European PV demand increases; incentives tightening

Short-term optimism has been created in the photovoltaics industry, says NPD Solarbuzz, due to a 23 percent quarter-on-quarter rise in installations, seen in Q4 2011, and module price increases.

While this represents good news, the research company cautions that the "boom" in Q4 installations has served to "accelerate the tightening of PV incentive policies that is gripping Europe". Most notable, it says, are changes to the feed-in tariffs in Germany and Spain. France and Italy have also recently announced incentive changes.

Overall, in 2011, NPD Solarbuzz says that the European solar market grew 18 percent year-on-year, with the difficult incentive situation and weak investment situation offset by falling module prices.

In particular, Germany’s market was said to have grown by 63 percent quarter-on-quarter. This was due, says the company, to developers waiting until the last minute to install their projects, because of falling module prices, and before the new 15 percent FIT reductions came into play this month.

It adds that the U.K. and France also upped the ante, having installed 370 megawatts (MW) in Q4. The Italian and French markets, meanwhile, were said to have sequentially decreased, due to incentive scheme deadlines and flexible cuts.

In terms of installation type, ground-mounted projects are said to have fallen by 13 percent in Europe in 2011, compared to 2010. Still, in the second half (2H) of 2011, they were thought to comprise 35 percent of the market. Non-residential building mounted systems, on the other hand, reportedly comprised 55 percent of the 2011 European photovoltaic market, while residential systems were said to represent 16 percent.

Looking ahead, it is forecast that in Q1 2012, photovoltaics demand will increase by 10 percent. "Belgium, France, Spain, and Greece will have their highest quarterly shares, and the United Kingdom could accelerate into a short-term boom in Q1’12 depending on the legal ruling on incentive tariffs," explains NPD Solarbuzz.

The markets in Germany and Italy, however, are expected to decline by a total of 37 percent. "The strongest growth in smaller markets over next one to two years, based on current incentive policies, will be in Austria, Bulgaria, Czech Republic, and Romania," continues the company.

It goes on to say that two factors are generating growth, particularly in emerging markets: (i) "as incentive tariffs follow prices downward, less public funding is needed to build significant country markets"; and (ii) "as PV becomes more competitive with retail electricity prices, investors become less dependent on public funding schemes for viable economics".

In other NPD Solarbuzz news, the Chinese Tier 1 photovoltaic module manufacturers say there will be module shortages by the end of Q1 2012. However, according to NPD Solarbuzz, "the evidence for this is not totally compelling". "The path for module prices in 1H’12 will largely depend on the extent to which wholesalers are confident enough to build inventories in the face of continued policy uncertainty.

"Germany’s role will be critical, especially because its demand profile will be significantly smoothed by its proposed change to monthly rather than biennial tariff adjustments," commented vice president, Alan Turner.