GERMAN SUN GOOD W/DROPPED F-I-T

German Solar Market Will Remain Attractive for Residential Investments Despite Cuts in Government Incentives
Henning Wicht, March 1, 2012 (HIS iSuppli)

"Despite the German government’s plan to reduce incentives for new solar installations, some market segments in the country will remain attractive for photovoltaics (PV) in 2012, with the return on investment (ROI) remaining sufficient to attract financial support for residential systems—and even some large-scale systems—according to the IHS iSuppli…

"Systems up to 10 kilowatts (KW) will have a FIT of 19.5 euro cents/kilowatt hour (kWh), a segment that consists of residential roofs, but not farm houses…Systems up to 1,000KW: 16.5 euro cents/ kWh, an area consisting of larger roofs…Systems up to 10 Megawatts (MW): 13.5 euro cents/kWh, including both large rooftops and ground installations…Large systems of above 10MW will receive no FIT starting on March 9…Tariffs will decrease monthly by 0.15 euro cents/ kWh starting on May 1, 2012…The government confirmed the target range of 2.5 GW-3.5 GW of annual installations for 2012 and 2013. From 2014 on, the target will be reduced by 400 MW annually…"

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"[R]esidential systems in Germany will still generate an ROI of 10 percent on equity capital (20 percent) if system prices are at €1,850/kW…[F]or large rooftop systems up to 1,000kW, attaining a worthwhile ROI will depend on how much of the generated electricity can be consumed locally or sold via PPAs…[At a site consuming about 30 percent of the PV electricity it generates, solar systems can yield a 10 percent ROI if the system price doesn’t exceed €1,400/kW…[Otherwise] system prices have to drop [to €1,250/kW] to keep ROI rates…[at] 10 percent…

"…For a positive ROI, ground installations should cost €1,050/kW…[I]f PV electricity can be sold via PPAs at rates of €10 euro cents/kWh, and prices are linked to average electricity price inflation of 4 percent per year, the investment can justify the cost of 1250€/kW…It will be up to the EPCs to transition from incentives to free-market dynamics, including PPA agreements and local consumption. Once the supply chain—and in particular the EPCs—has modified its services, large installations can pick up again. The German PV market is not nearly saturated in terms of space and rooftops. Roughly estimated, only 10 percent of suitable rooftops are equipped with a PV system."