Once again, the future of photovoltaics in Germany is being torpedoed by the delaying tactics of the federal government; once again, the solar companies that are still in business are being put to a severe test; once again numerous jobs are being heedlessly put at risk. But why?
Will 2020 turn out to be a good year? What challenges will we still have to contend with? Will the political elite in Germany finally come to its senses? I will address these questions below, but first let's start by looking at the current module price trends.
As can easily be seen from the chart, there was a slight drop in prices across almost all module technologies, triggered by recent selloffs of manufacturer and dealer product inventories remaining after the holidays and the turn of the year. This trend will not continue, at least not in the first half of the year, however, as high demand at the beginning of the year has already led to bottlenecks in certain areas. Once again, there is a long wait to purchase, particularly for popular brands and performance classes. Manufacturers such as Trina Solar, JA Solar and Jinko Solar are currently only accepting orders for April, May or even June delivery. It therefore seems advisable for project planners and installation companies to take precautions if they do not want to be left without high-quality modules in the coming months and then have to take whatever happens to be available.
In the case of cheaper mainstream modules, there has already been a supply problem for some time due to the systematic conversion of module fabrication lines to monocrystalline cells, mostly with PERC technology. However, the price increase in this index essentially reflects a shift in the boundaries between the various classes. The lowest performance class for high-efficiency modules now starts at 300 W, with most of the products in this class available on the market offering outputs between 325 and 340 W. Crystalline modules with outputs below 275 W, on the other hand, will fall into the "low cost" class in the future; that is, in the same category as clearance items and low-output modules. In this category, last month, there were a number of large volume lots of older stock as well as used modules from plant decommissioning, resulting in a major downward price swing. Unlike the prices for the other module classes, this price point is determined exclusively by offers on the spot market.
But what is it now that massively endangers the future of the German solar industry?
Of course, it is - once again - the refusal of decision makers in Germany’s coalition government to eliminate the 52-gigawatt cap on photovoltaics in the Renewable Energies Act (EEG). Unfortunately, since the government parties promised to do away with the cap as part of Germany’s climate package, there has been no substantial movement at all, apart from tossing a few smoke bombs. There is occasional talk of lowering the limit on tenders to compensate for the elimination of the cap, and sometimes of further cuts in onshore wind power. But a deal at the expense of the already hard-hit wind industry is simply unacceptable! We need a mix of all known renewable energy sources and often derided decentralization in order to achieve supply security at reasonable costs both now and in the future.
At the moment, however, we are heading for a very dangerous situation. The 52-gigawatt cap is still in place, but fortunately the demand for PV systems is high and the order books of installation companies everywhere are solid. What this means, however, is that the statutory upper limit for PV capacity eligible for feed-in tariffs under the EEG will soon be reached in Germany - some forecasts project that this could happen as early as the second quarter. At the same time, modules are becoming increasingly scarce, and available capacities of skilled tradesmen are scarcely sufficient to handle their current project pipelines in a timely manner. I already addressed the shortage of skilled solar-industry workers in an earlier commentary. According to surveys by the installers' placement platform, www.installion.eu, many installation companies have already stopped accepting orders for the first half of 2020.
So, once again, we find ourselves in a situation with very little planning certainty. How can investors decide whether to risk their capital if they do not know whether a newly installed PV plant will receive a guaranteed feed-in tariff, if for the reasons mentioned above it cannot be installed and connected to the grid before the second half of the year? Nevertheless, many medium-sized PV systems from 100 to 750 kilowatts are still being designed and built in Germany as pure EEG-compensated systems. Due to government inaction, this segment could be all but dead, or at least close to dying out. As a result, many companies committed to this segment, which have slowly been getting back on their feet since the major clearing of the field after 2012, are likely to be dogged by intense fears over the future.
So, if the positive developments in the solar energy industry are not to be abruptly curbed again, we need to set the political course immediately and create a secure legal framework. We cannot wait indefinitely for an EEG amendment, which has not even been announced yet. We need a faster, not a slower pace of expansion if we are to avoid missing the government's climate targets. We need both a strong solar and a strong wind power industry that can offer secure jobs to more and more people. What we do not need at all, however, is an upper limit for PV in the German EEG. In this spirit - once again - an urgent appeal: the cap must go!
Overview of the price points by technology in January 2020 including the changes over the previous month (as of January 20, 2020):
