The rate of photovoltaic installations in Germany has continued at a faster than ever pace during the first two quarters of 2010. Far from slowing down after the record 4^th quarter in 2009, installation of solar panels accelerated through the new year. Accurate projections are hard to make, but there are suggestions that the market volume in the first half of this year could be 4 gigawatts. This is likely to make 2010 another record year for Solar. This demand has been fuelled by the discussions surrounding the reduction in the feed-in tariff in Germany, which has now finally been decided. At the recent Photon PV Technology Show in Stuttgart, there was much discussion surrounding how the PV market would continue to grow despite the feed-in tariff reduction. Many were optimistic that the market may be unaffected the changes.

The scale of activity means that Germany’s dominance of the world solar market remains. In 2009, over 60% of the world’s solar panels were installed in Germany and it is likely that this trend will continue in 2010. This is having a big impact on markets in the rest of Europe. There is currently an extreme shortage of inverters for commercial and domestic rooftop installations and there are also reports of shortages of solar panels from the leading manufacturers.

This shortage is being felt across the UK PV industry. As demand in the UK steadily grows, installers are finding it more challenging to source the right products in a short time period. Many installations are being carried out without an inverter, meaning that customers are forced to wait several weeks for the inverter to arrive and they can start collecting the feed-in tariff. If you are considering getting a PV system for your home then make sure to ask your installer about their lead time for products.

Fortunately there should be an end to this shortage. The inverter manufacturers have been working very hard to increase manufacturing capacity, and some of that new capacity should be coming on-line later in the year. After the feed-in tariff change in Germany in July demand is expected to reduce to some extent which should free-up availability for the rest of Europe. SMA, the world’s leading manufacturer of inverters with a market share of close to 40% are expected to resolve their supply issues by the end of the summer, meaning that their highly sought after small inverters, the SunnyBoy series, become significantly easier to come by.

This will be important for the UK. Prices of PV systems in the UK are still significantly higher than in the rest of Europe. The shortages prevent new wholesale distributors from entering the market and keep costs high. As the market becomes less supply constrained we expect that the industry will become more competitive, allowing an advancement in price reduction. With the great feed-in tariff we have now, any cost reductions mean better returns for the customer, and will hopefully motivate more people in the UK to ‘go solar.’

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A big issue for solar and wind energy is that the power they deliver is not constant. Unlike coal or nuclear power stations which produce a steady stream of power whatever the weather, wind and solar suffer from extreme fluctuations. For wind energy, a drop in wind speed can mean a 90% power loss over a large area in just a few seconds.

For solar energy, there are many different types of fluctuations. In the UK for instance, winter months produce only a quarter of the amount of energy as summer months. Obviously solar energy production takes place only between dawn and dusk, and even during the day, clouds can cause major fluctuations in solar energy output. These fluctuations make it hard for electricity grid operators to really use renewable energy since they need to guarantee power is delivered 100% of the time.

At the moment, because renewable energy makes up such a small component of our electricity generation in the UK these fluctuations are irrelevant. However as the proportion of renewables connected to the grid increases these effects will eventually become more significant. In southern Germany, where solar energy makes up over 4% of the electricity generated and at times represents 30% of the electricity on the grid, energy companies are starting to think carefully about how to use this resource most effectively.

Several can be done to decrease the impact from these fluctuations in renewable energy:

The first thing is to have a strong and efficient electricity grid. This is the case in Germany where energy can be efficiently and almost instantaneously moved from one part of the grid to another. This means that when there is a surplus of energy in one part of the country, energy can be transported at very short notice to where there is an energy deficit. Interestingly, as the amount of solar energy in a country increases, short term fluctuations caused by clouds are “ironed out” as shaded solar panels in one region are compensated for by unshaded solar panels in another.

In addition, as some of you may have heard, there is something called a ‘smart grid’ in development. This term is used to refer to lots of different things but on its most basic level it implies that energy demand can be controlled in some way. This could be very helpful for renewable energy since energy demand can be matched to when there is an abundance of solar energy in the middle of the day.

Another tool that can be used is prediction mechanisms. Using weather forecasting and remote monitoring, the amount of solar energy expected can be predicted. Providing this information to energy companies allows them to use various forms of reserve energy such as gas turbines or hydroelectricity which can be turned on and off in a matter of minutes.

The ultimate solution though, is to find a cheap means of storing energy. This would make all the fluctuations from renewable energy irrelevant. Researchers around the world are busy working on a wide range of different energy storage technologies. One of the most familiar ways of storing energy is to use a battery. Regular alkaline batteries are far too expensive and not durable enough to be used on a large scale, but there is huge number of new types of battery being worked on that could soon bring the cost down dramatically.

Besides batteries, there is a wide range of other technologies in development that could all be used to store renewable energy. Examples of these include; compressed-air energy storage, pumped hydro-electricity, molten-salt, fly-wheels and hydrogen, to name a few. Of course each technology has advantages and disadvantages, but it remains that we have a number of potential solutions for storing renewable energy. So the fact that the sun doesn’t always shine is certainly not a reason not to support solar energy.

The long discussed changes to the German feed-in tariff are still in debate after a report released Monday by Germany’s regional government assembly called for a relaxation of the planned cuts. This means that the changes, which were originally planned to come into effect in April and have already been pushed back until June, may be yet again delayed. The bill we continue to pass its way through the German parliament over the next two months.

Whilst everyone appears to be in agreement that the feed-in tariff should be lowered faster than originally planned in light of dramatic price reductions in PV systems, there is controversy over much it should be lowered and how the structure of the tariff should be changed. There is a big debate for instance, concerning the level of a ‘self-consumption’ bonus, whereby producers of solar energy are rewarded for any electricity they use themselves rather than export to the grid. Also in discussion is the difference in feed-in tariff paid to ground mounted solar farms compared to rooftop installations.

Meanwhile, solar installers are experiencing a continuation of strong demand. At the end of 2009, the rate of new installations reached an all-time high with around 2GW installed in the fourth quarter alone as customers rushed to install before the 2009/2010 feed-in tariff drop. The threat of new cuts in the feed-in tariff are only increasing the incentive to install in 2010.

An interesting pattern is emerging, whereby the PV market experiences surges in the run-up to a feed-in tariff change. This cyclical pattern creates extra incentive for the government to decrease the feed-in tariff and looking at the market it seems that prices are set to fall further over the next year or so. These factors may well push us into the realm of parity with retail electricity prices in Germany by 2013.

In the UK, the feed-in tariff is unlikely to be altered before 2012, although we will carefully scrutinize the aftermath of the forthcoming general election. Already commentators in the UK are speculating that the UK may experience its own mini ‘PV-rush’ in the run up to 2012. However, as Germany has repeatedly shown, one ‘PV rush’ can lead to another.

Several of the thin film PV manufacturers (see previous article) have announced ambitious plans to start selling their products in large volumes. In particular, NanoSolar, Solibro, Solar Frontier and MiaSole are makers of the new “CIGS” type of modules that promise to achieve high efficiency and lower cost than the thin film modules currently available. It will take time for these new technologies to be accepted for their reliability, but it is likely that at least some of the companies offering these products will succeed. News has been announced that a solar park using Nanosolar’s modules is already under construction.

Several of the developers of large PV projects in Germany, such as Phoenix Solar and Gehrlicher, are currently testing new technologies whilst at the same time being cautious about their forecasts for the German market. Phoenix Solar recently announced that it cannot provide details of its development strategy until the details of the German feed-in tariff have been finalized.

These developments should act to further decrease the price of PV.