This is a guest post by Roddy Campbell.
Banks are turning negative on German solar, predicting demand will fall as subsidies are cut, in an environment of rapidly expanding supply of solar panels.
Bloomberg, in this story, talk about ‘Supply-glut armageddon’. Meanwhile, Merrill Lynch, in a note to investors dated November 30th, report on a FT Deutschland story:
‘CDU (ruling party) energy policy advisor Thomas Bareiss has written to the Environment Minister Norbert Roettgen, advising that there should be additional solar subsidy cuts next year.’
‘We calculate the average German household is paying roughly €200 per year for solar subsidies at present. The feed in tariff for new installations is set to fall 13% in January but if demand remains strong in H1 2011, which we think it will, then there could be an additional cut in July, just like what happened this year. Germany accounts for roughly 60% of the global solar market and is therefore crucially important for driving utilisation, pricing and profitability of the manufacturers.’
To date Germany has installed circa 18 GW of solar capacity, and have a target of 52 GW by 2020. A trebling of installed solar might imply, one would think, at least a doubling of the cost per household, from €200 to €400 per year.
Good luck with that, Angela. (And don’t forget the wind tariffs too.)
Germany dominates global solar - people talk about China, but Germany took 46% of world installation in 2007, 35% in 2008, 56% in 2009, and an estimated 55% in 2010 – over 50% in total. The truth is, no-one else cares, Germany has created the global pv industry almost single-handed, in one of the least likely geographies, because of its peculiar green political history. It’s an aberration, not a sensible economic or environmental policy in any way. As Merrill go on to say:
‘Germany has under-estimated... that few other countries care about solar, meaning Germany remains a large market of last resort. This will be the case more than ever in 2011…’
In related news, Citibank's thinking is turning the same way:
Cost conscious governments and consumers are increasing the risk of cuts in subsidies for solar photovoltaics through their increasingly negative sentiment towards the sector. In Germany the cost of electricity is expected to increase by 15% next year as solar installers reap the benefits of generous IRR’s this year
[Updated to fix millions/billions]