Last year, the Japanese government announced the creation of a national feed-in tariff (FiT) for solar, joining Germany and China in creating robust public policy to drive deployment of renewable energy. The program is set to launch on July 1, 2012 and solar is regarded as one of the brightest spots in the Japanese recovery from the tsunami.
The new program will guarantee payment of 40 Yen/kWh ($0.50) for solar energy produced by projects >10kw (non-residential) and 42 Yen/kWh ($0.53) for energy from projects <10kw (residential) for twenty and ten years, respectively. Today, installed system prices in Japan far exceed global norms – 2011 system costs averaged ~$6.25/w reflecting a high cost of regulation, grid connection, land, labor and construction costs in Japan as well as a module supply largely dominated by higher priced domestic manufacturers. Solar panel prices in 2011 ranged from 150-200Yen/watt ($1.90-2.70/w) which is almost twice what installers in the U.S. pay.
Italy is faced with three very important considerations in determining how to power the nation: Very modest domestic energy resources (it imports 87% of its electricity), resulting high electricity prices and abundance of sunlight. Consequently, over the last few years the Italian government has instituted a series of policies to promote solar photovoltaic (PV) deployment. Growing from just 60MW in 2007, Italy installed almost 2GW of solar PV last year - making it the second largest market in the world.
In Germany we will likely install about 8 gigawatts (GW) of new solar systems by the end of this year, meaning Germany will double its market compared to 2009 and hence would follow the worldwide trend (the world market in 2009 was 7.5 GW and 2010 is predicted to be about 14.7 GW).
In a perfect world we would be confident in these numbers and projections, but the situation is much more complex. The following are my thoughts on factors that could impact the solar industry in Germany in the coming year.
Despite the fact that Germany has far fewer renewable energy resources than the U.S., Berlin is surging ahead of Washington in terms of green job creation. In just the last eight years, Germany has generated 300,000 jobs in the renewable energy sector (their fastest-growing in fact), while the U.S. has struggled to keep the renewable energy jobs it does have from being outsourced. Which begs the question: how did a country that has fewer sunny days per year than Seattle become such a clean energy powerhouse? In a word, policy.
Earlier this month, I attended the world’s largest exhibition for the solar industry, Intersolar Europe, which reflects the dynamic developments along the entire value added chain in the areas of photovoltaics (PV) and solar thermal technology. Under the principle of connecting solar businesses, Intersolar brings together solar industry manufacturers, suppliers, institutes and associations, many of which use this time to discuss industry trends and challenges.
The German government coalition recently made a cabinet decision to cut back support of PV solar electricity funding. Consequently, solar power plants may be promoted significantly less in the future. Despite major concessions from the industry, the reduction of the solar feed-in tariff (FiT) is considered drastic, although the actual relief for electricity customers will only be marginally affected for the time being.
It’s been busy at Applied Materials from a Government Affairs perspective. Not only did we host a delegation from the Italian government, we also hosted a delegation of six members of the European Parliament.
The delegation was led by The Hon Dr. Werner Langen and consisted primarily of members of the German CDU/CSU party.
Applied Materials chairman and CEO Mike Splinter met with the Honorable Claudio Scajola, Italian Minister of Economic Development, at the company’s research and development campus in California on Friday for a demonstration of the Applied SunFab panel, the world's largest and most powerful solar panel.
Today, the solar photovoltaics (PV) industry relies on government incentive programs to be competitive in electricity markets. The main government policy lever has been the use of feed-in tariffs (FiTs). An FiT requires utilities to interconnect with private renewable energy generators and purchase the electricity generated at a pre-determined rate.
The feed-in tariff (FiT) and net metering are both methods by which a utility company compensates a homeowner or other producer for the energy fed back into the grid. Simply put, net metering requires one meter, FiT requires two.
In net metering the meter simply “runs backwards” when a homeowner’s solar panels are producing more electricity than the property is using, sending the excess energy back through transmission lines to other energy consumers.