June 23, 2010
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The PV Newsletter
FIT Reduction's Impact on PV Industry
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Linx-AEI analyzes change in subsidies due to recent FIT reduction
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Motivation for this analysis - Subsidies can change
- According to existing subsidy
rates, roof-mount systems installed in 2010 receive a Feed In Tariff (FIT) rate
of €0.30 to €0.40 per kWh produced depending on the system size.
-
The German government has decided
to cut the solar subsidies in order to better rationalize program costs to
falling systems prices.
The PV
demand relationship is determined by a robust analysis that identifies the
linkage between module price and cost, technology LCOE, system power sales and
returns. IRR (above/below)
requirements lead to changes, if possible, in price and cost throughout the
supply chain
Post FIT Cut - System Economics Can Change
We assume that 9.00% is the
acceptable IRR to create demand in Germany. In the post FiT cut scenario, if
the interest rate remains at 4%, prices should go down to $1.73/W to achieve
threshold IRRs. On the other hand, in the worst case scenario if interest rates
rise to 6% prices would need to fall to $1.40/W or risk choking off demand
completely.
INSIGHT
TO HELP YOU MANAGE YOUR BUSINESS BETTER -
The German
government has decided to cut the FIT by 16% on small and medium rooftop
systems. This cut and other cuts
to the subsidy for different segments will impact the global market. We know that demand will fall.
- We
calculated IRR for a rooftop system installed in Frankfurt Germany, using a
high efficiency polysilicon technology. Our analysis showed that the system
could generate 11.45% IRR in a "pre-FIT" cut scenario and 6.74% in the "post FIT"
cut scenario all things being equal.
- Because falling returns are followed by decreasing demand, the demand in the
"post FIT" cut market in Germany will not be robust for many companies. In order to generate acceptable returns
(i.e., IRRs of 9% min.) in the "post FIT" cut German market, module prices must
fall.
- Certain
module makers can accept a 16% price cut and still generate an acceptable gross
margin(i.e., 22%). But, the depreciating Euro can act
against them.
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Linx to present at Semicon West and Intersolar
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Update on Trends
Impacting Chemicals and Materials for Solar Cells and Modules - Mark Thirsk
Description: This
talk will review broad industry trends (such as changes in FiT and the
supply/demand balance for polysilicon) that are impacting demand for key materials
in solar cells and modules. 5 year forecasts for
demand of critical materials will also be included.
Details: Tuesday July 13 from 1:00 to 1:25 PST at the SEMI Theater (or SEMI
Booth) located just below long escalators near the entrance to the
North Hall on
the lower level.
Industry
Challenges for CMP - Mike Corbett
Description: This
paper will start by reviewing the current and projected markets for CMP. IT will then review the industry
structure for CMP applications, tools, and consumables. Finally it will examine likely industry
evolution and key challenges facing the industry given structure and investment
considerations for suppliers.
Details: Semicon West CMP Users Group,
Wednesday July 14, 2010 1:00 - 5:00
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