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German solar sector pulls in big investors

Subsidies for Germany's solar energy industry will see smaller cuts and the sector is set for consolidation in what many say is the crucial next step in its development, writes AFP’s Lenaig Bredoux.

German solar sector pulls in big investors
Photo: DPA

Global electronics group Bosch was first off the mark, announcing the purchase last week of German solar energy equipment producer Ersol. Bosch is set to spend more than 500 million euros ($770 million) for a majority holding in Ersol and could invest up to 1.1 billion if it decides to take full control.

Analysts at the private bank Sal Oppenheim called it “the boldest move so far in what we see as the start of a consolidation process in the solar industry.”

Matthias Fawer of the Swiss bank Sarasin who wrote a study on the sector, had a similar view. “It is a very positive sign for the the photovoltaic industry that a major

company is entering the market,” he told AFP. “This is proof the market is reaching maturity. Others may follow.”

WestLB analyst Peter Wirtz added: “Other large industrial groups are potentially interested in entering the sector as part of their long-term strategy.”

The main reason is solar energy’s growth potential in light of soaring oil prices and a possible depletion of the earth’s fossil fuel resources. “The market is going to grow by more than 20 percent per year over the next decade,” forecast Carsten Körnig, head of the German sector federation BSW.

In Germany alone, which leads Europe in the solar energy field, sales are expected to double within three years to 10 billion euros in 2010, according to a study by the Ifo and EuPD Research institutes. Turnover is then tipped to quadruple by 2020 and to multiply seven-fold by 2030.

“And it is not only in Germany, in every country in the world we realize we don’t have enough energy sources,” Körnig told AFP.

That said, not all solar energy pioneers will profit from the anticipated boom, analysts say. The sector attracted hundreds of entrepreneurs but represents only around one percent of total German energy production. “Many companies are too small,” Wirtz said.

Created for the most part in eastern Germany, companies must compete with Chinese rivals that are also in their early stages but will undoubtedly grow as well, putting pressure on prices. Major investments, meanwhile, are required to develop technology that is still in its infancy.

BSW estimates that solar energy will only be able to compete with fossil fuels in five to seven years. That is the time needed for large, specialised companies to emerge and to attract investment from traditional industrial groups in the automotive and machine tool sectors.

“It is important that during this phase of expansion, we do not lack capital. So that we make the competitive leap successfully,” Körnig said. He said he was satisfied that a draft law adopted which after much debate would extend the period during which the sector benefits from subsidies. “At term, there will be large companies and niche players,” said Wirtz at WestLB.

Meanwhile, jobs in the sector should grow, according to Ifo and EuPD Research, from 41,000 last year to around 110,000 by 2020.

ENERGY

Sweden’s parties agree on goal to cut peak power consumption

Sweden's Social Democrat caretaker government has agreed with the incoming Moderates on a goal of cutting peak power consumption by 5 percent as part of an EU scheme.

Sweden's parties agree on goal to cut peak power consumption

Now the election is over, both parties seem willing to consider ways to encourage citizens to reduce power use, an obvious measure to reduce winter power prices that was conspicuously absent from the campaign. 

At the same time, the Moderates are downplaying their election campaign pledge to bring in “high-cost protection” to reimburse citizens for much of the impact of high power costs by the start of November. 

At a meeting of the parliament’s Committee on Industry and Trade, the two parties agreed that both the caretaker Social Democrat government and the incoming Moderate-led government should take action to cut power consumption by between 5 percent and 10 percent. 

“If we succeed in carrying this out on a coordinated EU level, we will be on the way to at the very least halving electricity prices,” Energy minister Khashayar Farmanbar told Sweden’s TT newswire. 

“We stand behind the ambition to reduce consumption,” agreed Carl-Oskar Bohlin, the Moderate Party’s power spokesperson, after a meeting of the committee on Wednesday. 

But he said that meeting the goal would be very much dependent on outside factors, particularly how cold the winter is in Sweden. 

“Then there are questions of how that should happen practically in real terms,” he said. “In Sweden, electricity use is largely dependent on the outside temperature. If we have a mild winter, it will be extremely easy to hit the 5 percent target, if we have a really harsh winter, it might be impossible.”

The Moderates are agreed that the public sector should reduce “unnecessary power consumption”, but have yet to agree on measures that households should take, such as reducing indoor temperatures or turning off the lights. 

At the same time, Bohlin admitted on Wednesday that the high-cost protection that Ulf Kristersson pledged in the campaign by November 1st, may be delayed by the government negotiations. 

“We promised high-cost protection from November 1st, on the condition that a new government was in place rapidly,” he told the Svenska Dagbladet newspaper. “The problem is that Svenska kraftnät [the company that owns and operates Sweden’s power grid], is working to another schedule, one given by the current government.” 

The outgoing Social Democrat government has given Svenska kraftnät until November 15th to propose a system for high-cost protection. The cash paid back to households and businesses would be taken from the bottle-neck income which the grid operator receives as a result of capacity shortages in the network. 

The outgoing Social Democrats have also changed their rhetoric since the end of the campaign .

On September 9th, two days before the election took place, the Social Democrat government framed a meeting of EU ministers on September 9th as a “breakthrough” in the EU negotiations. 

Farmanbar is now describing it as “a process”. 

“What we can promise right now is that we’re going to work as hard as we can to get a breakthrough,” he said. 

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