PV market deployment is largely dependent on the political framework of any given country. Recently, the threat of a speculative bubble due to strong demand and rapid growth in the renewable energy sector has spurred several European governments to review their policies in support of the PV sector.
The French government established a three-month moratorium on approval of new PV installations as of December 2010. That moratorium ended on March 9, 2011. Subsequently, the government promulgated a revised PV feed-in tariff program as part of a new regulatory framework.
The new regulations set the annual target production of electricity at 500 MW, further provide for an automatic quarterly adjustment of the feed-in tariff according to the volume of project applications, and require mandatory calls for tenders concerning large roof-panel installations and solar farm projects. In addition, new projects will have to comply with certain requirements regarding environmental quality and provide a bank completion guarantee.
The German government promoted the PV sector through feed-in tariffs and other incentives that were introduced by the Renewable Energy Act in 2000. Germany’s cumulative solar PV installed capacity increased from 195 MW in 2001 to 5,337 MW in 2008. By the end of 2009, Germany’s PV energy output had increased substantially to 9.8 GW, representing more than half the global market share, and making Germany the world’s largest solar market.
The feed-in tariffs were charged to all consumers and covered the 1 billion Euros per month cost of subsidizing new PV installations. In response to complaints that the system was over-subsidizing the renewable energy industry and costing the consumer too much, the German government decided, at the end of January 2011, to advance the date of the next price reduction for purchasing electricity by six months. This price reduction will amount to between 3% and 15% effective July 1, 2011, depending on the sector’s growth.
Despite these cuts in feed-in tariffs, observers predict that the German PV market will continue to thrive and lead the global marketplace throughout 2011, with 9.4 GW worth of additional installations.
Policies implemented by the Spanish government fostered the growth of the PV market through 2008, with output growing from 35 MW in 2005 to 110 MW in 2006, securing Spain the second position among European PV markets. Spain topped the European market for new installations in 2008.
After its record-breaking year in 2008, the Spanish government placed a cap on new PV installations, which caused the PV market in Spain to plummet to an estimated 70 MW of new installations in 2009. This unprecedented rise and fall in PV plant installations prompted the government to establish a new legal framework that limits the number of new PV installations to a 500 MW per annum.
At the end of January 2011, the government also decided to reduce the number of hours during which facilities can be operated over the next two years by 30%. This new regulation, which would apply retroactively to pending applications, has been challenged by the EU authorities and PV sector professionals.
The PV market substantially increased in Italy after a series of incentives known as “Conto Energia” went into effect in 2007.
Under this favorable legislation, if a PV producer installs a power plant that not only generates electricity for domestic use but is also linked up to the local grid, that producer will be able to save money on the power he no longer buys from Enel, the local power provider. He will also be entitled to sell any excess electricity to Enel at a fixed price (feed-in tariff), which will subsidize its initial investment.
The government’s strong support of the PV industry through feed-in-tariffs contributed to rapid growth in the PV sector in Italy, particularly in the residential field. Experts predict that in 2011 the Italian PV market will continue to expand, growing a full 100% to 3.9 GW, up from 1.95 GW in 2010.
Since 2009 the Czech Republic has grown to be a leader in Europe for the use of PV energy. The country has been fueled by foreign investments, creating a solar boom comparable to that in Spain in 2008. As a result, the output of its newly installed PV plants was the third highest in the European Union in 2010 and topped 1,000 MW.
However, the Czech Republic’s government recently undertook measures to drastically reduce the number of new PV plant installations. The government cut more than 50% of the feed-in tariff for solar power plants with an output of over 100 kilowatts, imposed a 26% tax on PV energy from PV plants with an output of over 30 KW production for the next three years as well as 32% tax on carbon credits awarded to solar companies in the next two years, and implemented higher fees for the use of farmland for building PV plants.
As from January 2011, the new taxes will be retroactively applied to all ground-mounted PV plants built in 2009–2010, which means a decrease of the purchase prices of solar energy under the feed-in tariffs that were supposed to be guaranteed to investors by the government for 20 years. The proceeds from the taxes will be used to reduce the increase in household and industrial electricity prices next year.
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