To hear our policy makers talk, the energy transition is in full swing; an unprecedented radical and rapid transformation of our energy and economic systems. So much is being reformed, so much is being accomplished - we can't possibly to do more! But reality paints a completely different picture. Even for the big energy companies, which once leaned on the brakes in the face of change, the pace of the current federal government has become sluggish. The utilities have started to set the pace for change to prepare quickly for a future where energy will be generated exclusively from renewable sources and consumed free of emissions. Climate targets or no climate targets; for the utilities, it is a matter of developing a survival strategy in a disruptive market.
At the end of 2019, we can look back on a year of public protest in the form of climate strikes and roadblocks, which began with Greta Thunberg in Sweden and have now spread across the globe. Young people are no longer standing idly by and watching as policymakers and businesspeople frivolously jeopardize their futures by insanely adhering to conventional energy sources and mobility concepts.
But how did the solar industry actually fare in this year of upheaval?
Here, I'd like to lay out some of the expectations formulated over the past 12 months in chronological order, and then shed light on the actual situation based on concrete events.
December 2018: The final months of last year were initially marked by a sharp drop in module prices, triggered on the one hand by cuts to subsidy programs announced in China, and on the other by the elimination of the minimum import price (MIP) in Europe. After five years of market regulation, which the European Commission believed could counter price dumping by Chinese manufacturers and save the domestic solar industry, the specter was finally over in September 2018. But the success of these measures was limited - scarcely any local manufacturers had survived the competition.
But then came the sudden announcement by the German government that it wanted to reduce the feed-in tariff for roof-mounted PV systems between 40 and 750 kWp by 20%, to the level of ground-mounted systems as early as January 2019 - ostensibly due to overfunding. The resulting market turmoil subsided somewhat after the cuts were finally passed in a more moderate form. Overall, the fourth quarter of 2018 and the first quarter of 2019 saw a rapid increase in installed PV capacity in Germany.
Meanwhile, the UN Climate Change Conference in Katowice, Poland, in December, kicked off with lots of hot-air and half-hearted promises, instead of finally sending a clear signal of a more rapid restructuring of economic and energy systems. But then came the ray of hope: Greta Thunberg, then only 15, from Sweden, captured the attention of the world for the first time with an impressive, very emotional speech to delegates from all over the world. We all know what followed: the community "Fridays For Future", now comprising several million activists, which has since protested weekly in countless cities around the world against inaction on climate change policy.
February 2019: Through special incentive cuts, Germany’s guaranteed feed-in tariff for the medium-sized plant segment approached a level that made purely EEG-funded plants nearly uneconomical. Regulatory hurdles and contractual challenges for direct supply agreements in the form of PPAs were formidable with the result that only a few players in the large-scale plant segment dared to address the issue at all. This improved somewhat at the end of 2019, when contractual arrangements were standardized and more and more unsubsidized plants were built in Germany.
March 2019: Module manufacturer Hanwha Q-Cells filed lawsuits against three of its competitors; namely REC Group, JinkoSolar and Longi Solar, on several continents for alleged infringements of existing patents on their cell technologies. Q-Cells was certainly a pioneer in the use of PERC technology, but the counterparties rejected the accusation out of hand and insisted on that they had developed this technology themselves and were using it lawfully. We now know that the patent lawsuit has not yet been decided, but neither is the outlook very promising. An interim report on the patent review in the U.S. has confirmed non-infringement of the most important of the patents under discussion.
April 2019: Since the beginning of the year, schoolchildren and college students around the world had been taking to the streets on Fridays to protest the inaction of the political establishment, or rather the whole generation of their parents and grandparents. Young people no longer wanted to accept that their future – or, more precisely, their chance of a decent life on this planet was being endangered in such a frivolous way. Not only was this frivolous, but also ignorant, since the facts about the causes and effects of the progressive destruction of the environment have been known for decades. Yet, apart from declarations of intent, nothing decisive has been set in motion in the right direction. Carbon emissions and the resulting rise in atmospheric temperatures, the littering of the world's oceans, the extinction of species - everything is still progressing unchecked, and urgently needed steps are either not taken at all or not sufficiently.
Although the climate package presented by the Grand Coalition in Germany on 20 September seems to have been influenced by the protests - or "climate strikes" as they are called - and the change in public opinion on the subject of climate protection, the measures it contains are far from ambitious or effective enough for many opposition politicians, above all the Greens in the Bundestag, scientists, and especially young people on the streets. With a starting price in 2021 of only €10 per metric ton, the carbon tax rates seem laughably low - at least €150 to €180 euros has been called for. Public surveys have shown, for example, that the resulting increase in the cost of flights or car journeys would not sufficient to induce anyone to change their behavior.
(Part 2, including an outlook to 2020 will follow next month.)
Overview of the price points by technology in November 2019 including the changes over the previous month (as of November 18, 2019):
