Chihheng Liang, DIGITIMES Research, Taipei [Monday 16 January 2012]
Germany has announced that 2011 solar PV system installations totaled 7.5GW, and in particular the installations in the fourth quarter alone reached 4.15GW. This means more than 50% of demand came at the end of the year. The high levels of installations temporarily disarmed the concern over the amount of inventories in the end market. With the incentive programs still looking attractive in first-half 2012, demand is likely to continue growing, Digitimes Research believes. Nevertheless, the high level of installations in Germany means a 15% incentive cut in mid-year is almost for certain.
According to the incentive mechanism in Germany, there are two types of incentive cuts: annual and mid-year. The annual incentive cuts depend on the total installations from October of the previous year to September of the decision year. The mid-year incentive cuts depend on the total installations from October of the previous year to April of the current year to decide if an additional incentive cut in July is necessary. Take the incentive cuts in 2012 for example, the installations from October 2010 to September 2011 were 5.2GW, hence a 15% incentive cut were initiated in January 2012.
Also, more incentive cuts are likely in 2013, hence uncertainty for the Germany market still exists. In addition, the market share of Germany in the global market will likely decrease in 2012.
Italy is likely to decrease the feed-in-tariff (FIT) for solar PV systems again. However, the current FIT still makes the internal rate of return (IRR) very profitable. The new regulations include a ceiling for the number of ground-mount solar systems and complex application procedures causing a rise in rooftop installations. This means 2012 demand in Italy will probably stay flat, and Italy's global market share will decrease.