The German photovoltaic market, once the global leader in solar energy growth, is now experiencing a significant decline. In 2013, new installations are expected to drop by 55% compared to 2012, reaching only 3.3 million kilowatts. This marks the first year-on-year decrease in seven years. The drop is mainly due to falling feed-in tariffs and declining panel prices, which have reduced the profitability of solar power generation. As a result, Germany is losing its top position to countries like Japan, the U.S., and China. Moving forward, Asia and the U.S. are expected to take the lead in driving global solar growth.
According to BSW-Solar, Germany’s new solar capacity in 2012 reached 7.6 million kilowatts, making it the world’s largest market. However, in 2013, it plummeted to just 3.8 million kilowatts—lower than the 2009 level. This sharp decline reflects the impact of policy changes and economic pressures on the sector.
EPIA reports that as of 2012, China had a total installed capacity of 5 million kilowatts, second only to Germany. The U.S. reached 3.35 million kilowatts, while Japan had 2 million kilowatts. With strong government support, these three countries are set to surpass Germany in 2013.
Italy, which had led the world in 2011, saw its capacity drop by 64% in 2012, falling to 3.44 million kilowatts. The trend continued into 2013, signaling a broader slowdown in European solar expansion.
The shrinking German market is partly due to the government’s decision to cut feed-in tariffs starting mid-2012. To control rising electricity costs, Germany moved from semi-annual to monthly adjustments, reflecting actual generation costs. By December 2013, solar feed-in tariffs had dropped to between 9.61 and 13.88 cents per kWh—about a 50% reduction over two years.
Meanwhile, installation costs for solar systems rose slightly between October and December 2013. Although panel prices had been falling due to cheaper Chinese imports, an EU-China agreement on anti-dumping measures limited Chinese exports to Europe, leading to higher prices. Combined with lower purchase prices, this created a challenging environment for new investments.
In 2013, Germany generated 29.7 billion kWh of solar power, accounting for about 5% of national electricity consumption. Small-scale solar installations still receive higher feed-in tariffs than industrial ones, and household electricity prices continue to rise, encouraging more homeowners to install solar panels in the future.
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