Supplementing German market share

Written by Brian Hicks
Posted February 8, 2006

Back in 2002 I took my fourth trip to Gottingen, Germany - a small, university town just north of Frankfurt and east of Dortmund.

It's one of my favorite German towns as much of its early architecture has hardly been altered since the early 19th century - some time after George II, Elector of Hanover founded Gottingen University. (Though the first recorded mention of the area came as early as 953 when Kaiser Otto I granted the village to the Moritz Monastery in Magdeburg) Disregarding the half-assed history lesson however, many travelers like me are grateful for the meticulous steps the residents of Gottingen have taken to maintain the city's charm and antiquity.

Though I have to say I was quite surprised when, on my 2002 trip, I found local contractors installing PV on some of the old rooftops. Now I'm not sure what the local zoning laws are there, but I imagine they're pretty strict. Nonetheless, in an effort to supply a clean and renewable source of energy, the past shook hands with the future - and there didn't seem to be any complaints.

That's one of the things I love about Germans. Generally speaking, Germans tend to be straight shooters. They put their minds to something - and efficiently, they follow through.

From 1999 to 2003, under the "100,000 Roofs Program," 65,324 PV systems were produced in Germany, totaling 342 MW of capacity.

The government stimulated this program by offering 10-year, interest-free loans, waiving the last installment payment and guaranteeing a "feed-in" incentive of 8.5 euro cents per kilowatt-hour. But when the Renewable Energy Sources ACT (EEG) was introduced on April 1, 2000, the PV incentive price jumped to 50.62 euro cents (U.S. $0.66).

By the end of 2004, Germany had become the world's largest PV installer.

In 2004, the Renewable Energy Act was amended. With a base incentive of 45.7 euro cents, the incentive increased to 54 to 57 euro cents (U.S. $0.70 to $0.75), depending on the size of the PV systems. And for PV systems integrated into building surfaces (this is the BIPV I'm always talking about), the incentive is further increased to 59 to 62.4 euro cents (U.S. $0.77 to $0.81).

The law also requires grid operators to give preference to renewable energy generators, and to guarantee connection to the grid.

Brother, can you spare some silicon?

As Germany was clearly one of the first countries to get serious on solar, it's no surprise that some of today's most profitable solar outfits are German.

In fact, just this week, German PV manufacturer, Solarworld AG, announced that its 2005 profits nearly tripled from 2004.

Solarworld's net profit rose to euro52 million from euro18 million in 2004, and sales jumped 78% to euro355 million.

And last week, the company announced that it's going to acquire all of Royal Dutch Shell's solar crystalline operations. With approximately 80 MW of PV production being shifted over to the German manufacturer, the agreement will make Solarworld the largest producer of PV in the U.S.

Of course, with the silicon shortage PV manufacturers are facing today, it's not surprising Royal Dutch Shell decided to give up its solar crystalline operations.

As it stands now, the shortage is expected to last until 2007-2008.

Nonetheless, the scarcity won't last forever. And Solarworld has enough access to silicon to weather the storm...and more importantly, profit from the burgeoning U.S. solar market.

In the meantime, Royal Dutch Shell is focusing on 'next-generation' technologies - like CIS thin film solar.

CIS thin film solar is based on Copper, Indium and Selenium. And while these cells typically produce a lower total energy output than crystalline solar cells - they're also much cheaper to manufacture and don't rely on silicon.

Last fall, Royal Dutch Shell announced that its CIS solar achieved 13.5% efficiency. This is a new record for thin-film!

Interestingly enough, while the company handed over 80 MW of yearly production capacity potential from its crystalline operations - it held on tightly to its 3 MW production line of thin-film CIS solar in California. And the same day this announcement was made, Royal Dutch Shell struck a deal to explore the construction of a 20 MW CIS module production facility with France-based glass outfit, St. Gobain.

Another company that's done quite well dealing with the silicon shortage is Evergreen Solar (ESLR:Nasdaq).

Evergreen's 'string-ribbon' PV technology yields over twice as many solar cells per pound of silicon as conventional methods. Moreover, the company has access to a wealth of silicon.

Last November, Evergreen Solar announced a partnership with Renewable Energy Corporation - the world's largest manufacturer of solar-grade silicon and multicrystalline wafers.

In conjunction with becoming a stakeholder, Renewable Energy Corporation agreed to the long-term supply of solar-grade silicon to Evergreen.

Throughout the year, we're going to continue to hear a lot about silicon alternatives and silicon conservation. And these are the issues that will dictate market share during and beyond the silicon shortage.

PV manufacturers that don't have access to large amounts of silicon now, but are knee-deep in R&D (pumping out nanotech solutions and ultra-efficient PV) are the ones that will be able to compete with solar giants like Solarworld, Evergreen Solar, BP Solar, Sharp and Kyocera.

In fact, it is this 'next-generation' technology that could catapult some of these smaller solar firms (still trading below $1.00 per share) to tremendous heights...allowing them the lion's share of the PV market in less than two years.

For more on these 'next generation' technologies, as well as the latest in PV news, visit

Until next time,

Jeff Siegel
Managing Editor, Green Chip Stocks