Bishop Hill Bottom falls out of solar
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.’
Merrill say:
‘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.’
Germany produces some 600 billion kwh per year of electricity. Solar produced 1% of that in 2009. That’s about the most expensive way of reducing CO2 emissions one can think of.
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]
German solar – Banks turn negative, 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’.
Merrill Lynch, in a note dated November 30th, report on a FT Deutschland story that ‘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.’
Merrill say ‘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.’
Germany produces some 600 million kwh per year of electricity. Solar produced 1% of that in 2009. That’s about the most expensive way of reducing CO2 emissions one can think of.
To date Germany has installed circa 18GW of solar capacity, and have a target of 52GW 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 German remains a large market of last resort. This will be the case more than ever in 2011…..’
Reader Comments (61)
I enjoyed the apocryphal story about the guys in Germany powering photovoltaic cells using floodlights and claiming the price differential. They got caught because they were greedy and feeding into the grid during the hours of darkness.
The logic is that if we all became net producers of electricity as per their example, then we would all receive an income!
An income for a commodity in surplus is nil, in fact the greenies will no doubt fine you for wasting resources on excess capacity.
If you want to dabble in markets you first have to understand how they work, but greenies are against the market so will never come up with valid stratergies to use the market as they want to destroy markets.
@JohnH
The tone of my post was of incredulity. Government manipulation of markets 'for the greater good' always ends in tears. e.g. many small Spanish investors in solar going bankrupt as FIT's are reduced having been encouraged to invest by their government in the first place. And of course, as illustrated by Roddy Campbell's guest post here.
We need smilies etc on this blog, I thought I was agreeing with simpleseekeroftruth but it did not come out that way ;) I think ?
"many small Spanish investors in solar going bankrupt"
Proof, if it were needed, that Solar PV doesn't work without subsidy even somewhere sunny!
So the Germans produce 6000 GWatt hrs from 18GWatts of installed solar capacity! That's clever of them, how do they do that?
@ JohnH
Sorry for the late response - scratchin a livin n all that. The confusion would appear to be entirely mine.
:-)
We are not a wild-eyed "greenies, but just consider ourselves practical. We didn't want to spend inordinate amounts on gas, so searched for a way minimize that outlay. In the end, in 2008 we decided to have installed in our new-build house in upstate New York, solar thermal hot water.
It is 2 panels on the roof, facing south, but doesn't require hot sunlight directly (although that helps), just bright light. It supplies nearly all our hot water (and is supplemented by the gas if it falls short, so we are never without). The total cost to us was about $8,000 all in.
Interestingly, there are no tax deductions or subsidies for installing solar hot water. We the customer had to fork out the entire cost.
We had looked into PV too, until we discovered to our horror that electric would cost us an astonishing $40,000. Conservatively. As we wouldn't spend that much on electricity probably over our entire lives, to say nothing about not having that sort of money just lying around, we said, uh, no thanks.
Oh, there are subsidies for PV. But we learned they were not to be paid to us. They were given directly to the installing company.
It wasn't chump change either: the subsidy amounted to about half the cost. So it is easy to see why PV has not caught on widely and is stubbornly not coming down in price.
And why? Because suppliers have absolutely no incentive to get the price down, because the state picks up at least half (what we are told is) the tab. But if that subsidy were to vanish, suppliers would have had to find a way to do PV for us for less than "$40,000" ("$20,000" of which is the state subsidy) or go out of business.
However if we are still determined to "subsidize" because we are "saving the planet," the better approach would be to give any subsidy not to the company but TO THE CONSUMER. That would put us the customers in the driver's seat, with suppliers competing for our business because we would have the subsidy to spend instead of them. That fact would force suppliers to cut their costs and install PV more economically, because they couldn't just continue to coast on the direct state subsidy.
"6000 GWatt hrs from 18GWatts of installed solar capacity"
If that's for the who of 2009, it equates to 0.91 Watt hours per day, i.e. not quite enough to power a 60W bulb for one minute. Shome mishtake, no doubt, but I bet even the real figures aren't very good...
"for the who" = "for the whole" - sorry
"Shome mishtake"
Mine, I fear - we're dealing in GW, not W (i.e. they don't cancel each other out).
Shooting from the hip, I'm afraid. Will use paper and pencil next time...