush.

Spain watchdog halts premiums for 304 solar plants

Spain’s energy watchdog ruled on Thursday to provisionally suspend paying premiums to 304 solar plants which failed to show they were up and running before subsidies were capped in 2008.

The National Energy Commission (CNE) recalled in a statement that it had provisionally suspended another 347 solar plants on March 29.Last year the CNE began investigating 9,041 photovoltaic plants, of which 840 have waived a premium of 475 euros ($683.9) per megawatt-hour and accepted one of 326 euros/MWh.Spain’s benchmark wholesale power market price on Thursday was 44.43 euros/MWh.Of the remainder, 2,021 plants have been examined and 651 suspended. The government has the final say on suspensions.

Australia has a convoluted Renewable Energy Policy with frequent changes and a multitude of Federal and State Subsidy and Regulations.This has led to a situation where neither the government nor the renewable energy producers are happy.While some states like New South Wales have already cut their generous solar subsidies

New South Wales Generous Solar Bonus Scheme reaching the 50 MW Limit Prematurely Unsurprisingly Surprises the Australian Bureaucrats

New South Wales,Australia had started a very generous Feed in Tariff Scheme known as the “Solar Bonus Scheme” for solar installations under 10 Kw in size.This program which had been started in January 2009 had initially proven to be a failure because it was based on net feed in tariffs which resulted in insufficient returns for solar households.A Change in the scheme in Nov 2009 to change it to Gross Feed in Tariff from Jan 2010 has resulted in a very fast uptake as returns became quite large at 60c/KwH.The Australian Bureaucrats had expected the 50 MW scheme to last till 2012 but the upper limit got hit in 2010 itself.A Simple Calculation of the Returns on Solar Installations at 60c/KwH would have made it clear to anyone that the scheme would be wildly popular and the upper cap would be hit much before 2012.However the Bureaucrats were surprised by the rapid speed of solar installations under this scheme.No wonder State Control Communism Ideology lost out to Capitalism.

Other states are looking to do so as well.Like other Solar Subsidy Programs elsewhere in Czech,Germany,Spain,Australia too has seen solar energy costs fall much faster than subsidies.This has led to a boom in solar installations as the returns become very high.These costs are ultimately passed on the customer electricity bills drawing howls from the states.Large Wind Energy Producers like Origin Energy have also seen the prices of  RECs decrease so that is not feasible to build new wind farm projects.On top of all this confusion,the Australian government can’t make up its mind on a Carbon Tax which will help it to meet the 2020 20% Green Energy Target.

States call for solar subsidy cut

JULIA Gillard is under pressure from the states to roll back generous subsidies for rooftop solar schemes amid predictions that escalating costs from the federal renewable energy scheme will add as much as $90 to yearly household power bills. Queensland Premier Anna Bligh has urged the Prime Minister to reconsider the subsidy for rooftop solar schemes, worth $6200 in most cities, to relieve the burden on household budgets from rising power prices.

he scheme was split into two parts from January 1 – one for small-scale generators such as rooftop solar panels and the other for commercial systems such as wind farms. But the costs of the small-scale scheme grew as householders took the government up on incentives for installing solar panels.In January the renewable energy regulator increased the number of certificates power retailers had to buy to deal with a glut caused by a flood of solar panel installations.

Italian Electricity Regulator really shook the global solar market saying that approximately 6 GW of Solar Installations were done in the country in 2010 up almost 500% from 2010.While 2 GW were installed and connected in 2010,4 GW worth of application were submitted by 50,000 installations which were installed but not connected.This means that that Italy’s target of 8 GW in 2020 was almost fully met in 2010 itself.I had written that Italian Solar Feed in Tariff Subsidy Cuts for 2011 will fail to stop the Boom in Solar Demand and the 2020 target would be met much earlier.But 2010 was not in my wildest projection.The combination of high sunlight,high electricity rates,falling solar module prices and attractive feed in tariff by the government has made investing in solar in Italy a hugely profitable venture.So 6 GW is not totally impossible given the massive supply growth seen in solar panels.Every solar company in the world had been shipping to capacity making it a mystery as to what was the source of such demand.Italy might prove to be the answer.

With a sharp cut in 2010,every solar EPC was installing at a feverish pace to get higher returns.However 6 GW seems too high and their may have been some frauds.However  4 GW seems more probable and even this implies a 300% growth in 2010.Note the Spanish boom in 2008 had seen more than 50% of the global demand going to Spain due to the same conditions existing in Italy.So this GSE report does not seem to be too farfetched and might mean that in 2011 we might see a sharp clampdown like Spain in 2009.France has already put a moratorium on solar installations while Czech has put strong retroactive measures such as taxes etc.Italy might be forced to follow the same path as 2011 might see 6-7 GW if the subsidy is not changed.

Italy solar capacity can hit 8,000 MW end-2011: GSE

Italy’s total installed photovoltaic capacity can reach 8,000 megawatts by the end of this year, hitting a target the country has set for 2020, Italy’s state energy services agency GSE said on Tuesday.

Italy’s total installed photovoltaic capacity, which turns sunlight into power, jumped to 3,000 MW at the end of 2010 from 1,142 MW at the end of 2009 as operators rushed to sign up for generous incentives which expired at the end of 2010, GSE said in a statement.

The total figure would rise to 7,000 MW if capacity installed by the end of 2010 but not yet connected to grid was included, GSE said adding such capacity must be connected to the grid by the end of June to qualify for earlier incentives.

France recently halted its solar subsidy program for 3 months for solar installations under 3 kw as it was deluged with a large number of applications.Solar Feed in Tariffs are quite generous for certain type of solar panel installations like BIPV and greenhouses.This combined with rapidly falling solar panel prices primarily due to low cost Chinese manufacturing has made the business extremely lucrative.Note France is not the first country to see a massive flood of solar applications.Spain,Czech,Germany,Australia have faced problems with solar feed in tariff programs mainly because of poor design by slow moving bureaucrats.However most of these countries have never blamed cheap Chinese panel imports for their badly designed programs.Germany which is the undisputed solar market leader did for a while raise the Chinese bogey but it was for a short while.Anyone with a little understanding of the solar industry would know that almost 50% of the value is created in installation which is all done locally.Also most of the polysilicon raw material is made in the West as also most of the equipment used in producing panels in China.

A recent report by SEIA says that USA 71% of the solar industry value is domestically created and its exports are more than imports.Still USA is investigating a report by US Steelworker Union on Chinese subsidies for its Green Industry.France does not have much of a solar manufacturing sector so the solar energy industry will have to import panels from other countries in the EU instead of China.This won’t benefit the French industry which does not have a presence in either the solar or wind industry.All it has done is to put a freeze on Solar Thin Film Leader First Solar plans to establish a Cd-Te factory in France in partnership with EDF.

France Calls for Curbing Chinese Solar-Panel Imports

France’s decision to suspend most solar-energy projects for three months was done partly to curb cheaper imports of Chinese solar panels, Environment Minister Nathalie Kosciusko-Morizet said today on France Info radio.

“Ninety percent of the solar panels installed in France come from China and our import criteria must be strengthened,” Kosciusko-Morizet said. “We are not here to subsidize the Chinese economy but to create green jobs in France.”

EDF EN delays solar plant on French law changes

French policy changes for the solar power industry have forced EDF Energies Nouvelles to delay the construction of the country’s largest solar panel plant, the renewable energy arm of EDF said on Friday.

Work at the 90-million euro ($119.8 million) plant was initially expected to start in January 2011 but EDF EN said regulatory changes meant it and U.S. venture partner First Solar now had no firm idea on the project’s profitability.

The French government said earlier this month it sought to end what it called a “speculative bubble” by cutting the number of new projects and the price at which EDF buys the electricity from solar power producers — marking the government’s third move in 12 months to regulate the budding industry.