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Solar energy installation greed could destroy the long-term sustainability of the industry

Luvata solar energy expert warns more responsive regulation of feed-in tariffs is needed to protect against extremes seen in Germany spreading across Europe

(4 March 2010) A leading solar energy industry expert at the global metals, manufacturing and technology group Luvata, a major solar panel component manufacturer, has called for a new regulatory structure for the solar industry to protect it against the boom that has forced the German government into a drastic reduction in feed-in tariffs.

Although it is calling for regulatory changes to feed-in tariffs, Luvata is a staunch advocate of the principle of them, as Dr Petri Konttinen, Senior Solar Energy Consultant at Luvata explained: “Feed-in tariffs enable the market growth which leads to the benefits of mass production and the development of more advanced and cheaper technologies. However they need to be managed in such a way that limits drastic market movements that can endanger manufacturers supporting the industry. If left unchanged, poorly implemented feed-in tariffs have the potential to deter other countries from embracing a fundamentally sound programme or worse yet, endanger the industry as a whole.”

Dr Konttinen has warned that prospectors rushing into the solar market to take advantage of short-term profits could damage the long-term sustainability of the global solar power industry. These short spurts of growth will most likely lead to long periods of stagnant growth.

The German solar industry has predicted a 44% reduction in the price paid by utilities for solar energy generated with photovoltaic panels if the government goes ahead with its proposed feed-in tariff rate cuts1, which act as a subsidy to help energy producers generate solar power.

The bubble in Germany stemmed from the government doubling the rate at which the feed-in tariff decreases year on year, just over a year ago. Reductions in the cost of raw materials and the ensuing over-supply of solar panels contributed to a 25-30% reduction in the price of building a solar farm, but with no equivalent reduction in the feed-in tariff, the market suddenly promised huge returns for anyone opening a solar farm before the end of last year, which caused a huge influx of speculators generating solar power.

Dr Konttinen continued: “Feed-in tariffs have been the most important support mechanism for the growth of the solar power market but the current legislative framework that governs them is too inflexible and slow to react to changes in the market, which is why we have seen such volatility in the solar electricity markets in Spain in 2008 and Germany in 2009 for example. Recent news indicates the French are actually planning to increase building-integrated (BI) PV tariffs, perhaps suggesting the biggest onslaught is yet to come.

“We need a more responsive approach to feed-in tariffs and agreement on how we support and develop a sustainable solar energy industry.  If the triggers to re-evaluate feed-in tariffs continue to be on a reactive basis instead of proactive, the feast or famine tendencies will continue.”

“Governments need to work together with the photovoltaic industry to create a framework which can use real time indicators such as the number of people investing in solar panels, purchase and installation costs, supply and demand, and the amount of energy feeding into the system to adapt the tariffs according to the current state of the market. This will help prevent the necessity for drastic steps to be taken to adjust to the huge market shifts that have already had a profoundly negative effect on the industry.”

Luvata has been developing its expertise in photovoltaic power and in early 2008 announced a further investment of €20million into its photovoltaic wire, SunwireTM. 

                               

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Notes to editors:

1 Bloomberg 4 February 2010

About Luvata

Luvata is the leading international metals supplier of solutions, services, components and materials for manufacturing and construction. Luvata’s solutions are used in industries such as power generation, architecture, automotive, transport, medicine, air-conditioning, industrial refrigeration, consumer products and construction. The company’s continued success is attributed to its longevity, technological excellence and strategy of building partnerships beyond metals. Employing over 7,500 staff in 18 countries, Luvata works in partnership with customers such as Siemens, Toyota, CERN, Shaaz, and DWD International. 

 

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