Photovoltaic Barometer By EurObserv?ER

The European Union has the highest photovoltaic plant capacity, with almost 5.5 GWp installed in 2009. First estimates of the main global photovoltaic markets put additional capacity at around 7 GWp, equivalent to 16.6% growth over 2008 (6 GWp).

However this is a provisional figure, which could be revised upwards in the coming months, in the same way the 2008 installation level is much higher than we predicted in our previous barometer (Systèmes Solaires, Le Journal du Photovoltaïque n° 1).

The highest consolidation was in Germany where for the first time the Federal Network Agency (Bundesnetzagentur) published an accurate log of photovoltaic system connections that were assisted by the renewable energies law (EEG).

However world growth recorded for 2009 will fall short of its 2008 performance, when the market more than doubled its 2007 level. America and Japan are the biggest markets outside the European Union. The Japanese market will rise from 225.3 to 484 MWp and the US market from 338 to 475 MWp, making them the number three and number four world markets respectively, if we compare the 2008 installation data from the IEA PVPS national experts with the recent EPIA (European Photovoltaic Industry Association) data.

The Chinese market is also full of promise with CREIA (the Chinese Renewable Energies Industry Association) putting this market at 215 MWp in 2009, reckoning that it should rise to at least 500 MWp in 2010, and possibly pass the 1 GWp mark.

The main reason for the rise in installation volume over the past two years is the higher profitability of high-capacity projects. Ground-based plants with capacities running into the tens of megawatts are starting to appear. The largest installation in Europe for the time being is the 60-MWp solar farm built at Olmedilla, Spain in 2008, followed by two German installations –at Strasskirchen (54 MWp) and Lieberose (53 MWp), commissioned in 2009.

The American SunEdison group announced last March that it would be constructing a 72-MWp plant in Rovigo province, Veneto (North-eastern Italy) starting early in the 2nd half of 2010, that will be fully operational by the end of the year. The scale of this plant contrasts sharply with the biggest roof-integrated photovoltaic system with just 11.8 MWp of capacity installed in 2008 on General Motors’ Zaragoza plant in Spain.

The off-grid application market is also gaining ground, but is harder to monitor due to a lack of comprehensive surveys. The market is increasingly turning towards non-domestic applications such as telecommunications infrastructure, public lighting, telephone and cell phone chargers, motorway terminals, parking meters, and so on).

The collapse of the Spanish market only slowed down the European Union market’s growth. First available estimates put 2009 EU installed capacity at up to 5 485.1 MWp which is 8.1% higher than its 2008 level (tJbQe 1). If confirmed that would bring accumulated capacity up to about 16 GWp (15,861.2 MWp to be precise) (tJbQe 2).

Mean per capita capacity now stands at 31.6 Wp as against 20.8 Wp in 2008 (tJbQe 3). For many EU countries (Italy, Czech Republic, Belgium) that have consolidated the future development of the European sector, 2009 was a good year. Europe remained the main destination for the world’s photovoltaic market in 2009 as it concentrated 78.1% of the installation volume (with the global market put at 7 GWp).

Consequently the European Union is the main solar electricity producing zone, generating around 13.5 TWh in 2009, as against 7.4 TWh in 2008.

Germany leadinG by a lonG chalk

Calculating the installation volume of the German market accurately is always a hard task as the provisional data published at the beginning of the year is generally consolidated upwards during the course of the year if not at the beginning of the following year.

Early in April 2010 the Federal Network Agency worked out the additional “on-grid” capacity installed in Germany in 2009 at 3,806.3 MWp, raising the accumulated capacity connected to the grid to almost 10 GWp (9,785.3 MWp). Thus the annual capacity of connections to the grid continued growing for another year at a runaway rate (+ 843 MWp in 2006, + 1 271 MWp in 2007 and + 1 809 MWp in 2008).

In doing so, Germany has confirmed its world solar electricity producing top rank slot with production of 6.2 TWh (4.4 TWh in 2008), up 40% on 2008, according to the BMU (German Environment Ministry). For the first time, solar accounts for 1% of the country’s electricity
supply and this percentage could double by 2011.

The prime reason for the 2009 capacity installation level is the sharp drop in the cost of systems during the year. According to BSW Solar (the German Solar Industry Association), the average price of roof-integrated systems up to 100 kWp capacity dropped 25.6% from €4,216/kWp in the fourth quarter of 2008 to €3,135/kWp in the same quarter in 2009.

Looking back to the second quarter of 2006 when the systems sold for €5,000/kWp, this drop is as much as 37.7%. For the time being this price cut more than compensates for the sliding scale set in the current feed-in tariff scheme, fixed at 9 and 11% on 1st January 2010. This anomaly will be corrected during the year by an increase in the sliding scale.

Discussions are now under way between the government and the industry’s players. The government has already proposed to cut the feed-in tariff by an additional 16% from 1st July for roof-integrated panels and by 15% for free-standing panels. The buyback price would be staggered between €0.329/kWh and €0.253/kWh depending on panel type and capacity.

However, these proposals are likely to change, as no final decision had been made by the end of March. This is a highly controversial subject in Germany as its industry is currently hit by competitiveness issues and needs time to restructure and reduce costs. A too big reduction in the feed-in tariff could land many firms in difficulty and jeopardise many jobs. Most companies have postponed investments or even announced to partially shift production to Asia.

Italy, the World number tWo market in 2009

Italy is the third European Union country to pass the symbolic 1000 MWp installed mark, following Germany and Spain. According to ENEA (the Italian National Agency for New Technologies, Energy and Sustainable Economic Development), the country connected 574 MWp of additional capacity to the grid in 2009, bringing total connected capacity to 1 019 MWp (excluding 13.4 MWp of off-grid applications).

Italy owes this good year to the full implementation of its "Nuovo Conto Energia" incentive programme which validates a feed-in tariff system for capacity capped at 1 200 MWp (not including the 165 MWp installed under the previous "Primo Conto Energia" programme). The programme will shortly end, almost certainly before the end of the first half of 2010. By the end of March the government had yet to unveil the final version of the new incentive scheme. The first drafts published early in February demonstrate its strong determination to differentiate the tariffs – 42 in all – that vary in line with system capacity and type.

The new incentive system will also make allowance for the drop in the price of photovoltaic modules that has dramatically reduced the investment costs of high-capacity plants. This new legislation provides for increasing standard tariffs whenever measures are taken to increase the building energy performance level (up to an additional €0.12/kWh) or if the ground-based plants are constructed on polluted or landfill sites (up to an additional €0.8/kWh).

One of the latest proposals suggests that the standard feed-in tariff for a 3-kWp plant perfectly integrated into a building could be €0.57/kWh (for 20 years) up to the end of 2011, not excluding the bonus in the event of self-consumption on site. The basic remuneration should be much lower for plants with over 1 MWp of capacity. The current tariff of €0.346/kWh should drop three times in 2011, to €0.313/kWh and then to €0.264/kWh. These tariffs will then drop by 6% per annum in 2012 and 2013. While we await the adoption of the new programme in its finalised form, this should be taken as guideline data.

Over 400 MWp in the Czech Republic

According to the Czech Ministry of Industry and Trade, the Republic installed 411 MWp in a single year. This installation rate catapults the country to third place in terms of newly installed capacity (7th place in 2008) and fourth place in terms of accumulated capacity (8th place in 2008). As there is a good chance that over 1 GWp will be installed by the end of this year, the growth prospects for 2010 are even more encouraging.

However this rapid rise is offset by the fact that it is based on an incentive system that had not anticipated that high-capacity plant installation costs would plummet by almost 40% in 2009. This is because the Czech system makes almost no distinction for capacity in its incentive levels.

Investors can choose between a conventional feed-in tariff system and an environmental bonus added to the market price. In the latter case, the producer sells his electricity to a trader who sells it on the wholesale market. Every year the Energy Regulatory Office (ERU) defines the tariff and bonus a whole year in advance, the new prices cannot be less than 95% of the previous year’s rate. For 2010, the regulator naturally reduced the feed-in tariff by 5%.

Therefore the tariff is reduced to CZK 12.25/kWh (€0.482/kWh) for systems up to 30 kWp and the environmental bonus to CZK 11.28/kWh (€0.443/kWh). The feed-in tariff for systems with a capacity in excess of 30 kWp is set at CZK 12.15/kWh (€0.478/kWh) and the environmental bonus at CZK 11.18/kWh (€0.44/kWh).

The government intends to slash the solar electricity remuneration terms starting on 1st January 2011. Parliament has already tabled three proposals for debate. The first entails reducing the feed-in tariff by 25% per annum. The second, which is harder to apply, consists of authorising the regulator to recalculate the feed-in tariff when the payback time is less than 11 years, to raise it to 15 years. The third proposal would introduce restrictions for plants with over 20 MWp of capacity starting from 1st May 2011.

Belgium bolsters its ambitions

Once again Belgium is in the spotlight. According to APERE’s first estimates, Belgium installed 292.1 MWp in 2009 of which 251 MWp is spread over the Flemish region; 38 MWp over the Walloon region… and 3.1 MWp over the Brussels Capital region. The installation figure for the Flemish region was supplied by BelPV (the Belgian photovoltaic companies’ federation). It should be consolidated shortly by the VREG (Flemish Regulation Entity for the Electricity and Gas market).

The installation data for the Walloon and Brussels Capital regions come from CWAPE (the Walloon Commission for Energy) and Brugel (Brussels gas electricity) respectively. This capacity would raise the total installed capacity in Belgium to 363 MWp, taking it to fifth place in the European Union.

The reason for the sharp rise in installed capacity in the Flemish region is that it operates a particularly attractive regional green certificate system which offers a minimum price of 450 euros (or €0.0045/kWh) for a photovoltaic green certificate (equivalent to a production of 1 MWh) regardless of installation capacity or type. This system has naturally been a boon to high-capacity installations that have gained the most from the drop in the price of modules. An adjustment has set the price of a photovoltaic green certificate at 350 euros from 1st January 2010.

France trailing behind the leaders

According to SOeS (the Observation and Statistics Office), 185.2 MWp were connected to the grid during the course of 2009 (including 46.7 MWp in the Overseas Departments), increasing the photovoltaic base more than threefold since the end of 2008.

The accumulated capacity connected in France rose at the end of 2009 to 268.2 MWp, 200.7 MWp thereof in mainland France and 67.5 MWp overseas. Part of the reason why this installation level is lower than that of the other leading countries in the EU market, is the French government’s decision not to promote the development of ground-based plants, but to set a relatively low feed-in tariff. The government preferred to call a tender in 2009 to get a better grip on the profitability of this type of installation.

The target capacity is 300 MWp spread over 27 phases and over 4 geographical zones with 4 different sunshine levels. By the application expiry date, 25 January, 119 applications had been submitted for an accumulated capacity of 867 MWp. However the installed capacity level seems low when compared against connection applications.

This is because according to the SOeS, the capacity of installations awaiting connection as of 31 December 2009 had risen to 3 438 MWp for 58 544 applications submitted (2 789 MWp in mainland France and 650 MWp overseas), as against 1 886 MWp on 30 June of the same year for 24 470 applications.

The massive influx of connection applications at the end of the year compounded by the dearth of engineers to connect the installations to the national grid have caused the long lead times. The rush to submit applications prompted the government to change the solar electricity purchase terms by adopting a new order on 12 January, which like the previous order favours building-integrated installations this time distinguishing three types of tarification depending on the type of building, its usage (housing, health, teaching and others) and the type of integration.

A higher "integration to the frame premium" is awarded for systems installed on the roof of a closed building (all side walls closed) replacing the building elements that provide the roofing or closure (side wall), as well as the waterproofing function. A lower "simplified integration premium" is also allocated for systems installed on open-sided buildings, if the system replaces building elements that provide the walls and roofing as well as the waterproofing function.

A tariff of €0.58/kWh is allocated to installations that benefit from the integration premium on a building whose primary use is housing, teaching or health care. A tariff of €0.50/kWh is allocated to installations that have an integration premium on other buildings, while a tariff of €0.42/kWh applies to buildings awarded the simplified integration premium.

The applicable mainland tariff is €0.314/kWh for installations of 250 kWp and less, and €0.314 to €0.377/kWh for installations of over 250 kWp, applying a sunshine exposure index set for each department. The tariff applicable in Corsica and the French overseas territories is €0.40/kWh. A 10% degression will also be applied every year starting from 1st January 2012.

Silicon, wafer and polycrystalline module prices dropped by unprecedented levels in 2009. According to the American consultancy, iSuppli, the price of crystalline modules fell by an average of 37.8%, wafers by 50% and silicon by 80% and it predicts further, but much smaller price drops in 2010.

There are a number of reasons for this dramatic price realignment. This huge drop partly makes up for the slender reduction in module prices between 2006 and 2008, despite the industry’s considerable gains in competitive strength achieved through economies of scale and technological innovations.

The reason why prices were kept at high levels is partly because of silicon scarcity and particularly because demand continually outpaced supply. The manufacturers (especially those who had secured their silicon supplies) exploited this situation to maintain high profit margins on their investments while significantly increasing their manufacturing capacities.

At the same time, the new high pricing level kept up over several years enabled a number of thin film technologies to return to centre-stage as they were put through their paces to prune manufacturing costs radically.

The high prices also opened up opportunities for Asian manufacturers to accelerate their industrial and technological expansion (the Chinese in particular). For a number of years the Chinese market players have invested massively in new manufacturing capacity throughout the photovoltaic industry value chain. The biggest concerns have relied on leading-edge technologies and processes (primarily developed in Europe and Australia) that have enabled them to offer good quality modules at extremely keen prices.

The overproduction era

For the first time the photovoltaic industry has entered an era of overproduction with a huge increase in module production (see beQoV), set off by silicon flooding the market (175 000 tonnes expected in 2010 as against 70 000 in 2008. The shock is all the sharper because world market growth was knocked sideways in 2009 by the collapse of its leading market, Spain, in 2009.

As long as prices outstrip production costs, even a slash in the price of modules, will do the industry no harm. The situation would be much more of a problem if a number of Asian players were to decide to dump their goods on the market by undercutting real manufacturing cost prices – which is not the case as it stands.

The credibility of the photovoltaic industry has been boosted by lowering of prices as regards its manufacturing cost-cutting capacity. It will enable the technology to strengthen its foothold in the major electricity-consuming countries (United States, China, Japan, South Korea, Italy, France, etc.), as wind power has done, reducing its current dependency on the German market.

As the German producers could soon reach saturation point, this dependency is beginning to look dangerous for the global industry The situation will force the global photovoltaic industry to restructure and benefit those players who are best armed to reduce costs.

The european industry

With its back to the Wall Against this background, the challenge will be harder for some European actors as they cope with the reductions in aid with manufacturing in their own markets. European industrialists, who succeed in consolidating their technological advance by significantly reducing manufacturing costs, should be able to weather the storm by accepting to relocate part of their production and thus take part in the future growth of the global market.

One of the keys to the survival of the European industry will be to accentuate the development of thin film technologies, where the greatest potential for lean manufacturing lies. Many European producers are currently developing new technologies and processes that could overturn crystalline silicon’s stronghold.

The European industry is going through a bad phase and is continuing to lose market shares. The German photovoltaic industry has not really capitalised on the global market growth in 2009 or that of its own domestic market for that matter.

The Spanish market suffered a great blow from the collapse of its national market in a bad year, and as if to symbolise this, BP Solar, which has been in the country for over 25 years, is closing its Madrid plants and chosen to concentrate its manufacturing in the group’s most competitive plants.

Over 10 GWp produced in the World?

The sharp drop in photovoltaic system prices demonstrates that we have clearly entered an era of overproduction, although its scale has yet to be gauged. According to Solarbuzz, global production of solar cells came to a total of 9.34 GWp in 2009, as against 6.85 GWp in 2008. Apparently thin film solar cell production accounts for 18% of all production and the Chinese and Taiwanese manufacturers now hold a 49% market share. =AotoD IDterD?tBoD?C’s estimates, also published last March put global cell production at 12.3 GWp in 2009 as against its figure of 7.9 GWp in 2008 (MrJpN 1), which is up 56%. According to the magazine, polycrystalline technology accounts for 46.9% of total production (47.7% in 2008), monocrystalline for 34.1% (38.3% in 2008), thin films (CdTe, CIS, a-Si/microcrystalline and others) for 17.7% (12.5% in 2008) and silicon ribbon for 1.4% (1.5% in 2008).

According to their survey, the main cell producing countries are China with 38% (32.7% in 2008), ahead of Germany with 15% (18.5% in 2008), Japan with 12.5% (16% in 2008), Taiwan with 12.2% (11.6% in 2008) and Malaysia with 6.4% (2.1% in 2008) (MrJpN 2). The main manufacturing regions are Asia with 76.1% (68.3% in 2008), Europe with 19.4% (25.5% in 2008), America with 4.4% (5.5% in 2008) and Africa and the Middle-East with 0.1% (0.2% in 2008). Australasian manufacturing is no longer listed in 2009 (0.5% in 2008). =AotoD IDterD?tBoD?C’s estimate gives more cause for concern for the industry than the Solarbuzz estimate because it indicates that much more of global production than intended is currently held in stock awaiting purchasers to turn up.

Part of the difference between the installed capacity figures and manufacturing figures may also be explained by the time lag between selling a module and its connection to the grid. This is because the capacity of the modules sold will not be taken into account in the national installation statistics if a plant installation is underway, or if the plant is installed but awaiting connection to the grid. The increase in the size of the market evidently increases the gap between the number of modules actually connected. Lastly, part of the installed capacity may escape national observers and thus be left out of the figures.

News from the main manufacturers

The photovoltaic cell manufacturing industry is highly diversified with players of different sizes with manufacturing capacities ranging from over one GWp down to a few MWp. survey covered the production of 170 manufacturers. The top ten account for less than half of worldwide production (around 46%). The ranking of the main manufacturers in terms of capacity of cells produced, has changed over the last 12 months although, the same five nationalities monopolise the top 10 slots as in 2009 (the United States, China, Japan, Germany and Taiwan).

Yet again leadership has evaded Asia. American manufacturer First Solar goes to the top of the world ranks for the first time with over
one GWp of production (tJbQe 4) and its thin film CdTe technology achieved production costs at under one dollar per Wp. This is also the first time that a manufacturer specialising exclusively in thin films takes the lead.

Another American player, Sunpower, whose manufacturing facilities are located in the Philippines, is in 9th place. This ranking confirms the build-up of Chinese manufacturing capacity with 4 concerns in the top ten (Suntech –2nd, Yingly –5th, Ja Solar –6th and Trina Solar –8th). As Sanyo has dropped out of the ranks, Japan only has two flag bearers left (Sharp –3rd and Kyocera – 7th). Taiwan has one representative with Gintech (10th) and Germany one with Q-Cells (4th).

First Solar no. 1

First Solar is akin to the black sheep of the photovoltaic industry. It has demonstrated that cadmium telluride has a glorious future ahead of it as opposed to crystalline silicon by developing against the tide of the main module manufacturers. Opting for this choice now enables it to run for the top PV cell producer slot, by becoming the first world manufacturer to pass the one GWp manufactured mark in a single year. The manufacturer’s declared production figure of 1 112.6 MWp in 2009, more than doubles its 2008 output (504 MWp). Of this, 69.5% was produced in Malaysia, 17.5% in Germany and 13% in the United States. In the fourth quarter, the industrialist announced the production cost of its modules at $0.84/Wp for a 11.1% module efficiency, which is beyond many of its competitors’ wildest dreams.

Having boosted its manufacturing capacities in 2009 (from 716 to 1 228 MWp), First Solar is intending to take a breather in 2010 at 1 282 MWp (854 MWp in Malaysia, 214 MWp in Germany and 214 MWp in Ohio). New investments will then be made in Malaysia (a further 428 MWp) then in France (a further 107 MWp), increasing capacity to 1 816 MWp.

Construction work should start in the second half of the year on the French factory at Blanquefort near Bordeaux. This plant will be co-financed by EDF Énergies Nouvelles which will benefit from all the production sold for the first decade’s operation.

First Solar’s revenues for 2009 were 2 066.2 million dollars as against 1 246.3 million dollars generated in 2008. Its net income increased to 640.1 million dollars in 2009 as against 348.3 million dollars in 2008. The American manufacturer is forecasting sales revenues of between 2.7 and 2.9 billion dollars and is intending to earmark 500 to 550 million dollars in capital expenditure, largely to finance its expansion in Malaysia.

Suntech or high tech "made in China"

The Chinese industrialist is sitting comfortably in second place in the world rankings with output of 704 MWp in 2009, as against 495 MWp in 2008. In 2009, 41% of its production was shipped to Germany, 33% to the rest of Europe, 12% to Asia, 10% to North America, and 4% to the rest of the world. The company expects its sales to increase by 77.6% in 2010, (namely 1 250 MWp).

According to Suntech, 37% of its modules will be shipped to Germany, 31% to the rest of Europe, 16% to Asia, 12% to North America and 4% to the rest of the world. This output level should let it sail past the other manufacturers as of this year. Its manufacturing capacity should rise to 1.4 GWp by the middle of the year as against 1.1 GWp at the end of 2009. Of this capacity 450 MWp will be devoted to its high yield Pluto technology.

The company, which has 5 manufacturing sites – four in China (Wuxi, Luoyang, Qinghai and Shanghai) and one in Japan (Nagano), has decided to construct a new module manufacturing plant in the United States, in the city of Goodyear, Arizona. This plant will have an initial manufacturing capacity of 30 MWp that may be extended to 120 MWp. It should allow Suntech to strengthen its market positioning in North America.

Suntech has proven that a Chinese firm is technically capable of manufacturing high-yield cells. The manufacturer has announced that it has increased the yield rate of its cells yet again by using 19% Pluto technology for its monocrystalline cells and 17% for its polycrystalline cells. It is planning to ship 30 MWp of these cells over the first half of the year and 150 MWp in the second half of the year.

This technology was developed from the outset by Suntech in conjunction with the University of New South Wales in Sydney, Australia.
Turning to finance, the reason for the company’s lower sales figures (1 693.3 million dollars in 2009 as against 1 923.5 million dollars in 2008) is the drop in cell sales prices. Net income rose slightly to 91.5 million dollars (88.2 million dollars in 2008).

Sharp, still in the running

Sharp, together with Kyocera, is one of the few historical actors that have been able to stay up in the top producer ranks. According to
Photon International, the Japanese leader moved up one place in the world ranks with output of 595 MWp (473 MWp in 2008). Although Sharp’s manufacturing is primarily geared to mono and polycrystalline cells (501 MWp produced in 2009, a 15% increase), the Japanese manufacturer has developed its thin film business further (94 MWp, a 147% increase).

Sharp’s thin film technology consists of a triple-junction made up of 2 amorphous silicon films and a microcrystalline silicon film. Sharp is guarded about disclosing its manufacturing capacities. The latest announcement was made in March 2008 when the manufacturer announced it would be opening a new thin film manufacturing plant at Sakai in March 2010, with an initial capacity of 480 MWp, which should rise to 1 GWp over the year.

More recently Sharp announced that it had entered an agreement with Italian power company Enel Green Power and STMicroelectronics (STM) to set up a common subsidiary to manufacture thin film cells. Construction work on the factory should start at the beginning of 2011 in STM’s current Italian plant at Catania in Sicily. Its initial production capacity will be 160 MWp per year, which could be increased to 460 MWp.

Q-Cells “reloaded”

Q-Cells was the top world manufacturer in 2008 but only increased its output by 5 MWp to 586 MWp, hence it tumbled to fourth place in the world ranks, just behind Sharp. This production figure breaks down into 511 MWp from its main German plant at Thalheim, and also includes 20 MWp from its Malaysian plant, 14 MWp from Solibro, a German subsidiary specialised in CIGS (Copper indium gallium diselenide) thin film technology and 1 MWp from Calyxo GmbH, its other German subsidiary specialised in CdTe technology.

The year was very hard for the leading German manufacturer which was badly hit by the slump in module prices. In 2009 Q-Cells recorded a loss of 1.36 billion euros, while its sales contracted by 35% to 801 million euros. Q-Cells embarked on a recovery plan (dubbed “Q-Cells reloaded”) combined with the strategic reorientation of its businesses.

The company primarily envisages closing four production lines in its Thalheim plant that corresponds to a capacity of 360 MWp (of the plant’s 760-MWp capacity). It is also planning to invest a sum of 150 to 200 million euros, primarily to develop the capacities of its new manufacturing plant in Malaysia, which should be producing 600 MWp by the end of 2010. The group’s new boss, Nedim Cen, announced that the restructuring would go ahead and 500 of its 2 600 jobs were shed in 2009.

Q-Cells also announced that it had resolved its dispute with its Chinese wafer supplier LDK Solar and has decided to continue working
together. The two companies have agreed to relax the product delivery schedule and introduce a flexible price schemes based on market price. The prices previously negotiated with LDK Solar had risen much higher than the market price, harming the German manufacturer’s competitiveness even more. The company is banking on sales figures of 1 to 1.2 billion euros for 2010, and a significant improvement in its operating results.

SolarWorld, the new European billionaire

Not all the European actors are in difficulty. Some of them, like SolarWorld, are pulling through. Although the German manufacturer is not one of the top ten photovoltaic cell producers, it is still a leader on a world level. The company has gone down a different route, having manufacturing capacities all along the value chain (from silicon wafers to modules). Thus it had a wafer production capacity of 900 MWp, 450 MWp of cells and 500 MWp of modules at the end of 2009.

The company exceeded its sales targets and achieved an overall satisfactory result by harnessing its manufacturing capacities to the full despite the tight situation that characterised 2009. In 2009 SolarWorld AG’s sales figure was 1 012.6 million euros as against 900.3
million in 2008, rising by 12.5%. Earnings before interest and taxes were marked by a sharp drop in module prices, shrinking from 263.3 million euros in 2008 to 151.8 million euros, with a net annual profit of 91.4 million euros in 2009 as against 135.2 million euros in 2008.

The company issued a bond for the sum of 400 million euros in January, to cover its short- and medium-term growth targets, thereby increasing its cash assets to 900 million euros. The company is planning to use this capital base to increase its wafer and module manufacturing capacities by the end of the year to 1 250 MWp, by concentrating production at its Freiberg (Germany) and Hillsboro (United States) sites.

As SolarWorld prefers to increase demand from its cell suppliers, its cell manufacturing capacities will increase less rapidly to 750 MWp. The company also plans to rely on its own raw materials production. In March 2010, SolarWorld announced the setting up of an agreement for the creation of a common subsidiary with Qatar Solar Technologies and Qatar Foundation. All in all 500 million dollars should be invested in the construction of a silicon production site in Qatar.

2010, a record-breaking year

Everybody agrees that European market growth will again be at the heart of world growth in 2010. The question is how far the European Union countries can go, in the knowledge that this growth will not be fettered by the availability of modules. All eyes will be trained on the German market and its capacity to absorb a major share of world production yet again.

The more penalizing feed-in tariff sliding scale will not come into force before July, which if what happened in Spain is anything to go by, should lead to a rush for installations. Another market-friendly element is that the generalised overproduction should once again lead manufacturers to reduce their profit margins, even if this reduction will be much smaller than in 2009. European markets have shown that they are sensitive to this price elasticity and so a drop in prices will by force enhance the market.

A recent Barclays Bank study revealed its estimates of the German market 2010 as being 35% up at 4 093 MWp. It could turn out to be
much higher, closer to 4 500 MWp, or even 5 000 MWp. Elsewhere in Europe, new installation records are awaited in the Czech Republic (1 150 MWp more expected according to the Ministry of Industry and Trade), Italy (1 000 MWp more according to ENEA) and France (500 MWp more according to Observ’ER).

There are some doubts about the capacity approved by the Spanish authorities (theoretically capped at 502 MWp in 2010) and Belgium’s capacities to maintain its high installation level (200 MWp more expected according to EDORA).

EurObserv’ER has revised its 2010 market forecast quite dramatically in the light of these new estimates. Our new estimate is totalised at 23,700 MWp at the end of 2010 (MrJpN 3), which is almost eight times more than the 1997 European Commission White Paper targets for renewable energies.

It is true that every year the solar electricity market dynamics surprise even the sector’s professionals. The proven capacity of manufacturers to reduce their production costs, while achieving increasingly high yields, opens up new horizons to the sector and a much sunnier outlook for future generations.