Numerous indicators point to an impending sharp decline in PV installations, at least in Germany, after 31 March. Availability is poor, prices for both multi and monocrystalline modules have largely stagnated since the beginning of the year, and manufacturers have postponed or completely cancelled promised deliveries from Asia. As a result of the current monthly reductions in feed-in tariffs, we are now seeing a full-fledged run on the few lots of modules still available on short notice. With each passing month, anxiety mounts over whether the urgently needed components will be delivered on time. When deadlines are broken, installers face harsh contractual penalties, while system operators rack up major losses. Yet module producers seem to be taking all this in stride.
The game always seems to be the same: the eternal Pork Cycle. Initially, the PV market develops well, with new installations almost reaching the level needed to meet self-imposed climate targets and a healthy industry. Then some institute or other detects overfunding, and immediately drastic reduction measures are adopted. The market then plunges into turmoil and the scramble begins to snatch up the last available and affordable stocks. Re-supply can be slow, and subsequent shipments are generally no longer available at prices that would make new installations economically viable. But since Germany and Europe are no longer at the center of the PV world, international cell and module manufacturers tend to wait and see how the market shapes up, preferring instead to focus on markets that are less volatile and promise better margins.
Once the pain level is sufficiently high in Europe and installers are prepared to pay inflated prices and forgo returns as the cost of doing business, deliveries resume. This at least is the apparent market strategy that some of the top manufacturers have adopted in the short term. Some module types will presumably not become available with any reliability again until June or July, the claim being that production facilities are working at full capacity to fill pre-orders, according to information from Canadian Solar, Jinko Solar, JA Solar and Suntech, among others. But of course, the modules manufactured up to that point will not all flow to the European market - quite the contrary. Deliveries scheduled for Europe are diverted or held back to serve preferred markets in Asia and the Americas.
In this sense, the market over the next few months is likely to look much as it did in mid-2017, late 2015, and early 2014 – that is, every 1.5 years or so, installation figures will drop off a cliff.
In Germany, the guaranteed feed-in tariff in the mid-range plant segment will be so low that if material and installation costs remain flat or rise, plants financed purely under the Renewable Energy Sources Act (EEG) will be hard pressed to turn a profit. However, the regulatory hurdles and contractual challenges for direct supply in the form of tenant power models or power purchase agreements are currently too high even to attempt, especially for smaller EPCs and installers. The small plant segment will not be able to pick up the slack left by unbuilt medium-sized and larger commercial plants, and economical, technically mature large-scale storage systems are still a rarity with expected capacity utilizations that are too low.
Calls for abolition of the EEG are becoming increasingly loud. People are hoping for independence from political whims and what they see as wrong-headed decisions. The media celebrates the first ground-mounted systems that get by without any government-guaranteed funding, but are these utility-scale plants a blueprint for what awaits us in the post-EEG era? I'm afraid not, because as far as the broad feasibility of such concepts is concerned, we are still very much at the beginning. These are important lighthouse projects, but their significance is already dubious. On existing buildings, especially in smaller units, PV systems independent of the EEG are not yet feasible across the whole of Europe, given the current legal situation and the structures of the energy market.
Without the security of government-backstopped funding, medium to large investments will no longer be financially viable. Banks will make a wide berth around any investment in PV where the repayment of the loan will be secured solely by the creditworthiness of the customer, especially for systems to be installed on commercial buildings for which long-term use is not assured. So how might an alternative to today's EEG look? Should the future belong to tenders? Karl-Heinz Remmers recently told me that he could imagine this if accompanied by further smart measures to support the market, but he does not expect anything substantial from policymakers on this issue, even in this legislative period.
We, the renewable energy specialists and stakeholders, should contribute as many intelligent ideas and workable concepts as possible to avoid a further sustained slump in the market and hand yet another victory to those bent on preventing and delaying a rapid phase-out of coal and nuclear power. But implementing these ideas will be a long and painful process. Until then, let's stand by the EEG and not speak disparagingly of it, no matter how low the feed-in tariffs fall. The EEG has made our past possible, it secures our present and will help to ease the transition to our subsidy-free future.
Overview of the price points by technology in February 2019 including the changes over the previous month (as of February 15, 2019):
