The global solar market is going through a very strange period, ET Solar’s Israel representative Rafi Kirshenboim told The Jerusalem Post Tuesday.
Germany, Italy and the Czech Republic all announced recently that they would be lowering their feed-in tariffs or other payment mechanisms for solar photovoltaic (PV) systems at year’s end, which has generated a massive wave of demands, he said.
A feed-in tariff is the amount of money the government is willing to pay for each kilowatt hour of solar energy produced. Private companies or individuals erect solar panels and then sell the electricity to the national grid for the price of the feed-in tariff.
“Germany first announced that it would be lowering its tariff sometime between June and September. Now it says it will push off that decision to the end of the year and maybe not lower the tariff at all,” Kirshenboim said.
Germany is home to the world’s largest solar market.
Germany’s announcement sparked a rush to order panels and install systems before the tariff dropped, which would generate as much as a 15 percent drop in profits, according to Kirshenboim.
In Italy, the government has decided to lower the tariff incrementally starting next year, and the Czech Republic has also said it will be harder to build more systems under the current regime.
Take all three countries’ situations together, and it has touched off a massive boost in demand for panels.
The situation is compounded by a delay in the production of high quality solar panels. The factories which make the solar cells are all backed up, which has pushed the price of the materials for the panels higher.
All of these factors affecting the market in recent months have confounded the general expected trend, which was for panels to start becoming cheaper yet again this year. Panels started dropping in price last year.
So, will panels get cheaper or more expensive this year?
“We really don’t know,” Kirshenboim admitted. “With the tariffs dropping, people are willing to pay much more for panels now. Yet after the tariffs drop, the panels prices were supposed to drop as well. But with this whole wave of demand and the uncertainty about when the tariffs will actually finally drop,” the original projections may be off, he said.
The prevailing sentiment was that Chinese solar panel prices would drop off in November, since anything ordered after October would not be able to be installed before the tariff was supposed to drop in December.
ET Solar, a Chinese consortium with a German subsidiary, has positioned itself as a reasonably-priced producer of quality solar panels as well as an installer. The company recently unveiled a two meter square panel of 305 Watts (W) with an efficiency of better than 15%. The best panels in the world produce about 315-320 W with an efficiency of higher than 16%, but are twice as expensive.
An average Chinese solar panel produces 280-290 W, Kirshenboim said.
ET Solar’s goal was to make a panel which would withstand 20-25 years of continuous use at a reasonable price. The panel was created in conjunction with the MSO company by a former NASA scientist in ET Solar’s US office.
Although relatively new to the Israeli market – the company began marketing last August – ET Solar has already garnered 17% of the market share, according to Kirshenboim.
The company has signed a deal with G Systems for 7.5 MW and has also become the exclusive panel provider for the Gilat satellite communications company. Gilat provides computers and internet access to many off-grid entities via its satellites, which use the solar panels to produce the electricity to run the computers.
Looking at the Israeli market, Kirshenboim explained why ET Solar had established a presence even though fewer than 50 MW have been installed so far here, as opposed to more than a gigawatt in Germany.
“ET Solar is interested for two reasons. First, they think Israel will be a large market eventually because of the high levels of solar radiation it receives. When solar energy becomes as cheap to produce as energy from fossil fuels in perhaps ten years, then those countries with high levels of solar radiation could potentially develop very big markets.
“Second, the company thinks Israel could be a very good source for technological developments and breakthroughs,” the former hi-tech CEO said.
He added that the company was in contact with two Israeli companies involved in improving PV technology, though he declined to name them. ET Solar focuses on standard PV solar energy systems rather than other types of solar energy systems such as concentrated PV or solar thermal.
In the short term though, Kirshenboim warned that 1,000 people in the
industry could be fired here soon if the government didn’t get its act
together quickly and enable more installations.
“In my opinion, the regulatory bodies are jockeying for control of a
new market, [which is snarling the bureaucratic process],” he said. The
National Infrastructures Ministry and the Public Utility
Authority-Electricity Israel (PUA) have been feuding about the
direction of the market and other aspects.
As a matter of policy, the government has capped the total amount of
megawatts which can be produced through solar energy. The government is
working on expanding the household market cap by another 135 MW, after
licenses for the first 50 MW ran out in December 2009, taking the PUA
by surprise. It had initially believed the 50 MW cap would last two to
three years after its launch in mid-2008.
Without an additional cap, the market has been badly hit, as projects
await approval of the new cap. The new cap of 135 MW is in the
public-hearing stage of the approval process.
An additional 300 MW cap for medium-sized fields was announced earlier this year.
Kirshenboim also noted that Israeli financial bodies have elected to
invest in solar fields abroad since they’ve lost confidence in the
“ET Solutions has sold solar fields in Italy to Israeli financiers,” he said.