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German Solar Developers Boost Sales Abroad as Incentives Cut

Aug. 19 (Bloomberg) -- German solar power developers including Phoenix Solar AG and S.A.G. Solarstroem AG are expanding their businesses abroad in anticipation of slowing demand at home.

S.A.G. almost doubled the proportion of sales abroad to 38 percent in the first six months of the year, the company said today. Phoenix Solar last week boosted overseas revenue by more than 10 times in the second quarter.

Germany, forecast to install about half of the world’s new solar energy capacity in 2010, cut the price sun-generated electricity receives by 13 percent for projects started from July. That sparked a surge in sales in the first half of the year for projects seeking to qualify for the old rate. With that boom past, companies are looking for growth elsewhere.

“It’s extremely important for a company like Phoenix to expand out of Germany,” said Philipp Bumm, an analyst at CA Cheuvreux in Frankfurt who has an “outperform” rating on Phoenix’s shares. “The German market will likely be stable after this year.”

S.A.G. shares declined as much as 3 percent today and were down 2.1 percent to 4.65 euros as of 11:00 a.m. local time. Phoenix Solar was little changed at 31.17 euros.

International Expansion

Phoenix last month announced a plan to sell up to 670,200 shares to pay for an international expansion, especially focusing on the U.S. The company has also announced contracts to build solar fields in Italy this year.

Italy, the U.S., France are among countries where annual installations may reach 1 gigawatt and where growth may be strongest, said Phoenix Chief Executive Andreas Haenel, in an interview last week. The German market will probably “level off” at about 5 gigawatts annually in the coming years, he said on May 11.

Solar installations worldwide this year will range from 13.7 gigawatts to 18.2 gigawatts, with Germany accounting for about half of the total, according to Bloomberg New Energy Finance, a London-based industry researcher.

The expiration of the best feed-in tariffs this year means installations will peak this year. Developers rushed to get projects in place in time to take advantage of the tariffs, and German may install 7 gigawatts of solar capacity this year, Haenel estimated. That’s almost double the current capacity.

S.A.G. has targeted markets including Italy and the Czech Republic, taking advantage of feed-in tariffs for solar power in those countries.

The company, based in the southern German city of Freiburg, is holding back from “major” projects in Germany that require high start-up costs and personnel, the company said today. S.A.G. “deliberately avoided additional deadweight effects in Germany so as not to jeopardize foreign expansion and thus the steady increase in corporate growth,” it said in the statement.

To contact the reporter on this story: Jeremy van Loon in Berlin at jvanloon@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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