Germany’s proposed cut in solar feed-in tariffs is likely to take the market on a ride: first up, then down.
Germany's proposed cut to its feed-in tariff will send the solar market on a roller coaster of a ride.
The proposed reduction on roof-mounted systems is to go into effect in April, followed by a 15 percent cut for ground mounted system in July and a 25 percent reduction for large-scale ground mounted systems, also in July.
The dwindling subsidies will make solar less attractive to building owners and utilities. Many will rush to complete rooftop installations by the end of March. Then the market will come to a stop.
The fact that Germany accounts for 50 percent of the world’s solar purchases will weigh heavily on the industry. When Spain slashed its tariff in 2009, that red-hot market quickly cooled. Massive oversupply resulted and prices were cut almost in half.
Some analysts suggest dire consequences will flow from the German change. ISuppli said Thursday it expects a first quarter surge, with 200 MW of solar modules sold in January, 300 MW in February and 500 MW in March. Then the plunge. April sales will amount to 50 MW, says iSuppli Principal Analyst Henning Wicht.
Prices in Germany could fall 7.5 percent after April, he said.
Ironically, these lower prices could lead to another surge in demand before a second round of tariff cuts. The market could grow from 100 MW in July to 400 MW in November, iSuppli says. Then, in roller coaster fashion, another drop.
