Comparing the US PV and German Solar Market

1. Solar PV Market
Germany
versus
USA
3rd Solar Convention Las Vegas
October 7th 2010
Volkmar Kunerth, MBA
President, Solar Partners International

2. Agenda
Solar PV Market
German PV market
Germany Conclusions
Outlook
US PV market
U.S.A. Conclusions
Outlook
German versus US market
Economics Grid parity
Implications
Bureaucracy
Challenges Regulatory Environment
Federal Resources
Global Solar Outlook
Future Optimistic signs and challenges
Questions
Solar Partners International

3. Why Photovoltaic?
-PV can be used anywhere
-PV can be used in any size
-PV is scalable
-Grid connected and OFF-Grid possible
-Only one initial investment
-PV largest investment
-PV has the highest cost reduction potential
-PV reduces CO2 production and helps fight
global warming
Solar Partners International

4. German PV Market
-Installations until 2009: Over 10 GWp
-Predicted Installation in 2010 alone: 10 GWp
-150,000 people employed in the industry
-PV is the largest source of investment: $29 billion
-80% of installations are roof installations
-Dramatic growth since the introduction of the Renewable Energy Sources
Act (EEG) in 2000
-EEG guarantees operators a feed-in tariff (FIT) fixed for 20 years and a
purchase guarantee for the electricity produced
--> investing in a solar electricity system is a very secure investment for 20
years

5. German PV Market

6. German PV Market
- German Feed in tariff laws (FIT)
- “A feed-in tariff (FIT) is an energy supply policy that
offers a guarantee of payments to renewable energy
developers for the electricity they produce.”
- Under most FIT policies, the government establishes a legal obligation
for electric utilities to purchase all of
the electricity produced by qualifying developers.

7. German PV Market

8. German PV Market

9. German PV Market
Source: www.recurrentenergy.com

10. German PV market
Advantages
Leads to rapid deployment of Disadvantages
renewable energy in Germany
Cost for German electricity
customer until 2008: $48 Billion
Reduced investment risk: makes
it easier to finance projects (If calculated for 2009 and 2010
we reach $100 Billion!)
Faster reduction of CO2 output
Prices are set too high, utilities
and ratepayers are stuck with
Employment for 150,000+ people
those costs for the duration of the
contracts (20 years).
Innovation engine
The electric grid can only take so
much alternative energy due to
high fluctuations in input.

11. German PV Market
Conclusions:
-> FIT was a very suitable model to jump-start the German PV industry
-> FIT not sustainable business model in the long run because it is too
expensive
-> Future financial burden for German customers
-> Current grid is limited: Smart grid technologies necessary in the
future for further growth
-> Intelligent storage technologies needed for off-grid installations

12. German PV Market
-Outlook:
-After the January FIT decrease, the German parliament finally voted in an additional
decrease last July
-16% decrease for rooftops, 11% for reconversion areas, 15% for the other installations
-No more feed-in tariff for PV installations on agricultural land; the new law is expected
to considerably affect the market in the coming years.
-Market could stabilize in the 3 to 5 GW annual installations level by 2014, if the present
support scheme is maintained, with
adequate FIT decreases in line with the expected price decrease.

13. US PV Market
-USA has started to become one of the top PV markets
-477 MW installed in 2009; 40 MW of which are coming from off-
grid installations
-State of California leading the pace in 2009
-2010 could see the market rise from 600 MW to a possible 1 GW of
new installations.
-By 2014, the market could reach 3 GW installed (moderate
scenario)
-Policy-Driven scenario up to 6 GW could be installed
-Depending on market response to incentives in different states

14. US PV Market
The EPIA Global Market Outlook for Photovoltaics (PV) from 2010 to 2014

15. US PV Market
The EPIA Global Market Outlook for Photovoltaics (PV) by States

16. US PV Market
-Complex, evolving solar policy environment
-Overlapping federal, regional, and state regulation
-Solar policies are not harmonized
-Developers have to think like power companies
-Tax driven project financing
-Banks and developers are sorting out the new
financing structures for US solar projects

17. US PV Market
Source: www.recurrentenergy.com

18. US PV market
Advantages
The US has strong natural solar Disadvantages
resources Overlapping federal, regional,
and state regulation; Solar
Increasing energy prices and policies are not harmonized
strong public support
Developing a downstream U.S.
PV market strategy requires a
U.S. peak demand will increase
deliberate, highly specified
17.7% by 2017 according to NERC
approach to each application,
state market and market segment
Huge long term potential
Funding hurdles
U.S. federal government is
unlikely to provide level of
financial subsidy as in the
European markets

19. US PV Market
Conclusions:
- Short term conditions challenging and main hurdles are likely to remain
- US government’s lack of incentives by comparison to other regions
- Overlapping federal, regional, and state regulation
- Complicated and long negotiations with utilities
-> Long term outlook very promising
-The US will become the biggest and most important PV solar market in the
world

20. US PV Market
Outlook:
- Demand for PV projects in the United States is rapidly
expanding as a result of falling system prices
- The market is evolving as utility-scale projects gain
steam and innovations in project financing emerge
- With decreasing prices, a chain reaction will occur
causing a decrease in project payback time, finally an
increase in attractiveness of solar retail and commercial
markets in the US
- Global solar market players from all parts of the value
chain are seeking strategies to gain access to U.S

21. US versus German market
USA
Germany
The US has better natural solar
resources
Germany jump started the solar
economy
Grid parity reached earlier due to
more sun exposure
High market penetration already
reached. Market growth will slow
U.S. peak demand will increase 17.7%
by 2017 according to NERC down due to lower state
incentives
German solar companies are
seeking to go international and
transfer technology and
knowledge to international
markets

22. USA versus Germany
-2

23. USA versus Germany cost of solar
Germany:
Low Cost per kWh $0.35 (residential and commercial)
High Cost per kWh $0.47 (residential and commercial)
California:
Low Cost per kWh $0.17 (residential and commercial)
High Cost per kWh $0.22 (residential and commercial)
Source: SGC

24. Residential electricity rates USA

25. Grid parity influencers
-Grid parity is the point at which alternative means of
generating electricity is equal in cost, or cheaper than
grid power
-High radiation levels + high electricity prices + falling
pv system prices=> faster grid parity
-Hawaii has reached grid parity already; California
will be next
-When grid parity is reached market will grow rapidly

26. Grid parity-Market development

27. Challenges for market growth
-No national market coordination
-Bureaucracy
-Increasing policy complexity
-Various federal, state and local policy types for promoting solar
-Various financing options
-Private and commercial customers get confused

28. DSIRE
-DSIRE: Database of State Incentives for Renewables and Efficiency
www.dsireusa.org
-DSIRE lists a total of 616 Federal State, Utility and Local Financial
Incentives for Solar
- 518 Incentives for PV
DSIRE lists a total of 367 Federal, State, Utility, and Local
Regulatory Incentives for Solar
- 356 Incemtives for PV

29. Federal Resources
DSIRE: Database of State Incentives for Renewables and Efficiency: www.dsireusa.org
- US Department of Energy Efficiency and Renewable Energy: http://www.eere.energy.gov/
- National Renewable Energy Laboratory:
-
http://www.nrel.gov/
US Energy Information Administration:
-
http://www.eia.doe.gov/
Energy Star:
-
http://www.energystar.gov/
Federal Business Opportunities:
-
https://www.fbo.gov/
US Department of Energy:
-
http://www.energy.gov
EPA:
- http://www.epa.gov/

30. Global Solar Outlook
-Currently 20 GW installed
-30-35 GW installed by the end of the year
-Plunging prices of solar modules
-Europe is still leading the market with installations (Germany and Italy)
-47 countries have FIT but danger of Solar market bust in countries with FIT
-US, China, India, Japan and France will experience significant growth
-By 2015 cumulative solar capacity will have reached 65-100GW or more
- Demand for PV systems is still heavily dependent on the general economic
climate and most importantly on governments’ support schemes.
-

31. Thank you!
Questions and discussion
Please send e-mail to
kunerth@gmail.com
for presentation and sources