The Photovoltaic Industry in Germany – The World’s Strongest PV Cluster Industry Overview
The Photovoltaic Industry in Germany
Germany is the Geo-
High-tech PV products are developed, produced and made commercially available in Germany where leading global PV players (more than 60 PV manufacturers) and innovative SME form the largest PV industrial cluster in the world.
graphic and Economic Center of Europe Situated at the heart of Europe, Germany is far and away the world‘s largest photovoltaics (PV) market in terms of turnover (2007 revenue of EUR 5.7 billion) and sheer market size (49 percent global market share or 1,100 MWp of newly installed PV power alone in 2007).
Expected double-digit market growth for years to come offers excellent investment opportunities in a supportive and dynamic business environment.
Equipment suppliers (more than 60) along the whole value chain ensure quick timeto-market and provide invaluable firsthand knowledge and experience in the PV industry.
Germany is Europe’s leading PV manufacturer, and the third largest PV production force internationally. Germany converts more solar energy into electricity than any other country.
Finland
Sweden
Norway
Estonia Moscow Latvia Denmark
Ireland
< 24 h by
truck
United Kingdom
30 h >
Lithuania RU
< 12 h
15 h >
Belarus
Netherlands
Belgium
Germany
Poland
Luxembourg
Ukraine
Czech Republic Slovakia
France Switzerland
Austria
Moldova
Hungary
1.5 h >
Slovenia Croatia
Romania
BosniaHerzegovina
Portugal
Serbia
Spain Montenegro
Italy
Bulgaria Macedonia
Albania
3h>
Greece
Turkey
Malta
Member States of the European Union
Cyprus
The German Photovoltaic Industry in Numbers
- Net investment levels in Germany are set to increase to EUR 2.7 billion by 2010.
World Market Share 2007 (EPIA)
- Some EUR 175.8 million was invested in - Germany is the worldâ&#x20AC;&#x2122;s largest PV mar- R&D in 2007. This ďŹ gure is expected to rise ket with 49 percent of global installations to EUR 224.1 million by 2010. in 2007. - There are around 60 PV manufacturers - Newly installed PV power capacity of 1,100 based in Germany. MWp in 2007 contributed to an overall accumulated PV power total of 3.8 GWp. - At present, there are more than 42,000 people employed in the German PV in- The forecast compound annual growth rate dustry. for the period 2007 to 2012 is an impressive 28.7 percent. - The federal states which make up eastern Germany have become a major hub - German PV turnover for 2007 reached the of German renewable energy activity. EUR 5.7 billion mark.
13% 10%
49% 12%
4% 12% Total ~ 2250 MWp
Germany Spain Japan
USA Rest of Europe Rest of World
Source: European Photovoltaic Industry Association, 2007
- In 2007, the PV industry in Germany made net investments of around EUR 1.8 billion.
Estimated Annual Photovoltaics Installations (MWp) by Region Forecast
9.360
10000 Europe
USA
Asia
6.770
8000
2.770
2.017
1.780
1.158
687
413
3.878
3.288
2.244
1.733
2.738
1.701
2.854
3.542
1.100
919
451
255
2000
1.700
2.395
4000
3.959
5.543
6000
0 2007
2008e 2009e 2010e 2011e 2012e 2007
2008e 2009e 2010e 2011e 2012e 2007
Source: LBBW 2007, Sarasin 2007,
Germany
UBS 2007, EPIA 2007
France
Spain
Italy
2008e 2009e 2010e 2011e 2012e Japan
Korea
India
China
Greece
1
Forecasts are average of four recognized studies; for 2011 and 2012 only EPIA and UBS released forecasts.
Industry Overview 2008 www.invest-in-germany.com
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The Photovoltaic Industry in Germany
The Advantages of Ger-
- The world’s leading PV equipment suppli- - Local producers benefit from “Made in ers and superior engineering partners are Germany” quality. close at hand as part of the world-beating PV industrial cluster infrastructure (which - Germany provides direct access to a highly covers everything from cell-related wet qualified and flexible labor pool. Gerchemistry and turnkey lines through to PV many’s dual education system - unique Germany is the largest PV market in the automation and vacuum deposition). in combining the benefits of classroom world, with industry turnover of EUR 5.7 and vocational training over a period of billion in 2007 and double-digit growth - As the home of the world‘s largest PV 2-3 years - is specifically geared to meet rates forecast for the years ahead. Almost industrial cluster, Germany is the ideal industry needs and ensure that skilled half (49 percent) of all PV global instal- location for PV R&D activities. The pres- workers are well-prepared for the worklations are implemented in Germany ence of genuinely world class research place. Existing PV industry experience, alone – making Germany the leading institutions including Forschungszentrum a range of university graduate degree nation in PV installations per year. Con- Jülich (Research Center Jülich), Hahn- courses with a strong PV and renewable stant market growth is reflected in the Meitner Institut (Hahn-Meitner Institute), energies focus, and crossover synergrowing sales numbers of different mar- and the various Fraunhofer institutes (e.g. gies between the semiconductor industry ket actors, and a stimulated export mar- ISE Freiburg) also contribute to make combine to create a readily employable ket. Significant investment opportunities Germany the home of the most success- workforce which ensures that hiring and exist at all stages of the value chain and ful PV R&D programs in the world today. training costs are kept at an absolute in all technologies. minimum.
many as a Location for
Photovoltaic Investments
Excellent Infrastructure - Germany offers investment incentives of up to 50 percent of capital expenditure. In addition, there is extensive support for employment and R&D. - The Renewable Energy Sources Act (EEG) guarantees attractive and fixed feed-in compensation tariffs for 20 years for secure investment. This attractive remuneration package also helps safeguard the long-term demand for PV technology.
Unparalleled PV Know-How - Close cooperation between R&D institutes - Germany is the leading PV manufacturer and equipment manufacturers guaranin Europe, and the third largest PV pro- tees production technology and process duction force in the world. advances for significant cost reductions. - A significant number of the world’s lead- - Manufacturing projects can be swiftly ing PV players are already located in Ger- realized thanks to the close proximity of many and enjoying the myriad advantages leading PV equipment suppliers and the of German PV industry cluster know-how support of the reser ve of engineering and experience. companies and local authorities within the highly developed infrastructure network.
4 Industry Overview 2008
- By investing in the future, Germany is playing a pioneering role in the field of renewable energies. In this legislative period alone, the Federal Government will invest a further EUR 6.5 billion in research, technology, and innovation. The government’s High-Tech Strategy is already ensuring that research is translated into marketable products more quickly, with its Initiative for Excellence, the Pact for Research and Innovation, and the Higher Education Pact creating the optimal research environments to realize innovative investments.
Photovoltaic Manufacturers Located in Germany DENMARK BALTIC SEA
Überschrift
Kiel
BALTIC SEA
Schleswig-Holstein NORTH SEA Schwerin
Hamburg
MecklenburgVorpommern
Bremen
Brandenburg
Lower Saxony
POLAND
Malibu
Hanover
Berlin
THE NETHERLANDS Magdeburg
Schüco
Potsdam
North RhineWestphalia Saxony-Anhalt
Düsseldorf
Dresden Erfurt
Saxony Hessen Thuringia BELGIUM Wiesbaden
Rheinland-Pfalz Mainz
LUXEMBURG
© Invest in Germany design: greisner@typoly.de
CZECH REPUBLIC Saarland Saarbrücken
Stuttgart
Bavaria
FRANCE Baden-Württemberg Munich
National Border (Federal) State Borders (Federal) State Capital
Industry Overview 2008 www.invest-in-germany.com
5
The Photovoltaic Industry in Germany
The R&D Landscape The strong and longstanding cooperation with Germany’s research facilities has helped the German PV industry to attain its current pole position in the world market.
State-funded PV research is also at a high level. In 2007 alone, the German Environment Ministry (BMU) approved 49 new projects with a total project value of EUR 32.1 million, while institutional funding authorized by the Federal Research Ministry (BMBF) provided a further EUR 30 million. The BMU lends priority to market-based research for a rapid transfer of research results into the market.
In fact, Germany has one of the most active R&D landscapes in the PV area, with industry player investment of EUR 175.8 million in 2007, and more than 250 PV patents registered between 2004 and 2007. Looking Public support of R&D is also implemented beyond the impressive facts and figures, at a regional level through incentive proGermany is also home to state-of-the-art grams for companies executing high-qualinfrastructure and some of the world’s ity R&D initiatives. For example, in eastern leading research institutions (for exam- Germany, up to 70 percent of costs (up to a ple, Fraunhofer ISE Freiburg, ISET Kassel, maximum limit of EUR 375,000 per project) HMI Berlin, FSZ Jülich) who are fully capa- – can be subsidized through the “Promotion ble of meeting the latest R&D challenges of R&D for Growth Drivers in Disadvantage in PV for all technologies across all stages Regions/INNO-WATT” program. of production.
Institution
Si feedstock
Germany is pioneering research in new PV technology areas such as organic photovoltaics. BASF, BOSCH, and the Federal Research Ministry signed an agreement in 2007 to invest EUR 360 million over the coming years in order to develop this cutting-edge technology.
Wafer-based
Thin film
Dye & organic
Process and pro-
technology
cell technology
duction technology
¸
¸
¸
¸
¸
¸
www.hmi.de
¸
for Solar Energy Systems
R&D investments to the value of EUR 224.1 million are predicted by 2010, mainly driven by increased product development competition, cost reductions, and material efficiency improvements.
cell technology HMI - Hahn Meitner Institute
ISE - Fraunhofer Institute
Further innovations and R&D investments will help to fuel growth of the thriving PV industry.
Systems
Location
Berlin
¸
Freiburg
www.ise.fhg.de ISC - Konstanz International Solar Energy Research Center
¸
¸
¸
Konstanz
¸
¸
Jülich
¸
¸
www.isc-konstanz.de IPV - Institute of Photovoltaics Research Center Jülich www.fz-juelich.de ZSW - Centre for Solar Energy and Hydrogen Research
¸
Stuttgart Widderstall
Baden Württemberg www.zsw.de ISFH - Institute for Solar Energy Research www.isfh.de
6 Industry Overview 2008
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Hameln
Success Story: “First Solar” Based in Phoenix, Arizona, First Solar is one of the fastest-growing manufacturers of solar modules in the world today. Formed in 1999, the US thin-film solar module manufacturer has been commercially producing its innovative PV products since 2002. The company opened its EUR 115 million PV module manufacturing site in Frankfurt (Oder) in Brandenburg near the Polish border in 2007. First Solar‘s German subsidiary has already secured new PV business in Europe and Canada in the region of EUR 726 million. An energy production target of 685 MW has been set, helping reduce CO 2 emissions by 160,000 tons in one year alone. Background First Solar wanted to break into the European market to meet the growing European demand for P V products. The company required a production facility in a region close to equipment manufacturers with excellent access to a highly trained labor pool and main markets.
Selected Invest in Germany Success Stories
Size and Type of Facility
100 MWp Cell & Module Factory (Ribbon Si)
175 MWp Module Factory (CdTe)
80 MWp Cell Factory (c-Si)
500 MWp Module Factory (CIGS)
100 MWp Module Factory (a-Si)
Investment Volume
EUR 180 million
EUR 115 million
EUR 50 million
EUR 25 million
EUR 50 million
Jobs created/ to be created
1.000
500
150
50
130
Time Frame
Jan 04 Jan 05
Jan 05 – Dec 05 (excluding EU notification)
May 06 – March 07
July 2005 – March 2007
June 06 – May 07
Luckenwalde
Mochau
Location
Thalheim
Frankfurt/Oder Bischofswerda
Solution Initially keen to set up a new production facility in eastern Europe, First Solar was alerted by Invest in Germany to the considerable business advantages afforded by investing in the German PV industry. Having successfully implemented a European benchmarking process on First Solar‘s behalf, Invest in Germany carried out a detailed site selection process of suitable sites in eastern Germany.
“We selected eastern Germany because it is in the largest solar market in the world. It has a high concentration of solar technology companies, and has access to skilled technical labor. Germany’s regulatory agencies also move with remarkable efficiency.”
Invest in Germany then helped identify suitable project management partners within the region, and oversaw financing discussions with major German banks already active in the PV field. Having established the required combination of fast production facility ramp-up, appropriate infrastructure, moderate labor costs, and optimal investment conditions in Frankfurt (Oder), First Solar was guided through the investment incentive notification and application process by Invest in Germany. The project, which saw First Solar‘s EUR 115 million investment offset by EUR 45.5 million in financial incentives, has proved a resounding success, providing a boost to the local Brandenburg economy as well as helping First Solar effectively reduce production costs by up to 50 percent.
Ian MacLellan, Founder and CTO, ARISE Technologies Corporation
Industry Overview 2008 www.invest-in-germany.com
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The Photovoltaic Industry in Germany
Incentives in Germany
Types of Incentives in Germany
Germany offers numerous incentives for all investors – regardless of whether they are from Germany or otherwise. There is a large selection of programs designed to support a wide variety of business activities at different stages of the investment process available. Support ranges from cash incentives for the reimbursement of direct investment costs to incentives for labor and R&D.
Incentives
Germany’s Investment Incentives Package
+
Investment Incentives Package
1)
Operational Incentives Package
Cash Incentives
InterestReduced Loans
Public Guarantees
Labor-Related Incentives
R&D Incentives
Investment Grant
KfW Loans (National Level)
State
Recruitment
Grants
Investment Allowance 1
State Development Bank Loans
Combined State/Federal
Training Wage Subsidies
Loans Silent/Direct Partnership
only in eastern Germany
Investor production facility set-up costs can be significantly reduced using a num- The Investment Allowance (Investitionszu- Public Guarantees ber of different measures from Germany’s lage IZ) is a special cash incentive program The investment incentives package is comextensive investment incentive package. to promote investment activities in eastern pleted by public guarantees. This tool is The package consists of cash incentives, Germany. Accordingly, the program is only offered by the state and the federal governloan programs offering reduced interest available to investment projects settling in ment to help secure private bank loans. rates, and public guarantees at state and eastern Germany. national level. The Investment Allowance is usually proThe amount of these investment incentives vided in the form of a cash payment and/ generally depends on three factors: project or tax credit. The promotion rate is 12.5 scope, investor company size, and the new percent of the purchase or production investment location. Investment incen- costs of new buildings and new deprecia- Besides incentives focusing on reimburstives can reach up to 50 percent of eligible ble equipment. Small and medium-sized ing direct investment costs, Germany expenditures once these factors have been enterprises (SME) can even receive 25 per- also has ready incentives for operational taken into consideration. cent of the purchase or production costs of expenditures. These incentives, created to new depreciable equipment. These rates promote companies after the investment Cash Incentives are increased by 2.5 percent for all com- phase, include labor-related incentives and The main instrument of Germany’s invest- panies if investments are settled in bor- incentives for R&D. They are available ment incentives package are cash incen- der regions close to Poland and the Czech throughout Germany. tives provided in the form of non-repayable Republic. Labor-Related Incentives grants. Germany will make more than EUR The German states as well as the Federal 2.3 billion in cash incentives available in Interest-Reduced Loans 2008. Special loan programs make up a second Employment Agency offer a range of diffecomponent of Germany’s investment incen- rent labor-related incentives programs. Investment grants are offered in several tives package. They are offered by publicly They are offered subject to company needs incentive regions in Germany. The most organized financial institutions. These pro- and can generally be divided into three main prominent grant program for the distribu- grams usually offer loans at below market groups: programs focusing on recruitment tion of investment incentives is the Joint interest rates and subordinated loans sim- support, training support, and wage subsiTask for the Promotion of Industry and ilar to equity. The provision of such loans dies respectively. In addition to the investTrade (“Joint Task”), a program issued by makes it easier for investors to access ment incentive package, labor-related incentives reduce operational costs effectively. the Federal Ministry of Economics and additional funding from other banks. Technology.
Germany’s Operational Incentives Package
8 Industry Overview 2008
Incentives for R&D Germany offers several incentives programs targeted at reducing the operating costs of R&D projects at the national and regional level. At the national level, all R&D incentives programs are subsumed under the Federal Government’s four-year High-Tech Strategy. The High-Tech Strategy defines specific sectors with a high dependency on new high-tech developments. Each sector comprises various R&D programs. More than EUR 15 billion is available for all sectors until the end of 2009. Funding is allocated in the form of R&D grants. On average, incentives cover up to 50 percent of all eligible R&D costs, with fundamental research and experimental development entitled to higher and lower funding levels respectively. R&D grants at the regional level usually target SME. Some states have focused their funding policy on specific industry clusters, but funding programs are generally available for projects regardless of their technological focus.
The “Joint Task for the Promotion of Industry and Trade” The Federal Ministry of Economics and Trade has issued a special incentives program regulating the distribution of cash grants for investment costs, the Joint Task for the Promotion of Industry and Trade, usually referred to as Joint Task (Gemeinschaftsaufgabe GA). Its main goals are: (1) to improve the overall structure of economically weak regions; and (2) to create and secure competitive, skilled permanent jobs.
“Joint Task” funding is granted in the form of fixed asset-related grants or wage cost-related grants. Investors are free to choose their preferred model. The following capital expenditures are eligible for: Fixed asset-related grants: - Purchase or production costs of fixed assets (i.e., buildings, equipment, machinery) - Purchase costs of intangible assets (e.g., patents, operating licenses) - Leased assets (if they are capitalized by the applicant) Maximum eligible costs are up to EUR 500,0001 per job created (subject to respective state regulations), but may not exceed the maximum of total investment costs. Wage cost-related grants: Eligible costs are wage costs arising for a person employed during a period of two years. The majority of the newly-created jobs must meet one of the following criteria: - Jobs demanding above-average qualification - Jobs particularly featuring high value-add - Jobs in a sector with particularly high innovation potential Generally, wage costs of between EUR 20,000 and EUR 50,000 per person per year are eligible². 1
Could be reduced according to special state regulations.
2
Different regulations exist in several states.
Investment projects are eligible to receive funding from the Joint Task program in several regions in Germany defined by the German federal government in accordance with EU regulation. Subject to the level of economic development, these regions offer different cash incentives levels.
Generally, investment projects receiving funds from the Joint Task program must create long-term jobs (i.e., meaning that workplaces created have to remain in the region of the investment for at least five years).
Funds are awarded as grants towards investment or wage costs in the form of a cash payment. The basic incentive level can reach up to 30 percent of eligible expenditures depending on location and scope of the investment project. Promotion rates are increased by 20 percent for small enterprises and by 10 percent for medium-sized enterprises. The form and extent of support are subject to current EU regulations and may require EU notification.
All photovoltaic manufacturing industries are eligible under the Joint Task program. Eligible investment projects include the setting up of a new business facility, the expansion of an existing business, diversification of a business, and the acquisition of an industrial facility that has been closed or is threatened by closure.
Industry Overview 2008 www.invest-in-germany.com
9
The Photovoltaic Industry in Germany
Invest in Germany Closely Supports Your Project Management Team throughout the Entire Investment Decision Process Investment Decision Process – Areas of Invest in Germany Support Investment Process Milestones Strategy
Evaluation
Decision and Investment
Invest in Germany Key Support Areas
- General market information Information
- Industry guides/reviews - Conditions for investment, e.g. economic data, labor market, incentive programs, and tax & legal framework
- Discussion of market entry strategies
- Support with final site decision
- Advice on project financing
- Selection of project partners and facilitators (service providers, financial partners)
- Model calculation of potential incentives Consulting and Project Coordination
- Proactive identification of business opportunities - Identification of projectspecific location factors
- Cost factor analysis - Identification of possibilities for cooperation with suppliers, R&D institutes, technology partners, etc. - Organization of site visits and fact finding missions - Contact with the economic development corporations of the German states
Invest in Germany Helps You Our team of industry experts in the PV and renewable energies sector will assist you in setting up your business operations in Germany. We support your business project management requirements at all stages of the PV value chain.
initiation through to project expansion facilitation and implementation. As well as a comprehensive range of investment consultancy services which include market analysis and benchmarking, site selection and visits, we also put you in direct contact with the industry itself.
Calling on our experienced team of renewable energies industry experts (with a proven track record of implementing PV projects in Germany), we are able to address all of your investment needs: from project
Our team of consultants is at hand to provide you with the relevant background information on Germany‘s tax and legal system, industr y regulations and the domestic labor market.
10 Industry Overview 2008
- Negotiations with relevant authorities - Assistance with the incentives application process - Seamless project handover to the economic development corporation in the selected state
Invest in Germany’s experts help you create the appropriate financial package for your investment and put you in contact with suitable financial partners. Incentive specialists provide you with detailed information about available incentives, support you with the application process, and arrange contacts with local economic development corporations. Take advantage of our range of free of charge services.
Picture Credits
Cover Graphic: ©Hahn-Meitner-Institut Berlin Page 2 Germany is the Geographic and Economic Center of Europe Graphic: ©www.typoly.de Page 4 The Advantages of Germany as a Location for Photovoltaic Investments Photographs: ©Bundesverband Solarwirtschaft (BSW-Solar) e. V.
Imprint
Publisher & Editor Invest in Germany GmbH Friedrichstraße 60 10117 Berlin Germany T. +49 30 200 099-0 F. +49 30 200 099-111 office@invest-in-germany.com www.invest-in-germany.com Managing Director: Michael Pfeiffer Director Marketing Communications: Bettina Knape Contact Photovoltaic Industry: renewables@invest-in-germany.com Conception, Layout, Text, Translations Invest in Germany Supported by Federal Ministry of Economics and Technology Note © Invest in Germany, May 2008 All information provided by Invest in Germany is for informational purposes only and not legally binding. Invest in Germany does not accept liability for inaccuracies or errors in translation.
About Us Invest in Germany is the inward investment promotion agency of the Federal Republic of Germany. We assist and advise potential investors interested in Germany. Foreign enterprises planning to establish their business operations in Germany can ob-
Headquarters Invest in Germany GmbH Friedrichstraße 60 10117 Berlin Germany T. +49 30 200 099-0 F. +49 30 200 099-111 renewables@invest-in-germany.com www.invest-in-germany.com
tain information on the business environment, such as the corporate investment framework, tax regulations, and subsidies.
services from site selection to the final realization of the investment. All inquiries are kept confidential and our services are free of charge.
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