Module prices have scarcely changed over the past month across all technologies. Despite tightening supplies - especially for modules in the lower output range - all other prices, with the exception of those for all-black modules, fell slightly. The summer lull could exacerbate this downward trend even further but the unfavorable euro exchange rate is also working to counteract it. Exchange rate losses would make products manufactured in Asia and traded in US dollars nearly 5 percent more expensive than at the beginning of the year if prices remain stable. This means that in absolute terms the module sector can certainly be said to have seen slight price reductions over the past few months; we just have yet to notice them here in Europe. However, this sideways movement in prices will not continue for long, as the market is currently recovering - both in Germany and around the world.
In the last market commentary, I pointed out the transregional causes and trends that will lead to a year-end rally, the associated module and inverter bottleneck and an inevitable increase in prices. Today I would like to home in on the German market and show what consequences unwise action - or rather inaction - by the German Federal Government could have for the further, urgently needed expansion of photovoltaics. As the title suggests, I am concerned here with the 52-gigawatt cap still in place in the Renewable Energies Act (EEG). According to the German Federal Network Agency, by the end of June the total output of photovoltaic systems installed in Germany had already reached just under 48 gigawatts. If this capacity is extrapolated taking into account the current rate of build-out, the upper limit for photovoltaic systems in the up to 750-kilowatt category eligible for funding under the EEG will be reached by the summer of 2020.
For months, a number of community and industry organizations such as the German Solar Industry Association (BSW), have been calling on the federal government to remove the 52-gigawatt cap from the EEG, pointing to ever lower electricity production costs and the resulting drop in overall costs and surcharges due to photovoltaics, as well as the looming failure to meet climate targets. Recently, professor Volker Quaschning of the Hochschule für Technik und Wirtschaft Berlin also launched an excellent campaign, and not without a healthy dose of humor; he sent German Economics Minister Peter Altmaier a worn-out toilet lid inscribing it with the words "The lid on PV has to go." Quaschning – who by the way is also involved in Scientist for Futur and the Parents for Future as part of the Fridays for Future movement and is strongly supported by Hans-Josef Fell and Krannich Solar - called on his friends and customers to back the campaign. The company asked them to write their own statements and send them, accompanied by a company logo, to the wholesaler. All the logos sent in were put on a cardboard lid to form an oversized postcard, which was sent to the government representatives in Berlin with all the individually written reasons for abolishing the EEG cap.
These activities are very slowly having an effect. However, there is still disagreement within the governing coalition on the right course of action. It had already agreed to increase the share of renewable energy to 65 Percent by 2030 but this will not work without further support for PV systems, SPD politician Timon Gremmels told pv magazine recently. The CDU/CSU coalition partner will have to finally abandon its blockade stance on the 52 GW cap. Heated debates are currently underway in the committees on how to proceed with the expansion of photovoltaics and wind power. The German Federal Ministry of Economics and Technology has maintained a low profile so far, but Andreas Feicht, the state secretary in the Federal Ministry of Economics and Technology responsible for the energy transition, has at least recognized the need for action: "We have to do something!" But it is anyone's guess at the moment when these words will be followed by deeds.
The consequences of keeping the cap are also the subject of speculation at the joint cabinet session of the state governments of Bavaria and Baden-Württemberg, the two German states where PV is strongest. The fixed upper limit, which, according to current legislation, would abruptly cut off incentives once reached, would have an increasingly negative impact on investment decisions relating to PV systems. For cost-effectiveness reasons, once the statutory feed-in tariffs have run out, the installation of new plants will be limited solely to systems installed to cover on-site requirements. Due to the low price of exchange-traded electricity, marketing PV power via the exchange is unlikely to be an option anymore. The marketing of solar power to energy suppliers and direct customers will also have razor-thin margins if any at all for small rooftop systems. As a result, the market for roof-mounted systems would see a dramatic decline. The cap must therefore be abolished quickly. However, at the conclusion of their meeting, the state-level politicians failed to specify a concrete procedure for achieving this.
We have to face a further acceleration of installations, higher prices and lower quality
In a previous market commentary, I too had already expressed doubts as to whether PV systems without EEG subsidies would actually be cost-effective in view of the current energy market structures and the many legal hurdles on existing buildings, especially for smaller plants. Without the support of a government-backed compensation system, it would be a stretch to finance medium to large sized plants. What alternative securities can financial service providers expect or demand from their commercial customers that can match a legally guaranteed feed-in tariff? I can't think of any. So, if the cap is not lifted immediately, we will face the threat of a run on the last 4 GW still eligible for incentives. It will be the worst kind of expansion with all the resulting negative effects: last-minute panic, further acceleration of installations with scarce resources - manpower and materials - resulting in higher prices and lower quality.
I therefore emphatically urge all the players, both inside and outside the photovoltaic sector who are serious about the energy transition and a resolute approach to climate change to join one of the many campaigns and petitions in the call to: scrap the 52 Gigawatt PV cap!
Overview of the price points by technology in August 2019 including the changes over the previous month (as of August 19, 2019):
