Cutting subsidies will not reduce demand for photovoltaic products in the German market

Jefferies&Co. Solar energy technology analyst Jesse Pichel wrote Friday that the German subsidy reduction plan for solar power projects expected to be announced next week will lead to a reduction in the average selling price of PV modules, but the intention of the plan is not to prevent the development of related projects.

Jesse Pichel expects Germany's feed-in tariff will be reduced by 9% to 12%, but he also expects that Germany will have a huge new installed capacity of 5-6GW this year. The slow increase in installed capacity in the second half of last year fundamentally means that subsidy cuts will not reduce the demand for new installed capacity this year.

Of course, Jesse Pichel also predicts that the average selling price of PV modules will accelerate after the implementation of the 9% reduction in subsidies in April. Although not saying how fast the pace of price declines has become, Jesse Pichel clearly stated that the total installed capacity of a solar system with a roof of an average size makes the price of photovoltaic modules that can be supported by this kind of project be US$1.5 per watt. The price for the roof-like projects is 1.38 US dollars; as for the ground-based photovoltaic systems with large single cells, the price of photovoltaic modules is required to be as low as 1.25 US dollars per watt.