Germany, the world’s biggest solar- panel market, will cut subsidies for photovoltaic power by a record amount next year as the government tries to control the pace of installations and wean the industry off support.
Rates under the feed-in-tariff system will be reduced 15 percent from Jan. 1, 2012, after Germany added about 5.2 gigawatts of panels in the year through Sept. 30, the Bundesnetzagentur, the federal grid regulator, said in a statement on its website today. Power from panels will earn 17.94 euro cents (25 cents) to 24.43 euro cents a kilowatt-hour.
“The cut is part of the push down toward competitive pricing without subsidies,” Charles Yonts, an analyst at CSLA in Hong Kong, said by e-mail.
The decision may also spark a rush of installations as developers seek to lock in higher tariffs before the new rates apply next year. Germany added a record 7.4 gigawatts of solar power in 2010, and sales surged in the weeks before two previous tariff reductions.
“December is going to be so massive it’s going to blow everyone out of the water,” Martin Simonek, an analyst at Bloomberg New Energy Finance in London, said by phone today. “Germans can commission a lot of installations very quickly.”
Developers connected 2.2 gigawatts of panels in June 2010 as they sought to claim subsidies before a 12 percent reduction at the beginning of July, he said. That compared with 700 megawatts of installations from March to May.
Solarworld AG (SWV), Germany’s largest panel maker, rose as much as 14 percent in Frankfurt and was at 3.844 euros as of 4:35 p.m. local time. SMA Solar Technology AG, the country’s biggest solar company by market value, gained as much as 13 percent and was last at 44.43 euros.
Yingli Green Energy Holding Co., based in Baoding, China has seen shipments to Germany increase, Europe Managing Director Darren Thompson said last week.
Solar energy stocks have stabilized this month, gaining 12 percent, after the slump in German sales wiped 72 percent off Bloomberg Large Solar Energy Index between April and September.
“We’re one week nearer to a bottom, wherever that is,” Sean McLoughlin, an analyst at HSBC Holdings Plc (HSBA) in London, said by phone today.
Yingli rose as much as 10 percent in early New York trading, and was at $4.10 as of 10:35 a.m. local time. Jiangsu, China-based Suntech Power Holdings Co., the world’s biggest panel maker, rose as much as 11 percent in New York and was last at $2.58.
“There is some optimism that Germany is picking up and that may be driving some of the optimism in solar stocks,” Gordon Johnson, an analyst at Axiom Capital Management Inc. in New York, said today by phone.
Makers of polysilicon, the raw material for panels, and components for generators have been punished after ramping up capacity just as demand tapered off, creating a glut. The spot price of polysilicon has fallen 53 percent since March and dropped 9.1 percent in the past week to $37.39 per kilogram, New Energy Finance said on Oct. 24.
The U.K. government also signaled a planned cut to its solar subsidies today, citing “unacceptable returns” on solar investments as a “dramatic escalation” in panel installations threatens to weigh on the budget.
Suntech’s Europe President Jerry Stokes said last month that he expected German installations to reach about 6 gigawatts this year. Suntech will post a loss of $113 million this year after a profit of $262 million in 2010, according to a Bloomberg survey of 20 analysts.
German panel makers including Solarworld, Q-Cells SE (QCE) and Conergy AG have been struggling to offset slower demand growth in their home market, which has lowered subsidies twice since June 2010. Phoenix Solar AG (PS4), a German solar developer, on Oct. 12 cut its full-year earnings outlook, saying it didn’t expect a year-end rally in Germany, which added a record 7,400 megawatts of panels in 2010 as sales surged in December.
Germany added about 1,610 megawatts of panels in the third quarter, according to Bloomberg calculations based on Bundesnetzagentur figures. That compares with 1,681 megawatts in the year-earlier period.
“These numbers signal that the market is picking up,” Henning Wicht, a solar analyst at researcher IHS Isuppli, said by phone from Munich. He had forecast 1,530 megawatts for the third quarter. “Developers and contractors tell me that October is very good, so there may be a year-end rally in store,” he said.
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