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Media

06.01.2012

Strong End-of-Year Demand for Solar Power

By: BSW-Solar

Reasons are low prices, mild weather conditions, reduction of support measures at the turn of the year and concern about further cuts in support / Photovoltaic support reaches level of household electricity prices / Strong demand leads to further reduction of solar power support in 2012 by approx. 30 percent

The solar industry registered an unusually strong end-of-year demand for solar power in Germany, thereby making a significant contribution to the transformation of the energy system. Following a weak first six months, investment activity significantly increased towards the end of the year, according to industry figures. Overall, newly installed photovoltaic capacity for 2011 is expected to reach approximately the level of the previous year, as preliminary forecasts of the German Solar Industry Association (BSW-Solar) indicate. This would mean a slowing of the steep growth trajectory of past years. In 2010, a total of 250,000 new solar power systems were installed in Germany, amounting to a capacity of around seven gigawatts.

The renewable energy sources act (EEG) goes hand in hand with the development that is emerging for 2011: In 2012, support for solar power will be significantly reduced in two steps, by 15 percent as of 1 January 2012 and by an expected further 15 percent as of 1 July 2012. This means that support measures for 2012 will be cut at twice the rate of 2011, as our corresponding diagram on the subject illustrates.

With remuneration payments of between 17.94 cents and 24.43 cents per kilowatt hour, the support level for new solar power systems has thus reached the price level of household electricity prices in Germany. As of 1 July, remuneration is likely to fall to between 15.25 and 20.77 cents. At the same time, the societal costs of the continued expansion of solar power have fallen significantly. "In the future, newly installed photovoltaic systems will have only a minimal impact on the consumer apportionment for renewable energy sources," explains Carsten Körnig, Chief Executive Officer of BSW-Solar.

Through the strong growth in photovoltaics, its share of German electricity consumption in 2012 will increase to over four percent. The industry association expects this share, given moderate further growth, to grow to over ten percent by the year 2020. This makes solar power a key driver in the transformation of the energy system, which must be accelerated due to the withdrawal from nuclear power. The increased new deployment in 2011 was possible without substantial investments in the grid infrastructure, as solar power is produced near the point of consumption.

According to the industry association, the unexpectedly strong year-end sprint was due to an overlapping of several effects: Significantly lower prices for solar modules and turn-key solar power systems, mild weather conditions in December, the reduction, announced last fall, of support levels for solar power by 15 percent as of the beginning of the year, as well as the fear of a future cap on support for solar power that is fueled by some stakeholders in the political establishment. Another factor influencing the expansion of solar power is the flight into asset values that has been encouraged by the euro crisis.

Nevertheless, in light of global overcapacities, tough international competition and the deep cuts in support for solar power, the situation within the industry remains tense. Despite the stable and growing demand in Germany and in some other international markets, turnover and profits for 2011 remain below the expectations of many companies. The industry hopes for improvement through a significant upswing in international markets in the coming years. For Germany, the industry expects declining demand due to the statutory cuts in support for 2012, which will total approximately 30 percent.

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