Development of the PV industry in Europe Michel VIAUD General Secretary

WHO is EPIA? Non-profit orginasition existing since 1985 75 members: 59 full + 16 associate 59 full: manufacturers on the overall value chain Budget 2005: 1 000 000 € ( EC 1/3 + 2/3 members) Secretariat in Brussels - the heart of EUROPE : 6 permanent employees speaking 13 languages 6 Board members elected for 3 years President per year Winfried Hoffmann 2004-2005 2005-2006 Murray Cameron

EPIA and its members EPIA represents 95% of the photovoltaic European industry, covering the whole production chain. Silicon feedstock: Wacker … Wafers and Ingots: Crystallox, Scanwafer, PV Silicon … Cells: Q-cells, BP Solar, Isofoton, Shell Solar, Deutsche Solar,… Modules: RWE Schott Solar, Photowatt, Photovoltech… Systems: Total Energie, Naps Systems, Conergy, Phoenix,… Inverters: SMA, Philips, Sunways, Fronius…

EPIA and its members Top 10 worldwide – 9 EPIA members Source: EurObserv’ER, Photovoltaic Energy Barometer 2005

EPIA and its members EPIA members 80% of world cell production in 2004 Mitsubishi; 75; 6% Shell Solar; 72; 6% Sharp; 324; 28% Kyocera; 105; 9% BP Solar; 85; 7% Q-Cells; 75; 6% Sanyo; 65; 5% Isofoton; 53; 4% RWE; 44; 4% Deutsche Cell; 28; 2% Others; 268; 23% EPIA members 80% of world cell production in 2004 Source: EurObserv’ER, Photovoltaic Energy Barometer 2005

Dependant on market support programs Market Segments Economically viable Dependant on market support programs Consumer Off-Grid Industrial On-Grid Off-Grid Residential Source: Strategies Unlimited Knapp die Hälfte aller in in 2001 verkauften Solarzellen und -module wurden in Anwendungen eingesetzt wo PV Solarstrom entweder die kostengünstigste (wie bei den meisten netzfernen industriellen und ländlichen Anwendungen) oder einzige Lösung zur Realisierung eines Kundenwunsches darstellt. Die netzgekoppelten Anlagen sind bis jetzt nur mit Marktunter-stützungsprogrammen für den Anwender wirtschaftlich attraktiv. Letztere wurden als industriepolitische Instrumente in den Wirtschaftsregionen Japan, Deutschland und USA zur Entwicklung der jeweiligen produzierenden Industrie eingesetzt. Das Erreichen der Wirtschaftlichkeit in diesem Marktsegment wird in den Bildern 7 bis 9 erläutert.

Competitiveness of PV Solar Electricity proven in the three segments: industrial off-grid consumer rural electrification coming soon in grid-connected systems First, in local replacement of peak tariff electricity kWh in liberalized southern OECD countries (… 2010 … 2015) Second, the same in more northern OECD countries (… 2020 … 2025)

Solar-Grade Silicon SUPPLY CAN NOT FOLLOW DEMAND. CAGR Poly-Demand 2004 - 2010: + 15 % Module production (MW) and Polysilicon Production (tons) tons MW 3,1 GW Feedstock for the PV Industry Karl Hesse, Ewald Schindlbeck, April 11 2005, Page 8

Semiconductor Cycles

Electricity Generating Cost for PV and utility prices Photovoltaics Utility peak power Bulk power Specific investment costs in Germany reduced due to economy of scale in production since the start of the 1,000 roof program. Electricity generating costs for Northern and Southern Europe are shown. Extrapolation into the future with 5% decrease per year as in the past ten years. If in the same plot the price for electricity purchase from the utility is displayed, different break even points with PV electricity result accordingly whether peak power or which region is referred to. Source: RWE Energie AG and RSS GmbH

Competitiveness Correlation between Daily PV Power Production and Energy Consumption of an Office Building in Spain Plotted is the typical load profile during the course of the day for an office building in Spain. The electricity demand in the office building exhibits a pronounced peak between 9 and 16 hours which is significantly higher in summer than in winter. Synchronously in phase to this demand, PV energy is produced by the solar modules. This is in contrast to the use of wind energy, which can economically best be used in the future in central power stations (multi Gigawatt off-shore) where by the stochastic yield of wind a temporal assignment is not possible. With solar radiation in turn, a clear temporal and seasonal assignment is possible. Due to this reason, for the assessment of electric energy from different energy sources, the cost calculation for time dependent electricity tariffs will strongly depend on the temporal availability of the energy sources: e.g. conventional energy generation and large hydroelectric stations as compared to new energy generators (wind and PV solar electric).

Competitiveness Spot Market Prices in Correlation with PV Electricity Generation in Germany Spot market price PV power output Source:

World PV Market Size and Application Segmentation 200 400 600 800 1000 Market Size in MWp 1998 1999 2000 2001 2002 2003 2004 Off-Grid & Consumer on-Grid 18 % p.a. 63 % p.a. 40 % p.a. 13

Comparison of the Future Market Development in Europe and Japan 1000 2000 3000 4000 5000 6000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 cumulated installations in MWp 200 400 600 800 1200 1400 Yearly installations in MWp Yearly installations mainly Germany Cumulative installations mainly Germany Additional EU-installations e.g. EU-wide feed-in tarriff program (not contained in accumulated curve) Yearly installations Japan In analoger Weise zu den in Bild Nr. 20 diskutierten Zielen in Europa sind hier die Ziele des japanischen METI dargestellt: statt 3.000 MW kumulierter PV-Leistung in 2010 werden hier 4.800 MW angestrebt! Da Economy of Scale zwingende Voraussetzung zum Erfolg einer commodity-Fertigung ist, ergibt sich hieraus die wichtige Folgerung, dass wir in Europa nicht diskutieren sollten, ob die angestrebten 3.000 MW auch etwas geringer ausfallen dürften, sondern wir alle Anstrengungen unternehmen sollten, zu den japanischen Zielen aufzuschließen! Dies ließe sich mit hoher Erfolgswahrscheinlichkeit mit einem europaweiteten Stromeinspeisegesetz für PV Solarstrom realisieren. Cumulative installations Japan

Market Data Europe including the 100,000 Rooftop Program / Feed-in Tariff (EEG) in Germany 50 100 150 200 250 300 350 400 450 1998 1999 2000 2001 2002 2003 2004 Yearly Installed MWp DE EU without DE 100.000-Dächer- Programm KfW EEG Das 1000-Dächer-PV-Programm wurde im Zeitraum von 1990 bis 1992 durchgeführt. Es war weltweit als erstes flächendeckendes Programm zur erfolgreichen Demonstration der Leistungsfähigkeit von PV-Solarstromanlagen anerkannt worden. Aufgrund der "Kleinheit" des Programmes (ca. 2 MW pro Jahr) war - wie oben in der Abbildung zu sehen - leider keine Auswirkung auf das Jahresvolumen festzustellen. Der fulminante Marktanstieg seit 1999 ist auf das 100.000-Dächer KfW-Finanzierungsprogramm und insbesondere das in 2000 in Kraft getretene Erneuerbare Energieeinspeisegesetz (EEG) zurückzuführen: in nur 4 Jahren ist eine Verzehnfachung des Marktes zu verzeichnen Die derzeitige Novellierung des EEG, die den Wegfall der KfW-Finanzierungsprogramme durch eine erhöhte Einspeisevergütung kompensieren soll, kann gemäß dem vorliegenden Referentenentwurf (siehe Bild Nr. 19) für einen weiteren moderaten Ausbau der Jahresvolumina eine gute Grundlage bieten. Source: IEA PVPS

Influence of Feed-in tariff on an annual PV installation in Germany (MW) 50 100 150 200 250 300 350 400 1990 1992 1994 1996 1998 2000 2002 2004 New Feed-in Law Feed-in Law 1,000-Rooftop program (2.500x3kW) 100,000-Rooftop program KfW Source: @ RWE SCHOTT Solar GmbH and EurObserv’ER, Photovoltaic Energy Barometer 2005

Germany vs Rest of Europe in 2004 (MWp) 768 26 172 61 200 400 600 800 Germany Rest of Europe Off-grid On-grid

Total installed capacity in Europe in 2004 (MWp) 100 200 300 400 500 600 700 800 Others Belgium Denmark Portugal Finland Sweden Greece Great Britain Austria France Switzerland Luxembourg Italy Spain Holland Germany On-grid Off-grid

The most effective support programme Feed-in tariff Advantages : Focus of customers will be on product quality and performance of the systems for a long period of time Investors confidence secured (attractive rate of return for investors) Does not a burden on public funds No Bureacratic constraints Appropriate Tool to stimulate Industrial Investment

Feed-in law as an industry political action to reach competitiveness for the European industry of new technologies

EEG - the most effective program worldwide to stimulate the renewable energy market Equal market opportunities for all the renewable energies based on specific feed-in-tariffs Customer focus is on product quality and performance as a result of high competition in the market The long reliable availability (>20 years) of the system performance is the key requirement of the end-user of renewable power technologies In contrast to short-term cash subsidy programs the new law offers a perfect basis to forecast annual sales volumes in the mid-run EEG Win-win-situation:  stimulation of customer‘s demand  Economy of scale in production (e.g. SmartSolarFab® RWE Schott Solar)  defined decline of feed-in-tariff rate and price level of system

Annual Market Potential until 2010 (2015) assuming a quick Introduction of an EU-wide Feed-in Tariff System Country Populatio n [Mio] Market 200 4 [MW] Potential 2010 (2015) Germany 80 363 600 < 1.000 France 60 5.87 100 > 500 UK 1.9 50 Italy 4.3 200 Spain 40 11.8 Greece 10 1 .3 Ben e lux/Austria 30 2 0.83 150 700 Rest of EU - 15 1.26 New EU states 75 0.2 Total 455 410.5 Up to 1.5 5.000 For comparis o n: Japan 130 277 1.200 ca. 4.500 Source: @ RWE SCHOTT Solar GmbH and EurObserv’ER, Photovoltaic Energy Barometer 2005

0,60 €/kWp < 20 kWp 0,47 €/kWp > 20 kWp Country Price Installed capacity on 31.12.2003 (kW) 31.12.2004 off-grid on-grid total Austria 0,60 €/kWp < 20 kWp 0,47 €/kWp > 20 kWp 1 950 7 050 9 000 Belgium 0,45 €/kWh (only in Flemish part on 01.2006) 530 Cyprus 0,26 €/kWh    15

Czech Republic 0,19 € /kWh 147 216 363 Denmark no feed-in tariffs 215 1375 1 590 Estonia 0,05 €/kWh 2 Finland   2 890 140 3 030 France in metropole 0,15 €/kWp < 5 kW for residential system 0,15 €/kWp < 150 kW for non-building systems such as noise barriers 0,15 €/kWp < 1 MW for commercial and public buildings 15 299 1 942 17 241 0,30 €/kWp for installations in Corsica and Overseas Dep Germany rooftops facades 0,574 €/kWp 0,624 €/kWp <30 kW 0,546 €/kWp 0,596 €/kWp <30 ;100> kW 0,540 €/kWp 0,590 €/kWp >100 kW 16 700 260 600 277 300 Greece 0,06 €/kWh for mainland grid 0,08 €/kWh for autonomous island grid 1 330 1 040 2 370

Hungary 0,073 €/kWh 83 55 138 Ireland   Italy Decree 05.08.2005 0 to 20kWp = 0.445 €/kWh 20kWp to 50kWp = 0.46 €/kWh > = 0.49 €/kWh 12 400 10 350 22 750 Latvia 0,10 €/kWh = price that equals the double average sales tariff for the conventional electrical energy - now it is app. 0,05 €/kWh 3 Lithuania 0,056 €/kWh 17 Lux 0,45 €/kWh 3500 Malta  9 Netherland 0,07 €/kWh 4 632 21 694 26 326

Tariff for IPP (Independent Power Producers): Poland no feed-in tariffs 165 69 234 Portugal Tariff for IPP (Independent Power Producers): 0,51 €/kWh <5 kWp 0,28 €/kWh >5 kWp 1 276 392 1 668 tariff for producers that consume 50% of generated energy (producer-consumer law): 0,25 €/kWh (independently of the installed capacity) Slovakia 10 10j) Slovenia 0,375 €/kWh <36 kW 0,065 €/kWh >36 kW 90 6 96

Spain 0,40 €/kWh <100 kW 0,22 €/kWh <100; 50 000> kW 0 >50 000 kW 11 390 7 910 19 300 Sweden no feed-in tariffs 3 100 180 3 280 UK 568 3 568 4 136

Contribution of PV Solar Electricity to Global Electricity Production in 2040 [%] Source: Own estimates together with "advanced scenario" according to EREC 1 marine 2 geothermal 3 biomass 4 hydro 5 wind 6 solar thermal PV solar electricity 100 % RES 29,808 TWh (≡ 80 % of total) Total electricity consumption 36,346 TWh (from 15,578 TWh in 2001, IEA)

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