Solar PV Market

GermanyversusUSA

3rd Solar Convention Las VegasOctober 7th 2010Volkmar Kunerth, MBAPresident, Solar Partners International

German versus US marketGrid parityImplications

Agenda

German PV marketConclusionsOutlook

US PV marketConclusionsOutlook

BureaucracyRegulatory EnvironmentFederal Resources

Global Solar OutlookOptimistic signs and challengesQuestions

Solar PV Market

Germany

U.S.A.

Economics

Challenges

Future

Solar Partners International

-PV can be used anywhere-PV can be used in any size-PV is scalable-Grid connected and OFF-Grid possible-Only one initial investment-PV largest investment-PV has the highest cost reduction potential-PV reduces CO2 production and helps fight global warming

Why Photovoltaic?

Solar Partners International

-Installations until 2009: Over 10 GWp

-Predicted Installation in 2010 alone: 10 GWp

-150,000 people employed in the industry

-PV is the largest source of investment: $29 billion

-80% of installations are roof installations

-Dramatic growth since the introduction of the Renewable Energy Sources Act (EEG) in 2000

-EEG guarantees operators a feed-in tariff (FIT) fixed for 20 years and a purchase guarantee for the electricity produced--> investing in a solar electricity system is a very secure investment for 20 years

German PV Market

Solar Partners International

German PV Market

Solar Partners International

- German Feed in tariff laws (FIT)

- “A feed-in tariff (FIT) is an energy supply policy thatoffers a guarantee of payments to renewable energydevelopers for the electricity they produce.”

- Under most FIT policies, the government establishes a legal obligation for electric utilities to purchase all ofthe electricity produced by qualifying developers.

German PV Market

German PV Market

Solar Partners International

German PV Market

Solar Partners International

German PV Market

Source: www.recurrentenergy.com

German PV market

Advantages

Leads to rapid deployment of renewable energy in Germany

Reduced investment risk: makes it easier to finance projects

Faster reduction of CO2 output

Employment for 150,000+ people

Innovation engine

Disadvantages

Cost for German electricity customer until 2008: $48 Billion (If calculated for 2009 and 2010 we reach $100 Billion!)

Prices are set too high, utilities and ratepayers are stuck withthose costs for the duration of the contracts (20 years).

The electric grid can only take so much alternative energy due to high fluctuations in input.

Conclusions:

-> FIT was a very suitable model to jump-start the German PV industry-> FIT not sustainable business model in the long run because it is too expensive-> Future financial burden for German customers-> Current grid is limited: Smart grid technologies necessary in the future for further growth-> Intelligent storage technologies needed for off-grid installations

German PV Market

-Outlook:

-After the January FIT decrease, the German parliament finally voted in an additional decrease last July

-16% decrease for rooftops, 11% for reconversion areas, 15% for the other installations

-No more feed-in tariff for PV installations on agricultural land; the new law is expected to considerably affect the market in the coming years.

-Market could stabilize in the 3 to 5 GW annual installations level by 2014, if the present support scheme is maintained, withadequate FIT decreases in line with the expected price decrease.

German PV Market

-USA has started to become one of the top PV markets-477 MW installed in 2009; 40 MW of which are coming from off-grid installations-State of California leading the pace in 2009-2010 could see the market rise from 600 MW to a possible 1 GW of new installations.-By 2014, the market could reach 3 GW installed (moderate scenario)-Policy-Driven scenario up to 6 GW could be installed-Depending on market response to incentives in different states

US PV Market

US PV Market

The EPIA Global Market Outlook for Photovoltaics (PV) from 2010 to 2014

US PV Market

The EPIA Global Market Outlook for Photovoltaics (PV) by States

-Complex, evolving solar policy environment-Overlapping federal, regional, and state regulation-Solar policies are not harmonized-Developers have to think like power companies-Tax driven project financing-Banks and developers are sorting out the new financing structures for US solar projects

US PV Market

US PV Market

Source: www.recurrentenergy.com

US PV market

Advantages

The US has strong natural solar resources

Increasing energy prices and strong public support

U.S. peak demand will increase 17.7% by 2017 according to NERC

Huge long term potential

DisadvantagesOverlapping federal, regional, and state regulation; Solar policies are not harmonized

Developing a downstream U.S. PV market strategy requires a deliberate, highly specified approach to each application, state market and market segment

Funding hurdlesU.S. federal government is unlikely to provide level of financial subsidy as in the European markets

Conclusions:

- Short term conditions challenging and main hurdles are likely to remain

- US government’s lack of incentives by comparison to other regions

- Overlapping federal, regional, and state regulation

- Complicated and long negotiations with utilities

-> Long term outlook very promising

-The US will become the biggest and most important PV solar market in the world

US PV Market

Outlook: - Demand for PV projects in the United States is rapidly expanding as a result of falling system prices - The market is evolving as utility-scale projects gain steam and innovations in project financing emerge- With decreasing prices, a chain reaction will occur causing a decrease in project payback time, finally an increase in attractiveness of solar retail and commercial markets in the US- Global solar market players from all parts of the value chain are seeking strategies to gain access to U.S

US PV Market

US versus German market

USA

The US has better natural solar resources

Grid parity reached earlier due to more sun exposure

U.S. peak demand will increase 17.7% by 2017 according to NERC

Germany

Germany jump started the solar economy

High market penetration already reached. Market growth will slow down due to lower state incentives

German solar companies are seeking to go international and transfer technology and knowledge to international markets

-2

USA versus Germany

Germany:Low Cost per kWh $0.35 (residential and commercial)High Cost per kWh $0.47 (residential and commercial)

California:Low Cost per kWh $0.17 (residential and commercial)High Cost per kWh $0.22 (residential and commercial)

Source: SGC

USA versus Germany cost of solar

Residential electricity rates USA

-Grid parity is the point at which alternative means of generating electricity is equal in cost, or cheaper than grid power

-High radiation levels + high electricity prices + falling pv system prices=> faster grid parity

-Hawaii has reached grid parity already; California will be next

-When grid parity is reached market will grow rapidly

Grid parity influencers

Grid parity-Market development

-No national market coordination -Bureaucracy-Increasing policy complexity-Various federal, state and local policy types for promoting solar-Various financing options -Private and commercial customers get confused

Challenges for market growth

-DSIRE: Database of State Incentives for Renewables and Efficiency www.dsireusa.org

-DSIRE lists a total of 616 Federal State, Utility and Local Financial Incentives for Solar- 518 Incentives for PV

DSIRE lists a total of 367 Federal, State, Utility, and Local Regulatory Incentives for Solar- 356 Incemtives for PV

DSIRE

- DSIRE: Database of State Incentives for Renewables and Efficiency: www.dsireusa.org

- US Department of Energy Efficiency and Renewable Energy: http://www.eere.energy.gov/

- National Renewable Energy Laboratory:

http://www.nrel.gov/

- US Energy Information Administration:

http://www.eia.doe.gov/

- Energy Star:

http://www.energystar.gov/

- Federal Business Opportunities:

https://www.fbo.gov/

- US Department of Energy:

http://www.energy.gov

- EPA:

http://www.epa.gov/

Federal Resources

-Currently 20 GW installed-30-35 GW installed by the end of the year -Plunging prices of solar modules-Europe is still leading the market with installations (Germany and Italy)-47 countries have FIT but danger of Solar market bust in countries with FIT-US, China, India, Japan and France will experience significant growth-By 2015 cumulative solar capacity will have reached 65-100GW or more- Demand for PV systems is still heavily dependent on the general economic climate and most importantly on governments’ support schemes.-

Global Solar Outlook

Questions and discussion

Please send e-mail to kunerth@gmail.comfor presentation and sources

Thank you!