Japan Nuclear Crisis Boosts European Solar Markets

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

“Reaction to the Fukushima nuclear crisis has been swift in Germany and Italy,”said Henning Wicht, senior director and principal analyst forphotovoltaic systems at IHS. “Germany responded quickly by shutting down seven of its oldest reactors, potentially boosting the prospects forrenewable energy in the country. Meanwhile, Italy indicated it mightupgrade the role of solar within the country and accept higher volumesof sun-powered energy.”

In the wake of the Japanese disaster,debate quickly flared up on an appropriate course of action and energypolicy in Germany—the world’s largest solar market—although some of theresponse was thought to be political posturing and an attempt toinfluence forthcoming regional elections.

By the third quarter,it will be apparent whether the German government will proceed with arapid exit path from nuclear power. Assuming that a decision to abandonnuclear energy is reached, renewable energy will be promoted even morestrongly, IHS predicts.

Wind dominates current publicdiscussions, but solar energy possibly could benefit as well. Onepossible course of action that could benefit the solar industry wouldboost the annual PV installation forecast. Germany likely could increase the annual PV installation target for after 2010 to 5 GW, up from 3.5GW now, increasing the long-term outlook for solar.

Solar seasons
Despite potential impacts on the long-term outlook, PV installations in Germany in 2011 still are expected to follow a similar pattern to that of2010—with the exception of a four-week delay this year, because pricesdidn’t fall fast enough to enable investment conditions for the Germanmarket to take off.

Installation growth will accelerate in April and then peak in June, followed by a cooling-down period in the thirdquarter. The fourth quarter is expected to be strong again, just beforenew regulations and feed-in tariffs (FIT) are applied in 2012, IHSiSuppli research indicates.

All told, PV installations in Germany in 2011 are projected to reach 7.2 (GW), down 3.5 percent from 7.4 GWin 2010. Growth this year will oscillate, with moderate expansions inthe first and third quarters alternating with very strong increases inthe second and fourth quarters, as shown in the figure.

Italy in a bind
In Italy, the second-largest solar market in the world after Germany, thegovernment announced a hold on all plans for future nuclear powerstations during the next 12 months while it re-evaluates the role ofatomic energy for the country.

Ironically, this has occurred at a time when PV demand in Italy has come to a near halt because of thegovernment’s actions. The Italian government’s announcement on March3—eight days prior to the Japanese disaster—that it would launch a newFIT program with fewer incentives by early June came as a shock to thelocal solar industry, causing installation activity to stop immediately.

Solar investors in Italy expressed concerns about not beingable to meet the end-of-May deadline for any PV installations that theywere to undertake, for fear of running afoul of the expected newguidelines. According to unofficial reports, the annual cap would beplaced at 1 GW, and ground installations on farmland would be limited to just 1 megawatt in size.

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

With both sides at loggerheads, the pressure createdby the solar lobby in Italy likely will force the government toreconsider its new plans so that they do not push through, IHS believes. Furthermore, the Fukushima incident will lead to a new assessment ofnuclear and solar energy in the country.

Not including thepossible effect of the Japan crisis in the months to come, the ItalianPV market is expected to develop very positively in 2011, with anexpected cap of 1.5 to 2.0 GW from 2012 onward.

Source: IHS iSuppli, USA.