"I'm sorry, but I have to admit: there are things in the world that are, unfortunately, awesome." (originally: "Es tut mir Leid doch ich muss leider gestehen: es gibt Dinge auf der Welt die sind – leider geil.") sings the German hip-hop group Deichkind aptly and self-critically. The same can be said, in my view at least, about the current downward spiral of module and cell prices. Of course, it is clear to all of us that some companies - especially module producers - will again fall by the wayside. We wholesalers will also have to contend with the uncertainty of potential customers who cannot decide whether they should buy now or rather in a few weeks or even months. But if we are honest and serious about restructuring the global energy system then falling prices are, unfortunately, awesome.
What is behind the continuing downward trend despite a general increase in demand? First and foremost, it is the somewhat surprising announcement made by the Chinese government, in May, to make major cuts to subsidies and incentive programs for the further expansion of renewables. Analysts expect PV installation figures in China to fall by 20 to 30 gigawatts compared with last year, which is quite dramatic given the rapid increase in production capacities, particularly in Asia. The reasons given for capping renewables development include the high costs of the enormous build-out in recent years, as well as problems with grid expansion and the connection of new plants. It may be that the decline in China will only have a minor impact on global demand over the long term, being offset by other rapidly growing markets, but the pressure on photovoltaic manufacturers is already mounting due to the overcapacity already present in the market.
Delays in project implementation on the one hand, and uncertainty about future module price developments on the other, have led to large-scale cancellations by a number of major manufacturers in recent weeks. Some of the key players in the industry simply no longer feel bound by their perhaps too loosely worded purchase agreements, which has become a serious problem for suppliers. So why are they doing this? Because they can! In times of oversupply the customer is suddenly king again and takes revenge for having been left in the lurch a few times too often in the past. Gone are the days when module manufacturers could pull out of agreements with flimsy arguments to earn a few cents more in another market, and still manage to keep their buyers. Now the tables are turned! Bad for companies, good for market prices, good for customers – unfortunately, awesome.
A new round in the seemingly never-ending hog cycle has begun. Following a shortage of inexpensive modules due to artificial bottlenecks caused by market regulations in the USA and Europe and the resulting stagnation in prices, we are now facing a glut of modules which will inevitably cause prices to fall. What seemed cheap yesterday is already too expensive for today's market. Of course, this causes buyers of PV systems to hesitate, and stocks which currently have to be devalued almost weekly, are growing. "I love this business - it never gets boring," a wholesaler friend recently said to me, not without a touch of cynicism. Planning security? Not a chance! But the old hands of the PV industry have long since come to terms with this. The newcomers, on the other hand, are wide-eyed and wonder why their business models, which have proven so successful in other sectors, do not seem to gain traction in the solar industry. At best, they can quickly adapt to the volatile market situation. In most cases, however, this ends in bankruptcy or withdrawal from the market - and not without serious financial losses.
Does survival in the solar industry or in the entire energy sector really have to be so unpleasant and unpredictable; and if so, why? As long as the solar business - worldwide, by the way - continues to be at the mercy of policies driven by the purely economic interests of the old and large industrial sectors, we will remain a pawn of the forces that cannot be influenced by the environment-conscious citizens and voters of supposedly democratic governments. At the banquet of high politics the stakeholders in the renewable energy industry do not even have a seat at the children's table yet; at best they are permitted to lurk at the back door for a few leftovers to be tossed their way once the business dinner is finished. Good for the economy, bad for the citizen, bad for the environment – unfortunately, not very awesome.
In his recently published outlook for the next ten years, Kalle Remmers expects, "... for Germany [...] little political will to implement core projects that serve the further development of our society. In a market as highly regulated as the energy industry, innovations are doomed to failure due to outdated rules." I can only fully endorse that view! However, ever more rays of hope are coming from Brussels, where the influence of the industry lobby on EU policy is perhaps not quite as strong as on politics at the national level. Following the complaint I raised in my last commentary about excessive NO2 pollution in cities, binding targets have now been formulated for the Europe-wide expansion of renewable energies - not to 35 percent, as requested by parliament, but to 32 percent by 2030. Germany has shown itself to be an obstacle to meeting the targets, according to informed sources.
What has become of this country, which only a few years ago emerged on the international stage as an absolute pioneer in environmental issues and as the architect of the Paris climate protection agreement? Soon the requirements will be coming from Brussels and must then be transposed into national law by the EU member states within 18 months. Failure to do so could result in new lawsuits and severe penalties. Bad for Merkel, bad for Altmaier, bad for Scholz - but unfortunately, awesome.
Overview by technology of different price points in June 2018, including the changes over the previous month:
