As usual France has followed Italy in boosting solar manufacturing industry by giving a 10% FIT bonus for solar Solar Panelsproducts manufactured in Europe. Note Italy had given this FIT bonus a year ago, however that has not helped the European solar manufactures. Even the biggest solar panel producers like Solarworld are near bankruptcy, as high cost solar panel locations like Europe are nonviable now. Most of the solar factories in Europe have closed (Isofoton is the latest one). Even as the lowest cost factories in China are operating in the red, solar factories in the world have not got a chance to survive. Countries are trying to protect their manufacturing base by imposing duties on imports of Chinese cells and panels. However protectionist measures don’t work well as small US makers of panels have gone bankrupt while Chinese makers have found workarounds by using solar cells from Taiwan. Only the US consumer has been hurt while US solar panel makers have kept shutting down.

Read Solarworld Solar Panel reviews.

We don’t think that this 10% FIT bonus will help the failing solar panel makers in Europe. The trend of solar factory shutdowns in Europe will continue and almost all manufacturing will migrate to Asia. Like semiconductors and other products, Europe will have lost out to Asia despite the ad hoc attempts by its governments to protect whatever manufacturing that is left.

PVTech

This quarter, the government has set all 0-9kW installations at €0.3159.According to the government’s announcement, the FiTs for rooftop PV systems up to 100kW with simplified integration have been raised 5%, while the FiT for ground-mounted PV plants up to 10MW has received a 20% cut. Yesterday, it was announced that the government would offer an additional 10% under its domestic content allowance bonus in order to further aid the ailing French solar industry.

Ontario Canada has a comprehensive solar subsidy policy which mandates that a large percentage of solar components be manufactured in Ontario in order to receive the Feed in Tariffs. The province has managed to attract a lot of manufacturing investment as well due to its local content requirements, which requires around 50-60% locally produced parts. This has made Solar Module companies like Silfab and Canadian Solar to set up module plants while companies like Enphase, Schneider and SMA are setting up inverter plants in the province.

Italy First Country to reach Solar Grid Parity on a Large Scale

Italy’s high electricity retail prices and superior solar insolation makes it naturally attractive to solar energy generation. With solar insolation almost 50% higher than Germany and Feed in Tariffs equal to, if not higher than Germany, Italy saw a massive boom in solar installations in 2010. The project ROI for solar plants has made it a lucrative target for all solar companies leading to a scarcity of solar components. Expect this boom to continue forward as the the 20% cuts will fail to dent the enthusiasm of solar developers who are seeing 20%+ project IRRs in that country. Italy’s target  of 8000 MW by 2020, will be far exceeded in my humble opinion. Some parts of the country are already at grid parity and by 2012-2013 you should see the first unsubsidized solar projects.

The main features of the Italian Feed in Tariff Policy in 2011:

  1. A 20% cut in Feed in Tariffs in 2011 to be rolled out in 3 phases with 4 months gap. So apparently a 6.66%  cut in January and so on.
  2. A 30% cut in FIT for solar plants greater than 5 MW. This should not have much repercussions as most of the capacity is lower than 5 MW. The German experience shows that the market can easily adapt to lower solar project sizes.
  3. A 3000 MW cap on the installations during this phase with a target of 8000 MW by 2020. This proposal seems weird. Italy with its huge sunny areas and high retail electricity prices is already approaching grid parity in some places. Expect the 8000 MW target by 2020 to be far exceeded.
  4. 6% cuts in solar subsidy in 2012 and 2013. This might have to be changed if Italy sees a massive boom like Spain did in 2008 and Czech Republic in 2009.

Japan increases Solar Panel Efficiency Criteria to curtail foreign imports

Asian countries like Japan and China routinely erect non explicit barriers to imports to protect their domestic firms. This is not isolated to solar panels but extends to other industries as well. The governments and the financial institutions exhibit a strong nationalistic streak to support their companies over foreign competition. It is notoriously difficult to sell foreign brands in Japan be it mobile phones or cars. China too has protected its domestic companies through a variety of ruses like staring its own telecom standards, mandating local procurement by state owned companies, domestic content requirements for wind turbines etc.

Japan has become a magnet for solar panel producers around the world, thanks to a very generous government subsidy which has led to a huge PV Panel boom. Goldman Sachs and gambling parlor operators too have joined the fray along with a large number of conglomerates and industrial powerhouses like Mitsui, Sumitomo, Mitsubishi, Softbank etc. To protect the Japanese solar panel companies like Kyocera, Sharp, Panasonic, the Government is going to only allow import of solar panels which have a high threshold with respect to efficiency. This will lead to the elimination of a vast majority of Chinese, Korea and Taiwanese players who sell panels cheaply but have lower efficiency. Note Japanese solar panel makers make mostly high efficiency solar modules with Sanyo having one of the highest commercial efficiency solar panels in the market.

Note Japan has already curtailed imports of solar inverters through a registration requirement which has led to a boom for Japanese solar inverter companies as demand is greater than the current supply.

Japanese solar inverter manufacturers

While Japanese solar panel companies are sweating due to cheap Asian solar panel imports, the solar inverter companies in Japan are facing the happy problem of supply shortages. The reason is that the Japan requires that PV inverters be certified by Japan Electrical Safety & Environment Technology Laboratories (JET). Most of the big global solar inverter companies lack this, which means that the local companies have a massive advantage. The Japanese solar market is set to boom due to very generous subsidies set by the Government which would imply returns of around 30%. While global solar panel majors are salivating at the prospect of the huge growth, solar inverter companies face a big barrier in the form of the JET certification.

Japanese Solar Bubble

Solar Energy in Japan is seeing a huge boom in solar installations as the generous subsidy announced by the Government sees the entry of newer players each day. The growth is driven by assured returns in excess of 30% which is attracting all sorts of investors from Japan where the interest rates are as low as 1%. The Solar Bubble is growing bigger and bigger each day as the surge in solar installations refuses to stop. The Government in Japan has refused to learn from the solar bubble bursting in Spain, Italy, Czech and Bulgaria.

The bureaucrats are blind to the bubble forming in front of them. Instead Kazuhiro Ueta, the head of the five member solar panel thinks they have a late mover advantage. But they are not using the advantage by setting the solar feed in tariffs so that the rate of return is around 5-8%. Instead they have kept it at the highest rate in the world.

The setting of a crazily high Feed in Tariff of 52c/KwH, solar demand is set to increase exponentially in Japan. Note Japan is already one of the biggest markets globally and has a large solar manufacturing industry. This is ideal grounds for a subsidy led solar boom like what happened in Spain in 2008 and Czech in 2010 with pernicious results. You know there is a bubble when Gamblers and Goldman Sachs start investing massive amounts to reap the early mover advantage of the Solar Bubble.

DigiTimes

The Japan government will reportedly hike energy efficiency standards for imported PV modules in 2013 from 250W currently to 255-260W for a module made of 60 monocrystalline silicon solar cells and from 235-240W to 245W for one made of 60 polycrystalline solar cells, according to Taiwan-based makers.

As the Japan government began to offer a feed-in tariff rate of JPY42 (US$0.53)/kWh for electricity generated by PV systems in July 2012, Japan has become a target market for Taiwan- and China-based solar cell or PV module makers because production costs in Japan are significantly higher, the sources pointed out.

The hike in energy efficiency standards for PV modules is equivalent to an increase in energy conversion rate for monocrystalline silicon solar cells from 18.2% currently to 18.8%, and that for polycrystalline ones from 16.8-17.1% to 17.4%, the sources indicated.

Solar Boom in Romania

Solar booms inspired by large solar subsidies are a regular feature in the solar industry. The story line is the same where clueless bureaucrats set high feed in tariff rates for solar energy which leads to a massive influx of solar developers and solar panel producer from China. This leads to exponential growth in solar power installations (up to 1000% growth in a year). The country sees high electricity tariffs and clamps down heavily solar developers (through retro tariffs like that, being seen in Bulgaria).

Romania is set to see almost 100 MW of solar power being installed in 2012 and 1500 MW by 2015 according to the energy regulator ANRE. The solar subsides in Romania are given through green certificates which are between 27 to 55 euros in value which means 15-33c/kwh tariff for solar power. While the mid point of USD 35c/Kwh is not very high compared to the Japanese solar subsidy of 52c/Kwh , it is still enough to draw in big developer like EDF and Chinese low cost solar panel producers like ET Solar. Unless Romania reduces the subsidies sharply (they are thinking of cutting it by 16% in 2013) , they will see the same mess as being seen in Bulgaria now and Czech, Spain earlier.

Solar Booms always end up in Spectacular Busts

Note Solar Booms are generally followed by a Bust after a couple of years as the massive subsidies forces the Government to stop the incentives abruptly and even apply retroactive taxes . This story has been completed in a number of countries like Spain,Italy Czech and Bulgaria already and Japan is in the first phase. Sumitomo one of the largest industrial  groups has decided not take part in this bubble and is investing instead in wind energy which has lower FITs and lower returns as well.

Bulgaria the most recent Solar Bust

The Bulgarian Government is set to face numerous lawsuits from investors in solar power plants as it imposes electricity grid fees on existing solar power plants to reduce their returns. This will reduce the returns for solar investors by 20-40% and bring down the electricity rates for Europe’s poorest citizens who saw rates go up by 12%. Note Bulgaria had given a very generous solar feed in tariff which has attracted solar developers and companies in droves setting up large solar power plants. The returns were enormous for these investors as solar panel prices have crashed leading to IRR of 30-40%. This has imposed a heavy monetary burden on the Bulgarian government and electricity companies as they are forced to pay for this boom. This story is similar to what was scripted in Czech and Spain a couple of years ago. The story goes like this:

a) Government starts a solar subsidy program by giving above market rates for solar electricity

b) Solar systems prices go down making the FIT very lucrative

c) Massive solar boom ensures with solar developers setting up huge capacities in short period of time (Czech saw 1 GW of solar installed making it the 4th largest solar market)

d) Burden becomes huge in the government leading to increasing rates for customers

e) Government clamps down and imposes taxes and fees on existing solar power plants

f) Investors cry wolf and sue the government.

Businessweek

Romania’s energy regulator will decide early next year whether to recommend a cut in solar incentives as project costs fall. The regulator, known as ANRE, has so far proposed a reduction in the number of green certificates granted for solar- power production to five from six per megawatt, said Nicolae Havrilet, who heads the organization. Romania may have as much as 100 megawatts of power produced from solar plants at the end of this year, said Zoltan Nagy- Bege, a director at ANRE. The country’s solar capacity may increase to 1,500 megawatts in 2016, he said.

ET Solar gets 50 MW contract

Solar PV solution provider ET Solar was awarded a 50MW contract from Tinmar-Ind, a Romanian power supplier and energy trading company, to build several PV plants in Romania.The PV projects will be developed in three counties, including Gorj, Girugiu and Dolj. More than 20MW are already under construction and expected to be completed before the end of this year while grid connection and electricity feed-in is anticipated to be finished in the first quarter of 2013. The remaining 30MW are being planned, although the company notes that construction is slated to start before the end of 2012.

1. European solar wafer maker PY Crystalox thinks about shutting operation and returning cash to investors

2. Jinko Solar manages a 9.9% Gross Margin even as Tier 1 solar panel producers struggle for breakeven

3. GCL Poly wafer and polysilicon shipments fall off a cliff as customers stop orders

4. Stion tandem junction thin film solar panels gets a $2 million DOE grant

5. Bulgaria to legitimize ” 39% retroactive grid access fee” for solar pv developers – Spain and Czech déjà vu

6. Polysilicon prices see one of the worst monthly prices crashes in October 2012 – 7-9%

7. New startup shows technology to clean CSP and Solar PV plant without water usage

8. 160 MW Solar Thermal Plant in Marrakesh, Morocca to get German loans

9. Brightsource and Areva win 121 CSP Plant approval in Israel

10. 350.org organizes thousands of students to protest coal usage in India

 

Japanese Solar Bubble

Solar Energy in Japan is seeing a huge boom in solar installations as the generous subsidy announced by the Government sees the entry of newer players each day. The growth is driven by assured returns in excess of 30% which is attracting all sorts of investors from Japan where the interest rates are as low as 1%. The Solar Bubble is growing bigger and bigger each day as the surge in solar installations refuses to stop. The Government in Japan has refused to learn from the solar bubble bursting in Spain, Italy, Czech and Bulgaria.

The bureaucrats are blind to the bubble forming in front of them. Instead Kazuhiro Ueta, the head of the five member solar panel thinks they have a late mover advantage. But they are not using the advantage by setting the solar feed in tariffs so that the rate of return is around 5-8%. Instead they have kept it at the highest rate in the world.

The setting of a crazily high Feed in Tariff of 52c/KwH, solar demand is set to increase exponentially in Japan. Note Japan is already one of the biggest markets globally and has a large solar manufacturing industry. This is ideal grounds for a subsidy led solar boom like what happened in Spain in 2008 and Czech in 2010 with pernicious results. You know there is a bubble when Gamblers and Goldman Sachs start investing massive amounts to reap the early mover advantage of the Solar Bubble.

Solar Booms always end up in Spectacular Busts

Note Solar Booms are generally followed by a Bust after a couple of years as the massive subsidies forces the Government to stop the incentives abruptly and even apply retroactive taxes. This story has been completed in a number of countries like Spain, Italy Czech and Bulgaria already and Japan is in the first phase.

More players joining the Bubble

Mitsui, Japan’s second-biggest trading company, and Tokio Marine Asset Management, are working on a project to construct 10 solar power stations across Japan at a total cost of 9 billion yen ($114 million).

Bloomberg

The Ministry of Economy, Trade and Industry in Japan approved clean energy projects totaling 1,780 megawatts of capacity, with solar accounting for 83 percent, as of the end of September under a government incentive program. “Several large-scale solar power plants are scheduled to start operations toward the end of this fiscal year so the non- residential solar sector is expected to expand,” it said.

Also Read on GWI:

Mitsubishi Solar Panel Reviews

Kyocera Solar Panel Reviews

Japanese Solar Panels – Comprehensive Guide to Manufacturers, Cost, Efficiency & Technology.

 

We have been predicting a massive solar energy boom in Japan due to the generous solar feed in tariffs set by the Japanese Government in the wake of the Fukushima Nuclear accident. Note Japan generates very little electricity from renewable sources of power like wind and solar energy. However that is changing with a large number of solar power plants being developed by a number of Japanese companies. Seeing the lucrative returns and IRRs in excess of 30%,  gamblers and Goldman Sachs have started investing massive amounts to reap the early mover advantage of the Solar Bubble.

Solar Demand to Explode in Japan (the following excerpt was written by us in June)

Japan after the Fukushima disaster had set out on a plan to increase the share of renewable energy in the electricity mix which is abysmally low. Japan has very low capacity in wind and solar energy compared to the more environmentally conscious developed countries like Germany. Japan which had led the solar market in the period till 2005 abruptly stopped its support. Though that time period had led to the birth of the Japanese solar industry (which is second to the Chinese even today), the industry had faltered as domestic demand went into decline.

Sharp, Kyocera, Panasonic-Sanyo, Mitsubishi are the top solar panel producers in the world. Solar Energy in Japan has a long future dating back to 1994 when the government introduced capital subsidies to boost solar energy installations on rooftops. Till 2004, Japan was the largest solar market in the world after which it was overtaken by Germany. After 2004, the growth in the solar industry tapered off as the government reduced the subsidies for solar panels to almost zero. However the low cost Chinese solar module producers have pushed back most of the Japanese companies. The Japanese government grants generous solar subsidies and feed in tariff to boost the renewable energy production in the country which remains far off targets. This has led Japan to become the top non-European market after USA and the growth seems set to continue in the future as well. Japan has relatively low installations costs and is much nearer to grid parity. Also lack of  wind energy makes solar energy more attractive as a renewable energy choice. While large scale solar installations in Japan are almost absent, there remain large numbers of rooftop solar installations.

However with the setting of a crazily high Feed in Tariff of 52c/KwH, solar demand is set to increase exponentially in Japan. Note Japan is already one of the biggest markets globally and has a large solar manufacturing industry. This is ideal grounds for a subsidy led solar boom like what happened in Spain in 2008 and Czech in 2010 with pernicious results.  Japanese solar companies like Sharp, Solar Frontier, Mitsubishi will benefit the most.

Solar Booms always end up in Spectacular Busts

Note Solar Booms are generally followed by a Bust after a couple of years as the massive subsidies forces the Government to stop the incentives abruptly and even apply retroactive taxes . This story has been completed in a number of countries like Spain,Italy Czech and Bulgaria already and Japan is in the first phase. Sumitomo one of the largest industrial  groups has decided not take part in this bubble and is investing instead in wind energy which has lower FITs and lower returns as well.

Bulgaria the most recent Solar Bust

The Bulgarian Government is set to face numerous lawsuits from investors in solar power plants as it imposes electricity grid fees on existing solar power plants to reduce their returns. This will reduce the returns for solar investors by 20-40% and bring down the electricity rates for Europe’s poorest citizens who saw rates go up by 12%. Note Bulgaria had given a very generous solar feed in tariff which has attracted solar developers and companies in droves setting up large solar power plants. The returns were enormous for these investors as solar panel prices have crashed leading to IRR of 30-40%. This has imposed a heavy monetary burden on the Bulgarian government and electricity companies as they are forced to pay for this boom. This story is similar to what was scripted in Czech and Spain a couple of years ago. The story goes like this:

a) Government starts a solar subsidy program by giving above market rates for solar electricity

b) Solar systems prices go down making the FIT very lucrative

c) Massive solar boom ensures with solar developers setting up huge capacities in short period of time (Czech saw 1 GW of solar installed making it the 4th largest solar market)

d) Burden becomes huge in the government leading to increasing rates for customers

e) Government clamps down and imposes taxes and fees on existing solar power plants

f) Investors cry wolf and sue the government.

Businessweek

 “With so many companies rushing in we are seeing a solar bubble forming and land prices are rising,” Kitamura said in a Sept. 7 interview. Japan’s ambitions in renewable energy look more manageable in wind energy, he said.

Projects to add more than 1,150 megawatts of solar plants have been announced this year in Japan, compared to none last year, according to BNEF. Those estimates, which exclude residential installations, mean about 110 megawatts of utility- size solar capacity may be commissioned this year, up from 10 megawatts last year, BNEF said in an Aug. 31 report.

Japan Asia Group, a Tokyo-based brokerage and an aerial surveyor that started looking at renewables three years ago, last month pledged to invest 150 billion yen to build 500 megawatts of solar power across the country by March 2015. The amount exceeds Japan Asia’s revenue over the last two years A group including International Business Machines Corp. (IBM) and Goldman Sachs won approval to build Japan’s largest solar plant of 250 megawatts in the southern city of Setouchi, which will cost as much as 86.1 billion yen, the local council said Sept. 13 on its website. That would be Goldman Sachs’s second renewables investment in Japan after it bought 5.1 percent of Eliiy Power Co. a lithium-ion battery maker, last year.

Also Read on GWI: