European Solar Power Market Faces Tough Times

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The reduction in government incentives and feed-in tariffs (FiTs) for solar photovoltaic (PV) projects will significantly hit the solar sectors in some of Europe's largest markets in 2011 and beyond.

Germany, the largest solar market in the world, will be hit the hardest according to the European Photovoltaic Industry Association (EPIA). Speaking exclusively to Industrial Info Europe, Marie Latour, national policy advisor for EPIA, said: "We are expecting the reduction of the support scheme in Germany to have an impact mainly from the second half of this year, depending on how much the FiT will be reduced in July this year. This reduction could be up to 15% already. We expect the German market to stagnate in 2011, reducing by 1-2-gigawatts (GW) maximum from 2010 levels.

"For Spain, the market is not expected to be lower than what it was in 2009 and 2010," she added. "It is progressively recovering from the strong cut and change of rules to allocate the FiT reviewed at the end of 2008. However, administrative constraints should be removed for the market to actually go back on track this year and next."

The comments come just days after the EPIA released figures showing that 2010 was a record year for solar photovoltaic power in Europe, with almost 13,000 megawatts (MW) of new installations. For related news, see March 1, 2011, article - European Solar Power Shines Brightest in 2010.

Last year, numerous leading European solar players announced cuts in their FiTs for solar to control their booming sectors. In January 2010, Germany's environmental minister proposed a 15% cut in feed-in tariffs for the solar power industry. Last week, Germany's government voted for the cut to come into effect from this summer--six months earlier than originally thought. For related news, see January 21, 2010, article - Germany Cuts Solar Subsidies By 15%. France has already introduced a 24% cut in solar feed-in tariffs for rooftop systems. For additional information, see related news item from January 17, 2010 - France and Germany Cutting Solar Subsidies.

The U.K. government recently launched a review of its own incentives for solar power projects, which has caused concern for many solar players.

"The U.K. has had an encouraging FiT system in place since April 2010, which has triggered a lot of interest and expectations," Latour told Industrial Info Europe. "In only eight months, the FiT has allowed the development of a 40-MW [solar] market. Many projects are being planned. The FiT scheme was not originally foreseen to be reviewed earlier than April 2012, but in February, Chris Huhne, the U.K. Secretary of State for Energy and Climate Change, announced the review would start in April 2011, one year ahead of schedule. The reason for reviewing the FiT early stems from fears that it could benefit mainly large investors, with not enough going to domestic and community-based installations.

"Their risk is that it may paralyse market development and discourage investors," she concluded.

IIR's Renewable Energy Database provides extensive coverage on the wind energy, geothermal, hydroelectric, landfill gas-to-energy and utility-scale solar power plants throughout North America, and is now expanding coverage across the world.

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