Buckling despite a solar surge

While many solar manufacturers continue to struggle, the key German and US markets are seeing remarkable growth in solar installations and Japan is set to follow suit.

The solar industry threw up conflicting signals last week with reports of progress in some key markets juxtaposed with indications of a further squeeze on a few of the strained manufacturers. Germany – the world’s second-biggest solar market after Italy – provided cheer when its federal regulator revealed that 2.3GW of solar panels had been installed in the first four months of the year. This was more than three times the 712MW installed in the same period last year.

Since the government is yet to finalise a schedule for the roll-back of incentives – with concerns being raised about the impact of such a move on domestic manufacturers like SolarWorld – the capacity added could continue to grow significantly. Suntech Power Holdings and Trina Solar said Germany may install as much as 7GW of solar this year. The country added 7.5GW of solar panels in 2011. Chancellor Angela Merkel’s government wants to reduce the pace of annual installations by about half.

In a related move, First Solar – the world’s largest maker of thin-film solar panels – said it would delay the planned closure of a German plant until the end of this year to meet unexpected strong demand in Europe.

There was traction visible in the US solar market too. Developers installed 506MW in the first quarter – some 85 per cent more than a year earlier, according to the Solar Energy Industries Association. Total installations may reach 3.3GW this year, equivalent to about 11 per cent of the 2012 global market, the Washington-based trade group said. New Jersey led the additions, followed by California, with most of the growth coming from non-residential solar projects.

There was a spate of announcements from markets just opening up. Japan’s feed-in tariffs for solar, in addition to other renewable sources, will kick in on July 1. Utilities will pay 42 yen/kWh ($A0.56) to solar power producers for 20 years, which is almost twice the rate payable in Germany. According to Bloomberg New Energy Finance, the move may spur the addition of 3.2-4.7GW of new capacity. Last year, Japan added 1.3GW of solar.

In Turkey, the regulator EPDK said that bids would be invited in June next year for installation of solar PV projects. It plans to issue licences for capacity of 600MW by 2015 though actual additions may be higher as off-grid projects (which require no licence) pick up pace. The country has less than 10MW installed currently.

International Finance Corporation and Norway's Scatec Solar announced plans to build power generating plants in west and central Africa beginning with Benin, Burkina Faso, Cameroon, Niger and Togo. German solar panel maker Conergy said it would supply equipment to Pakistan’s biggest solar-power plant as the country seeks to increase access to electricity.

China said that it had begun building solar-power projects in 20 countries in Africa to spur the export of technology to the continent. The projects, mainly to power street lamps, will cost 10-20 million yuan each. The Asian giant plans to invest as much as 800 million yuan ($A120 million) in 40 African countries.

On the flip side, Chinese banks have tightened lending to solar manufacturers because of worries over industry risks, according to the chief executive officer of JA Solar, the country’s biggest producer of cells for power plants.

In Germany, Centrotherm Photovoltaics, a maker of machines for the solar-power industry, saw its shares slump to a record low in Frankfurt trading last week after merchandise credit insurers cut off cover for deliveries because of a “poor market environment”, Bloomberg News reported.

Shares in US polysilicon maker MEMC Materials also fell, after a ratings downgrade by Moody's limited its access to credit. The downgrade “reflects the financial distress in MEMC’s solar operations, which we expect will continue to burn cash for the near term,” Terry Dennehy, a Moody’s senior analyst, said in a statement.

The other main headline of the week was from the energy efficiency arena: European Union negotiators reached an agreement on tougher energy-saving rules. A draft law was approved that requires energy distributors to save 1.5 per cent of their sale volumes annually. It would also force central governments to refurbish at least 3 per cent of their buildings to higher efficiency standards annually.

EU Carbon

European carbon allowances, or EUAs, for December 2012 delivery surged 9.4 per cent last week, closing at €7.32/tonne, compared with €6.69/t at the end of the previous week. December EUAs made steady gains as traders continued to speculate about policy intervention in the region’s oversupplied emissions market. They broke through €6.80/t on Thursday following news that a draft report on possible options to strengthen the market had been sent for internal consultation in the European Commission.

EUA prices spiked to a weekly high of €7.35/t in intraday trading on Friday after a Bloomberg News article revealed that the European Commission may favour delaying sales of as many as 1.2 billion carbon allowances from 2013. United Nations Certified Emission Reduction credits, or CERs, for December 2012 rose 5.9 per cent last week to close at €3.62/t, up from €3.42/t the week before.

Big firms join UN water commitment

As the Rio 20 conference on sustainable development got underway, the CEOs of 45 companies, including Nestlé, Unilever, and Coca-Cola, committed to improving water management practices under the UN Global Compact, Bloomberg News reported.