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June 23, 2010
The PV Newsletter
FIT Reduction's Impact on PV Industry
Linx-AEI analyzes change in subsidies due to recent FIT reduction
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.
Graph of Germany FIT structure

Costs are Also Changing

value chain costs

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.

post-FIT cut numbers

  • 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.
View the Entire Webex Presentation

For a pdf of the presentation, contact Mike Corbett at 973.698.2331 or mcorbett@linx-consulting.com
Linx to present at Semicon West and Intersolar
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
Hope to see you at Semicon West!
Mike Corbett
Linx-AEI Consulting
Linx-AEI Events
Come see us at Semicon West!

Linx will be presenting at Semicon West and Intersolar in July!
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