Market Watch

Photovoltaic Markets in Germany and Italy Likely to Get Boost after Japan Nuclear Crisis

German installations in 2011 to reach 7.2 gigawatts, Italy 4.1 gigawatts

April 14, 2011

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The earthquake-related nuclear disaster in Japan could prove to be a boon to the photovoltaic (PV) industry in Germany and Italy, the world’s two largest solar markets that have become sensitized to the dangers of a nuclear meltdown in light of recent events, according to new IHS iSuppli research.

Though the effects of the Fukushima nuclear crisis could not be immediately quantified on the PV industries of the two countries, reaction was swift on both ends. Germany responded quickly by shutting down seven of its oldest reactors, while Italy indicated it might upgrade the role of solar within the country and accept higher volumes of sun-powered energy.

In the wake of the Japanese disaster, debate quickly flared up on an appropriate course of action and energy policy in Germany—the world’s largest solar market—though some of the response was thought to be posturing and an exercise in influencing forthcoming important regional elections.

Overall, however, PV installations in Germany in 2011 still are expected to follow a similar pattern to that of 2010—with the exception of a four-week delay this year, because  prices didn’t fall fast enough to enable investment conditions for the German market to take off. Installations will pick up in April and then peak in June, followed by a cooling-down period in the third quarter later this year. The fourth quarter is expected to be strong again, just before new regulations and feed-in tariffs (FIT) are applied in 2012, IHS iSuppli research indicates.

All told, PV installations in Germany in 2011 are projected to reach 7.2 gigawatts (GW) after a moderate first and third quarter, alternating with very strong second and fourth quarters.

 Photovoltaic Installations

By the third quarter, it will be apparent whether the German government will proceed with a rapid exit path from nuclear power. Assuming that a decision to abandon nuclear energy is reached, renewable energy will be promoted even more strongly, IHS predicts. Wind dominates current public discussions, but solar energy possibly could benefit as well. An effective PV measure would be to increase the annual installation target from 3.5 GW to 5 GW, which would provide a boost to the market beyond 2012, IHS iSuppli research indicates.

Italy in a Bind: PV Seems More Attractive than Ever, but Government Wants to Clamp Down
In Italy, the second-largest solar market in the world after Germany, the government announced a hold on all plans for future nuclear power stations during the next 12 months while it re-evaluates the role of nuclear energy for the country.

Ironically, PV demand in Italy has come to a near halt. The Italian government’s announcement on March 3—eight days prior to the Japanese disaster—that it would launch a new FIT program with fewer incentives by early June came as a shock to the local solar industry, causing installation activity to stop immediately. Solar investors in Italy expressed concerns about not being able to meet the end-of-May deadline for any PV installations that they were to undertake, for fear of running afoul of the expected new guidelines. According to unofficial reports, the annual cap would be placed at 1 GW, and ground installations on farmland will be limited to just 1 megawatts in size.

As a result, installation activity that was significant in January and February for large Italian solar plants has all but stopped, and the only projects continuing at this point are those that are almost finished. Meanwhile, resistance to the government’s new plans has gained significant momentum, even though Rome still has to negotiate the final scheme, expected sometime in mid-April.

With both sides at loggerheads, the pressure created by the solar lobby in Italy likely will force the government to reconsider its new plans so that they do not push through, IHS believes. Furthermore, the Fukushima incident will lead to a new assessment of nuclear and solar energy in the country. Not including the possible effect of the Japan crisis in the months to come, new PV installations for Italy in 2011 are forecast to reach 4.1 GW, with an expected cap of 1.5 to 2.0 GW from 2012 onward.

Read More PV: Navigating a New Round of Policy Changes

Research by Market
Power & Energy Technology
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