12 May 2010


Interview with Karl Kuhlmann, S.A.G. Solarstrom

1. Compared with 2009, do you expect to see growth in the market volume of newly installed photovoltaic power in 2010 in Germany?

  Right now, growth in 2010 is difficult to predict. We see pull-forward effects due to the planned cuts in the FIT in Germany this summer, so it is likely that the first half-year will be very strong again. In our opinion, the CAGR will decrease over the next few years, but the newly installed power in 2010 will most likely surpass last year’s 3.9 GWp.

2. What are your expectations for the German PV market by 2013? Will Germany remain the world's leading market?

We are convinced that Germany will remain one of the most important and leading photovoltaic markets worldwide. However, whether Germany will remain the leading market up until 2013 is impossible to predict at present, as there are a number of influencing factors which need to be taken into account, such as a new FIT in a particular country – which we experienced in 2008 in Spain, when Spain was the shooting star market – component pricing trends and the pricing trends for traditional electricity tariffs in Europe.
However, we have laid a solid groundwork in Germany. We are widely accepted by the population, and there is a general consensus in all political parties to support renewable energies – their opinions differ only regarding the extent to which they will support certain technologies.

3. What system price development do you expect in this and next year? Will a turnkey sales price for c-Si PV systems of less than €2/Wp be possible in 2011?

The price decline in 2009 was exceptional and the market should not expect such a trend in 2010 and 2011. On the contrary - the prices for high quality modules have once again increased. We witnessed a significant rise in prices again in Q1. In the long-term, we anticipate a possible price reduction of between 5 and 10% per annum as a result of technological developments, scaling effects etc. At the moment, we doubt whether this will lead to €2/Wp in 2011, but we’ll need to see how things develops during the course of this year.

4. When do you expect to see 'grid parity' for households in Germany? And what do you expect to actually happen at that particular moment?

In my opinion, we’re less than five years away from grid parity. Grid parity will boost the market even further and discussion concerning the FIT will have become obsolete at that point. The issue of own consumption will be an interesting option, as will feed-in at market prices. There is a market demand for ecological power and if the market is able to address this demand at the same price or less than that of conventional power, the growth rate will increase.

5. Germany represents at least 50% of the global PV market. When the FiT decreases in July, the industry will have to follow with similar module and system prices. Will the German PV industry be able to follow or will this open the doors for more and cheaper products from China?

We criticized the government decision openly, although S.A.G. Solarstrom itself is not really affected by the decision. It’s not really a matter of ‘cheaper’ products from China. In a global market, we always have to compete with other countries, other production options, etc. But Germany has held an exceptional position in the photovoltaic market as one of the leading technology locations worldwide. The drastic cut jeopardizes this technological leadership. Few German companies will be able to react quickly enough to the market change and uphold their technological edge, whereas China, with its large production units, will profit from the scaling effects. However, it is foreseeable that the percentage of Asian products installed in Germany will increase as a result of the cut in FIT.

6. What is the potential impact, and for which PV companies mainly, if the German Government decides to abolish the FIT for ground-based PV systems?

The cut in FIT will impact component manufacturers as well as companies whose footprint is based solely in Germany and solely in ground-mounted systems. However, if you examine the German market more closely, this description applies only to very few companies. S.A.G. has many years of experience in both ground-mounted as well as roof-top systems. If the situation arises in which it is no longer profitable to install ground-mounted systems in Germany, we have enough options in other European countries. And Germany will remain an attractive market for roof-top systems, especially if you take the issue of own consumption into account.

7. What do you see as the most important German market segments for the near future: residential, commercial, or utility-scale projects?

In our opinion, the residential and smaller commercial systems will make up the largest share of the market. Utility scale projects are more profitable outside Germany with a higher irradiation of kWh per kWp.

8. What are the major threats and challenges for further growth of the German market?

Changes in legislation always pose a threat, as does of course financing. Although financing for residential projects is not really a problem in Germany. The reliability of the legal base for investors is the most important issue. Germany has been quite reliable in the past, but it remains to be seen whether investors still feel this way after the planned exceptional cut in the FIT.

9. What are your company’s ambitions in the years ahead?

S.A.G. Solarstrom wants to achieve double-digit, sustainable growth and expand to other interesting new markets. One of our goals is to become synonymous with sustainability in the photovoltaic industry – economically, ecologically and socially.

10. What do you see as the major trends and drivers for solar energy in the coming decade?

Avoiding Co2 emissions is becoming more and more important, the problem of nuclear waste hasn’t been solved, and conventional energy sources are finite. Renewables, and especially a renewable energy source such as photovoltaics, are more than just a ‘green technology trend’; they will become mandatory in addressing the world’s future energy demand.
The main drivers will be higher performance ratios, decreasing prices for photovoltaic systems and increasing prices for conventional energy.

Mr. Kuhlmann will be one of the CEOs speaking at The Solar Future conference on 8 June 2010 in Munich.

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