Germany Surprised Everyone with December Solar Installations Reaching 3GW

Germany surprised everyone with December solar installations reaching 3GW. This means the 2011 total installations in Germany market hit 7.5GW, surpassing 7.4GW in 2010 and becoming a record high. However, this could also mean that in 2012 the industry will have to pay attention to the numbers and policies and the relationships in between. Germany's policy stated that if installations in January-April exceed 225MW, another 15% incentive cut will happen on July 1, 2012. The high installations will also stir oppositions to the incentive programs. According to data provided by the German Network Regulatory Agency, the high installations in fourth-quarter 2011 pushed the total number of installations in 2011 to 7.5GW. The installations in fourth quarter alone were close to 4GW. Some factors stimulated customers to install solar PV systems. First, the large price drop of solar products pushed up the internal rate of return (IRR), making it more profitable to invest in solar PV systems. Secondly, the weather conditions in December 2011 were mild. Thirdly, customers rushed to install PV systems ahead of a 15% incentive cut in Germany in January 2012. The rule of game in the solar market has been that if the installations are high, then incentive cuts will happen. If there is a 15% incentive cut in mid-year, it may cause the market to freeze in the second half of 2012. The solar industry has been hoping for spring to return to the market, but if the incentive cuts do take place, the spring may turn into winter again. The government of Germany hopes for the solar market to grow steadily by 4-5GW per year. Therefore, the 7.5GW of installations in 2011 means the market is expanding way too fast. The market suspects the government is likely to take measures to prevent the market from overheating. From past experience, once a new regulation has been set to be announced, rumors will begin to circulate like wildfire. If there is a new regulation to suppress the market from expanding too quickly, it is likely that most solar firms will not be able to take the hit after going through a traumatized 2011. Source: www.digitimes.com