Ever since last Decembers Paris Agreement, most talk of renewable energy growth has centered on and around the emerging economies and markets yet to fully embrace the potential of clean energy. Where there is scope, there is hope, it would seem.
But this week the big guns of the renewable landscape laid their cards out firmly on the table to remind the world that their ambitions are every bit as important and potentially transformative as those being projected by smaller economies.
However, not all of the traditional solar heavyweights have delivered good news, least of all Germany, which revealed at the start of the week that it installed just 1.37 GW of new solar PV capacity in 2015. Such a figure represents disappointment for the German solar industry, particularly following the halcyon years when the country enjoyed three straight years of +7 GW growth, and is some way below the governments own target corridor of 2.4 to 2.6 GW a year.
China takes the lead
Slowdown or no slowdown, Germany would have been overtaken sooner or later by China, which ended 2015 as the worlds largest solar PV market in terms of cumulative capacity installed, having added more than 15 GW last year.
Various official sources now put Chinas total capacity at above 43 GW, beating out Germany (with just under 40 GW) and pulling away from the U.S. and Japan. Whether China can maintain its pace of installation for 2016 remains to be seen, but many analysts are confident that, for this year at least, the country will extend its lead, perhaps even adding as much as 19 GW of new capacity, according to data from Bloomberg New Energy Finance (BNEF).
A Sharp downturn
In Japan, which added around 10 GW of new solar PV capacity last year the second-highest in the world talk this week was dominated by the contrasting fortunes of two of its largest solar players: Sharp and Solar Frontier.
It is no secret that Japanese electronics giant, Sharp Corp. has been flailing in recent times, particularly on the back of its failing LCD business, but also due to falling profits in its solar division. Indeed, despite being a domestic market leader in the latter, disappointing financial results in 2014 prompted speculation last March, although quickly refuted by the company, that it would sell off its solar arm.
Fresh speculation is now circulating that the Innovation Network Corporation of Japan (INCJ), a public-private fund, is looking to inject roughly JPY 300 billion (around US$2.49 billion) of capital into Sharp. According to the Nikkei Asian Review, which cited anonymous sources, part of INCJs rescue plan would see Sharps solar PV business integrated with thin film producer, Solar Frontier.
"Under the plan, the public-private fund would lead efforts to restructure Sharp’s solar business, such as streamlining surplus production facilities, then integrate the unit with Solar Frontier’s business," reported Nikkei on Sunday, January 31. At the end of last September, Sharp reported a "substantial" operating and net loss for the year ended March 31, 2015. In its Energy Solutions division, a sales decrease of 44% was recorded, based on a decline in sales of its solar cells.
To counter these losses, the company issued shares to Mizuno Bank Ltd, Bank of Tokyo-Mitsubishi UFJ Ltd and to Japan Industrial Solutions in June.
US brings promise
The troubles of Sharp are in, erm, sharp contrast to the fortunes of two of Germanys leading players in the industry: SMA and SolarWorld. Despite maybe because of Europes PV downturn, both companies have enjoyed enduring and encouraging success stateside, and look set to build upon a positive 2015 with even greater sales this year.
Smart Solar Consulting CEO Götz Fischbeck analyzed both firms results and outlook for the year, and found similarities across the board. For SMA, the consultant wrote: "The strong growth in PV power plant installations in the U.S., where SMA holds a dominant market position with a market share north of 40% was clearly beneficial for the companys efforts to return to profitability. Yet the increase of central inverter shipments into the U.S. market alone, would not have been sufficient to turn a profit.
In order to achieve this goal, SMA had to improve on two conflicting metrics at the same time: growing its shipments at a faster rate than ASPs were declining, while at the same time significantly reducing the companys fixed cost base.
Indeed, SMA was able to deliver on both ends: inverter shipments increased by a whopping 44% year-over-year to 7.26 GW. 2015 marked the first year since 2010, where SMA was able to increase its inverter shipments on an annual basis.
The story was much the same for SolarWorld, according to Fischbeck: Half of SolarWorlds shipments went into the U.S. PV market, giving the company an impressive combined market share for the U.S. residential and commercial PV market of the order of 18%-20%, assuming that less than 10% of SolarWorlds module shipments in the U.S. were destined for utility-scale projects.
On the back of a strong order book, SolarWorld guides for a sales increase in 2016 in the range between +20% and +30%. At the upper end of its guidance the company would reach 1 billion in annual sales. With the operating leverage resulting from the increased production volumes envisaged by SolarWorld for 2016, the companys target of reaching a positive EBIT in a two-digit million amount in 2016 does not appear to be overly ambitious.
The medium-term outlook for SolarWorld is less clear, however. On the one hand, the ITC extension for another five years passed by Congress in late December last year paves the way for a continued growth of U.S. residential and commercial PV demand for the foreseeable future, which is a clear positive for SolarWorld."
The impact of the U.S. and particularly its ITC extension on the wider solar industry should not be underestimated. But on home soil, the extension has served up a side helping of political wrangling, not least on the thorny issue of net metering.
Just a few days after California regulators approved a net metering 2.0 deal, senators moved to preserve net metering in Nevada, thus stumping the kind of retroactive changes that the Nevada regulators had tried to push through.
The amendment to the Energy Policy Modernization Act (S.2012) would add new language to PURPA, a landmark 1978 energy law, to require that state regulators include the benefits of distributed solar in any change to net metering valuations. The Reid-King amendment would further prohibit regulators from retroactively changing net metering arrangements for existing customers.
This bill appears to specifically represent a response to the severe and retroactive changes to net metering implemented in Harry Reid’s home state.
"This amendment is good for consumers in Nevada and across the country," said U.S. Senator Harry Reid in a speech on the floor of the Senate this morning. "It will safeguard people who want to generate their own clean energy from retroactive rule changes that could devastate their finances."
The amendment is supported by the Solar Energy Industries Association (SEIA). "The King-Reid amendment would protect hundreds of thousands of Americans who have already invested in solar systems for their homes and businesses by preserving their rights to sell power back to the electric grid," says SEIA President and CEO Rhone Resch.
And in other news
Data published by the U.S. Department of Energys (DOE) Energy Information Administration (EIA) forecast that the country will see renewables reach more than 14% of electricity generation this year. Supporting this growth every step of the way is likely to be Teslas Powerwall, with the company announcing this week that a version 2.0 is set to be unveiled this summer as part of a step change" in the batterys evolution.