04.03.2013
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Photovoltaics

Market researchers say China will overtake Germany

Market researchers expect the German PV market to come in at only 3.9 gigawatts this year because of the reductions in feed-in tariffs and the exclusion of utility-scale arrays larger than 10 megawatts. Furthermore, there are still too few incentives for storage. Over the next few years, China will become the largest single market.

Market researchers at Germany's EuPD Research expect the country to shrink from roughly 7.5 gigawatts per year (the level from 2010-2012) to 3.9 gigawatts this year. Increasingly, power storage will be crucial as German solar power production peaks at ever higher levels of power demand; already, solar supplies up to 50 percent of power demand on sunny summer days. A recent attempt to produce a policy to encourage power storage failed, and it remains unclear when such a policy will be produced.

But the need for such policy clearly illustrates that, as Renewables International has been saying since its inception in 2010, grid parity is not a Holy Grail, and policy support will continue to be needed after grid parity has been reached. In Germany, the retail power rate is already around 50 percent higher than the feed-in tariffs paid for even the smallest new solar installations, yet Germans continue to complain about a lack of policy support.

 - In 2012, Germany was probably the world's largest market for the last time. Analysts expect China to be the biggest market in the midterm.
In 2012, Germany was probably the world's largest market for the last time. Analysts expect China to be the biggest market in the midterm.
NPD Solarbuzz

At the German PV Market Briefings held in Frankfurt am Main last month, Markus Lohr, head analyst at EuPD Research, pointed out how important the large systems now no longer eligible for feed-in tariffs had become on the German market. "Such systems were especially common towards the east. "Without such utility-scale arrays, the market is expected to come in roughly at the level of December 2012, when only 330 megawatts was newly installed. The year has gotten off to a slow start, but market researchers expect more to be installed in June and July, though the market is expected to cool down again towards the end of the year.

The main ones to suffer from this downturn will be installers. The second half of the year will be especially difficult for them. Lohr expects a lot of firms to go out of business, especially those who have specialized in PV arrays. "Current surveys show that 40 percent of German installers are already looking for other markets," EuPD Research says.

NPD Solarbuzz of the US also believe the German market will shrink considerably, with China becoming the leader. In 2012, Germany still made up around 25 percent of the market, but that share is likely to be cut in half. Global installations are still expected to come in at around 30 gigawatts, a level that continues to fall far short of the estimated global production capacity, which is probably twice as much. China will mainly be a market for its own PV products.

Michael Barker, analyst at NPD Solarbuzz, says foreign providers will have a tough time setting up shop in China, which is mainly opening up its domestic market to save its own companies – a step that has become all the more necessary as the EU and the US look into import levies against Chinese products. "Germany has seen its production base dwindle over the past few years even as it remained the largest sales market," Barker explains. "But China already overtook Germany as the global leader at the end of 2012, and our research suggests that the country will remain king of the hill for many years." (Sven Ullrich / Craig Morris)

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