CLOUD OVER EUROPEAN SUN

Strong 2010 European PV Market Growth of 169% Set to Give Way to 14% Contraction in 2011; Solarbuzz Reports Adjustments to European Policies Cause Price Collapse, Inventory Build and Increasing Market Fragmentation
July 21, 2011 (SolarBuzz)

"Rapidly falling prices in 1H’11 have been unable to stimulate the faltering European PV market, according to [Solarbuzz®]…Signs of a strengthening market in June 2011 were hit by cancellation of the anticipated mid-year incentive tariff reductions in Germany…

"The downturn in European major markets in 1H’11 left module shipments from manufacturers running well ahead of end-market demand. The resulting increase in downstream inventories quickly spread to the upstream, causing production plans to be reined in. Desperate to stimulate growth, crystalline silicon module price offers from manufacturers have reached new lows of €0.75-1.00/W…"

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"Market growth of 169% across Europe in 2010 was led by three countries: Germany, Italy and the Czech Republic. Each country delivered gigawatt-scale markets and, combined, represented 89% of European demand. Italy’s market share is forecast to rise from 32% in 2010 to 39% in 2015 to become the largest market in Europe, while the combined share of the two largest markets, Italy and Germany, is forecast to fall to 71% in 2015 from 80% in 2010…[but] solar PV project investment returns (IRRs) up to 20% could still be realized, a clear indicator both of the generous level of incentive tariff rates and the headroom for future tariff reductions…

"Based on an assessment of countries over the next 18 months, incentive tariffs for residential systems are set to fall by at least an average 17%, with commercial roof-mounted systems of 100 kW falling by 23% and ground-mounted 1 MW installations falling by 34%...Over the next five years, customer segmentation changes across Europe will see the residential segment double its share. In addition, investor groups’ share will fall by almost half, while commercial (including agricultural) customers remain the dominant market segment…"