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PV Policy Group

Improving the European and National Support Systems for Photovoltaics

European Best Practice Report

Assessment of 12 national policy frameworks for photovoltaics Country Analyses Benchmarks Conclusions

Supported by

PV Policy Group
Improving the European and National Support Systems for Photovoltaics

European Best Practice Report


Assessment of 12 national policy frameworks for photovoltaics Country Analyses Benchmarks Conclusions

ImPRInt

The report has been prepared in the frame of the PV POLICY GROUP project with the support of the Intelligent Energy Europe programme (EIE/04/058/S07.38564). This report is the result of the work undertaken under the working group  PV Policy Database and Best Practice Report. The editorial deadline of this report was 7 November 005. As the political framework for photovoltaics is currently changing fast in several countries parts of the country profiles might already be out-dated. For up-to-date information please visit www.pvpolicy.org.

Authors: WIP Sylvensteinstr.  D-81369 Munich Ingrid Weiss Stephan Orthen Johannes Stierstorfer Ralph Gisler Reviewed by: Job Swens, SenterNovem Andreas Veigl, Austrian Energy Agency Andrew Machirant, Switchpower Special advisers technical support of research team: Job Swens (SenterNOVEM) Special adviser for overall research methodology and collection of EU-level information Michel Viaud (EPIA) Special adviser for collection of PV industry information Carsten Krnig (UVS Unternehmensvereinigung Solarwirtschaft e.V. German PV industry association) Special adviser for legal aspects of research concept Arnulf Jaeger-Waldau, EC-JRC Special adviser for overall research methodology and collection of EUlevel information and global Stefan Nowak, NET, Chairman of IEA PVPS, Special adviser for overall research methodology and collection of international-level information

Collection of national market information (including questioning of national key actors): Austria: Otto Starzer, EVA France: Philippe Beutin, ADEME Germany: Corinna Klessmann, dena and Christoph Urbschat, eclareon Greece: Christos Protogeropoulos, CRES Netherlands: Job Swens, SenterNOVEM Portugal: Luis Silva, ADENE Slovenia: Franko Nemac, ApE Spain: Amparo Fresneda, IDAE Italy: Emiliano Fioravanti, GIFI Japan: Kaizuka Izumi, RTS Corporation UK: Rod Hacker, PV-UK Sweden: Andrew Machirant, SESTAB

Print and Layout: set-up design.print.media

Photos by: BP Solar, Conergy, CRES, eclareon, ECN, EPIA, Isofoton, Naps Systems, Phoenix SonnenStrom, Photowatt International, Q-Cells, Schott Solar, Shell Solar, SolarWorld

May 006

Legal disclaimer The sole responsibility for the content of this publication lies with the authors. It does not necessarily reflect the opinion of the European Communities. The European Commission is not responsible for any use that may be made of the information contained therein. Le contenu de cette nengage que la responsabilit de son auteur et ne reprsente pas ncessairement lopinion de la Communaut europenne. La Commission europenne nest pas responsable de lusage qui pourrait tre fait des informations qui y figurent. Die alleinige Verantwortung fr den Inhalt dieser Publikation usw liegt bei den AutorInnen. Sie gibt nicht unbedingt die Meinung der Europischen Gemeinschaften wieder. Die Europische Kommission bernimmt keine Verantwortung fr jegliche Verwendung der darin enthaltenen Informationen. El contenido de esta publicacin solo compromete a su autor y no refleja necesariamente la opinin de las Comunidades Europeas. La Comisin Europea no es responsable de la utilizacin que se podr dar a la informacin que figura en la misma.

PV Policy Group European Best Practice Report

ExECutIVE SummARy

Background PV Policy Core Group and European Best Practice Report (Chapter A) This European Best Practice report forms a first, critical output of the PV Policy Core Group project co-funded by the European Commission under the Intelligent Energy Europe (EIE) programme. The Core Group, an initiative by energy agencies from 8 European solar nations and the European Photovoltaic Industry Association (EPIA) aims at identifying ways for the improvement and harmonisation of current national policy frameworks for PV. Thematically the report focuses on policies for PV market promotion on the national level: demand-side measures defined by governments to improve the attractiveness and security of PV investments for market actors (incl. financial institutions), and therefore to leverage the development of sustainable sales markets for the PV industry. Main target groups are political decision-makers on EU, national and regional levels, but also European PV investors (demand side) and the PV industry (supply side). The objectives and structure of the report can be summarised as follows: Information: compilation of a detailed inventory of key information on 1 national markets and political frameworks (Country analysis) Analysis: unbiased assessment and comparison of 1 national frameworks with regard to effectiveness and efficiency (Benchmark analysis) Dissemination: user-friendly presentation of complex research findings for publication and dissemination to target groups across Europe (Best Practice analysis) The research project underlying this report was coordinated by WIP in the period JanuaryOctober 005 and supported by 1 national partners as well as a variety of European experts.

National PV market National PV industry National PV strategy and regulatory framework (overview) Key PV legislations (esp. feed-in-tariff system) Key PV support schemes PV monitoring systems

Benchmark Analysis comparison of 12 national PV policy frameworks (Chapter C) In this chapter, a benchmark analysis sets out to compare the respective national PV policy frameworks with regard to their overall effectiveness, but also to the efficiency of the implementation of single instruments in practice. In different assessment areas the policies of outstanding countries (benchmarks) are analysed in greater detail, in order to draw conclusions for the other countries lagging behind in these aspects (gap analysis). Overall, the following assessment areas are covered in the analysis: General effectiveness of national PV policy framework National PV market development (benchmark: Germany); National PV industry development (benchmark: Germany, followed by Japan and Spain); National PV price development (benchmark: Germany); National PV acceptance (benchmark: Germany); Efficiency of single PV policy instruments: PV regulatory framework (legislation) Ambition of national PV targets and consistency of PV strategy (benchmark: Spain); Attractiveness of conditions (feed-in-tariff) for target groups (benchmarks: Germany and Spain); Economic cost of regulatory framework Implementation and administration of regulatory framework in practice (benchmark: Germany) Efficiency of single PV policy instruments: PV support schemes Attractiveness of conditions for target groups (benchmark: Spain); Economic cost (budget) for support scheme (benchmark: Japan); Implementation and administration of support scheme in practice (benchmark: Germany) Efficiency of single PV policy instruments: PV monitoring systems National approach to PV market monitoring (benchmarks: Spain and the Netherlands); National approach to PV policy performance measurement (benchmarks: Austria and Germany).

Country Analysis assessment of 12 national PV policy frameworks (Chapter B) This chapter provides a synthesized overview of the research findings from a comprehensive survey conducted in the 1 participating countries in the PV Policy Group project (0107/005): Austria, France, Germany, Greece, Italy, Japan, The Netherlands, Portugal, Slovenia, Spain, Sweden and the United Kingdom. Each country is covered in an unbiased profile without comparison to other countries. The identical structure of each country profile reflects the most important areas covered by the questionnaire:

Executive Summary

European Best Practice Analysis transnational conclusions (Chapter D) This chapter draws key conclusions from the analysis and comparison of 1 national policy frameworks. These conclusions regarding key success factors (drivers), risk factors (barriers) and general lessons learnt are valid across national boundaries. A consistent PV strategy based on ambitious and longterm targets, a clearly defined implementation programme and a well-conceived mix of instruments becomes the groundwork for success; simultaneously, politicians must ensure commitment of relevant authorities on federal, regional and local levels as key actors in implementing strategies and programmes. The basic requirement for each PV policy framework is its longevity and stability. Only under secure conditions will respective target groups (customers and industry) be willing to invest in PV. Stop-and-go effects must be avoided at all cost. For instance, a cap for feed-in laws will inevitably lead to overheating of the market followed by a collapse. The same can occur with subsidy programmes, which have limited overall budgets. Sustainable promotion strategies for PV should be independant of the usual budgetory constraints of subsidy schemes. In absence of the parallel introduction of the EEG (German renewable energy feed-in law), the German 100.000 Rooftop Programme (HTRP) would certainly have failed. In general, the PV policy framework needs to be carefully designed according to country-specific preconditions. A feed-in-tariff system, for instance ought to be based on country-specific calculation of the threshold for profitable operation of PV plants (break-even point). It is vital that instruments are consistent and well coordinated. Procedures to apply for support and to install a gridconnected PV system should be simple and clear. A number of countries show complicated and lengthy administrative processes for authorisation, grid access and approval of subsidies for PV installations, representing a substantial barrier to market diffusion. PV policy and market monitoring is crucial on the National and European level. An advanced approach to market monitoring and policy performance measurements, application of a consistent methodology and professional tools to gather, evaluate and disseminate data is a perquisite for effective policy control and acceptance by target actors.

Outlook recommendations to European PV Policy Core Group (Chapter E) This European Best Practice Report on national support schemes, PV regulatory frameworks and monitoring systems delivers a comprehensive and coherent basis for next steps in the PV Policy Group project: The Core Groups assessment, exchange and action planning processes. During the first meeting of the thematic working groups on 7 October 005 in Catania, raporteurs for the three groups were appointed. The thematic work groups of regulatory frameworks and support schemes will cooperate closely to include cross cutting issues of their outcomes. Further assessments of economic costs will be included in the discussions and output. Monitoring the policy regulations and market is crucial. The thematic working group will therefore develop recommendations on this issue. The outcomes from discussions at European, National and Thematic level will finally be merged to form a joint Action Plan and Position Paper directed at decisionmakers on both EU and national levels. Project results will then be disseminated across Europe.

PV Policy Group European Best Practice Report

tABlE of ContEntS
A. Background PV Policy Core Group and European Best Practice report ......................................................... 7 1. Background and objectives of the Best Practice Report (Why?) ................................................................................ 8 . Concept of the Best Practice Report (What?) .......................................................................................................... 10 3. Methodology of the Best Practice Report (How?)..................................................................................................... 13 4. Contributors to the Best Practice Report (Who?) ..................................................................................................... 15 B. Country Analysis assessment of 12 national PV policy frameworks............................................................. 17 1. Austria....................................................................................................................................................................... 18 . France .......................................................................................................................................................................  3. Germany ................................................................................................................................................................... 6 4. Greece ...................................................................................................................................................................... 30 5. Italy ........................................................................................................................................................................... 33 6. Japan ........................................................................................................................................................................ 37 7. Netherlands .............................................................................................................................................................. 40 8. Portugal .................................................................................................................................................................... 44 9. Slovenia .................................................................................................................................................................... 48 10. Spain....................................................................................................................................................................... 5 11. Sweden ................................................................................................................................................................... 56 1. UK ........................................................................................................................................................................... 59 C. Benchmark Analysis comparison of 12 national PV policy frameworks ....................................................... 63 1. Overview ................................................................................................................................................................... 64 . Efficiency of National PV policy Framework ............................................................................................................. 66 3. Effectiveness of national PV sector development ..................................................................................................... 81 D. European Best Practice Analysis transnational conclusions......................................................................... 91 1. Overview National PV policy frameworks .............................................................................................................. 9 . Key success factors for national PV policy frameworks ............................................................................................ 94 3. Key barriers / risk factors for national PV policy frameworks .................................................................................... 95 E.Outlook..................................................................................................................................................................... 97 Glossary ...................................................................................................................................................................... 99

Table of contents

A. BACkGRound PV PolICy CoRE GRouP And EuRoPEAn BESt PRACtICE REPoRt

A. Background PV Policy Core Group and European Best Practice Report

1. Background and objectives of the Best Practice Report (Why?) 1.1 Background and context The European Best Practice Report is an integrated part of the PV Policy Core Group, an initiative by energy agencies from 8+ European key solar nations and the European Photovoltaic Industry Association (EPIA), funded by the European Commission (EC) under the Intelligent Energy Europe (EIE) programme. All activities related to the report are summarised in the respective project plan under Work Package (WP)  European PV Policy Database and Best Practice Report. The PV Policy Core Group aims at identifying ways for improvement and harmonisation of current national policy frameworks for PV. At the same time, it is designed to support the evaluation of the coexistence of different support mechanisms in the EU member states by the EC. This evaluation by the EC announced in the Renewables Directive (001/77/EC) is scheduled for the end of 005. The Policy Groups work programme follows three overall steps: 1. Comparative assessment of national policy frameworks in the 1 countries (status quo) . Mutual exchange and knowledge transfer between national energy agencies on lessons learned and best practices on the national level 3. Definition of own activities (action plan), as well as development of proposals to politicians (position paper) by the members of the Core Group This project is co-financed under the Altener programme and contributes to energy related policies and other EU policies. The report focuses on maximum implementation of PV due to the following EU Policies and Strategies. The Green Paper on Security of Energy Supply draws attention to the structural weaknesses and geopolitical, social and environmental shortcomings of the EUs energy supply. The European economy, steadily demanding more and more energy, is essentially based on fossil fuels, which make up four-fifths of its total energy consumption, almost two-thirds of which is imported. The Green Paper states 13 questions as a framework for a general debate. These have triggered a number of responses and reactions about the security of energy supply. The conclusion is that there is virtually unanimous agreement on the strategic axis of demand management: energy consumption must be guided and steered. The Commission made some very well-received proposals along these lines. One of these is in particular the Directive on electricity production from renewable sources, adopted in 001, under which Member States undertake to comply with national targets for future consumption of electricity produced from renewable energy sources, to set up a system of guarantees of origin of green electricity, and to introduce accompanying measures to facilitate the market penetration of green electricity on the international market. Within this regulatory framework,  % of the electricity consumed in the EU by 010 shall have been produced from renewable energy sources.

The PV Policy Best Practice Report focuses on policies for PV market promotion on the national level: demandside measures defined by governments to improve the attractiveness and security of PV investments for market actors, and therefore to leverage the development of sustainable sales markets for the PV industry. In this context it is also of major importance to install the maximum possible PV-systems in order to achieve the goal of  % until 010 and to build up security of energy supply in the field of renewable energies. The European Commissions White Paper Energy for the Future (1997) sets out a strategy to double the share of renewable energies in gross domestic energy consumption in the European Union by 010 to 1 %, based on the debate of the Green Paper. The Paper includes a timetable of actions to achieve this objective in the form of an Action Plan. The calculations of increase in RES needed to meet the indicative target of 1 % share in the Unions energy mix by 010 is also based on the projected energy use in the pre-Kyoto scenario. This target implies that EU Member States need to encourage the increase of RES according to their own potential. The European Photovoltaic Industry Association (EPIA) estimates that 3 GWp installed PV power in 010 will create approximately 100.000 jobs in the PV sector. A contribution of 3 GWp installed capacity in EU 15 from photovoltaics by 010 is ambitious but realistic. With an actually installed capacity of around 1 GWp in 005 the European PV sector still lacks behind these political objectives. Although ambitious national targets boost the PV economy in a way that the goal of 3 GWp in 010 will be widely exceeded, a more than 5 GWp installed cumulative capacity at this date is now entirely possible. The Best Practice Report takes such positive developments into account as shown in the Benchmark Analysis. Market development is particularly well demonstrated through monitoring of new installed capacity per annum. Maximisation of installations thus helps to develop the market considerably. The Green Electricity Directive (001/77/EC)) of the European Commission aims to establish a consistent framework for the promotion of electricity generation from renewable energy sources across the EU. Currently each member country follows its own approach, with differing levels of success. At the end of 005 the existing national models were assessed by the Commission in order to draw conclusions for the achievement of political targets. The PV Policy Group Best Practice Report delivers important data input of the current situation in the PV sector in 11 EU-countries as well as Japan. The analysed spectrum ranges from the PV market, frameworks for PV, legislation for PV to support schemes and monitoring systems. In Europe the Kyoto Protocol also plays a major role as shown in the White Paper Energy for the Future, which emphasises the imperative to reduce CO-emissions by 5, % until 01 compared to 1990 worldwide. This challenging target has to be implemented through maximised contribution of RES and will be significantly supported by a worldwide and European increase of PV installations. The Lisbon Strategy mentions three main imperatives Growth, Competitiveness and Employment. Renewable energies show major potential for a contribution to the

PV Policy Group European Best Practice Report

aims set out in this strategy. Achieving the indicative target of 1 % share of renewable energies in gross domestic energy consumption in the European Union by 010 will lead to an increase in the market for European Industry and will create a significant number of new jobs, directly and indirectly, especially within SMEs. The export market is particularly important as Europe, with its traditional links to Africa, South America, India and recently also South-East Asia, is in a favourable position to reap the rewards. As shown in this Best Practice Report, the PV market continues to grow significantly and is creating positive effects for the alleviation of energy supply issues in developing countries. The effects are furthermore leading to the preservation and creation of a great number of already existing and new jobs, especially in small to medium-sized enterprises. Maximisation of installation rate, however, remains one of the key factors for the ability to expand the PV industry and to support the employment rate in a positive way whilst significantly contributing to reduced costs. Economy of scale signifies the reduction in cost per unit that results from increased production and operational efficiencies. Economy of scale is accomplished due to the fact that as production increases, production costs decrease simultaneously. This fact explains why the Best Practice Report focuses on maximised implementation in the PV sector. Not only do augmented PV installation rates result in greater acceptance due to lower price levels, one is also able to establish a direct link to increased job creation and new investment opportunities supported by Research and Technology Demonstration (RTD). WP  is therefore designed as a groundwork activity for the European Core Groups later working processes. In addition, its final deliverables European PV Policy Database and Best Practice Report as output of the Core Group will be disseminated to target groups across Europe.

National regulatory (legal) framework for the PV sector PV incentive systems Feed-in laws / tariffs for PV electricity Subsidy schemes for PV investments Fiscal incentive schemes for PV investments Tendering systems Quota obligation systems Green pricing systems Electricity sector regulations relevant to the PV market Administrative procedures for the authorisation of PV installations Grid access codes Building sector regulations relevant to the PV market Building codes and standards Solar building obligations Regulations for building-integrated PV (BIPV) PV industry regulations relevant to the PV market Quality standards and regulations for PV products and suppliers Quality standards and regulations for PV installers Safety standards and regulations for PV installers Nota bene: the relevant national framework may comprise legal regulations on the federal, regional or even municipal level! Only the 13 most important legislations per country were analysed in greater detail. National PV support schemes for PV investments Grant schemes Soft loan schemes, in collaboration with financial institutions Other financing schemes, in collaboration with financial institutions / energy service companies (ESCOs) Nota bene: this area focuses on the operational analysis of the most important subsidy schemes. These schemes may also be managed on the federal, regional or even municipal level. The 13 most important schemes per country were to be analysed in greater detail. National PV monitoring systems Approaches to market monitoring Approaches to monitoring & performance measurement of PV incentive / support systems Geographic focus This research project covers political frameworks in eight countries (project partners): Austria, France, Germany, Greece, Netherlands, Portugal, Slovenia and Spain. To widen the scope of the study the following countries have additionally been included in the research design: Italy, Japan, Sweden and the UK.

1.2 Thematic focus of the Best Practice report As the overall PV Policy Group the report focuses thematically on the political frameworks for PV markets on the national level: demand-side measures defined by governments to improve the attractiveness and security of PV investments for market actors (incl. financial institutions), and therefore to leverage the development of sustainable sales markets for the PV industry. Excluded from the scope of this Best Practice report are national policies for Research, Technology & Demonstration (RTD), as well as those for PV industry development. However, the close relation to these policy areas has been acknowledged and output from other projects in this context (e.g. PV-EC-NET, PV TRAC, PV Catapult) is referred to. Concretely, under the three headings of national regulatory frameworks, national support schemes and national monitoring systems, the following topics were defined as relevant objects for the research project underlying the Best Practice Report:

1.3 Target groups (beneficiaries) of the Best Practice report Direct beneficiaries (= main target group!) Political decision-makers (EU, national, regional) EC evaluating national policy frameworks for PV and proposing an EU-wide framework

A. Background PV Policy Core Group and European Best Practice Report

National (regional) governments setting national regulatory frameworks Public authorities and agencies managing support schemes Indirect beneficiaries European PV investors (demand side): financial investors, utilities, industry, private households European PV industry (supply side): manufacturers, system integrators, distributors, project promoters

PV-EC-NET / PV-ERA-NET / PV-NAS-NET / PV-NET IEA-PVPS PV-TRAC / PV Technology Platform EPIA Roadmap EurObservER PV Catapult

1.4 Objectives of the Best Practice report Central research problem (= overall goal) Delivery of a sound and unbiased information basis for the European Core Group that helps them identify feasible options for improvement and harmonisation of national PV policy frameworks in the respective 8+ countries Setting the foundation of an information resource and analytical tool for target groups to help them improve the ongoing monitoring and performance measurement of 13 national markets and political frameworks (Management Information System) Concrete research objectives Information: compilation of a detailed inventory of key information on 1 national markets and political frameworks (PV Policy Database) Characteristics of national market and industry Characteristics of national legislation Characteristics of national support schemes Characteristics of national monitoring (and performance measurement) systems Analysis: unbiased assessment and comparison of 1 national frameworks with regard to effectiveness and efficiency (Benchmark Analysis) Strengths and weaknesses of national systems, differentiated according to set of assessment criteria Best practices, lessons learned and success (risk) factors across all countries Dissemination: user-friendly and concise presentation of complex research findings for publication and dissemination to target groups across Europe (Best Practice Report)

1.5 Synergies and added value to existing resources A close alignment to networks that address PV policy issues in downstream areas (research, technology and product development, demonstration) will be ensured. There will be an information exchange between key persons selected who are also member of the advisory group of the PV Policy Group in order to mutually exploit synergies, to have access to previously collected data and to methods applied. The PV policy group consortium has established a close cooperation to the following networks: 10 PV Policy Group European Best Practice Report

2. Concept of the Best Practice Report (What?) 2.1 Overview / modules of research project Data collection / Assessment structuring Country & PV Policy Benchmark Database Analysis Dissemination Best Practice Report

Level 3: sub-chapters General structure of chapter 1 National PV market Market background and history Market size and growth (on- and off-grid) Best and worst case scenarios Regional distribution Case studies of a 5 and 500 kWp PV system General structure of chapter 2 National PV industry PV industry structure and development Wafer manufacturers Cell manufacturers Module manufacturers Component manufacturers Key industry figures Capacities and production Revenues Investments Employees General structure of chapter 3 National regulatory framework for PV Overview: national strategy and framework for PV promotion National goals and targets for PV National strategy and programme of activities for PV promotion National regulatory framework for PV (overview) National administration of policy framework and support schemes PV incentive systems Feed-in laws / tariffs for PV electricity Subsidy schemes for PV investments Fiscal incentives for PV investments Tendering systems Quota obligations Green pricing systems Electricity sector regulations relevant for the PV market Administrative procedures for authorisation of PV plants Grid access codes Building sector regulations relevant for the PV market Building codes and standards Solar building obligations Regulations for building-integrated PV installations PV industry regulations relevant for the PV market Quality standards and regulations for PV products Quality standards and regulations for PV installers Safety standards and regulations for PV installers General structure of chapter 4 National PV legislation General information on legislation History and background of legislation Political objectives and targets of legislation Beneficiaries of legislation Structure of legislation Long-term security of legislation

In accordance with the objectives defined the research project is designed to lead to three subsequent deliverables: A comprehensive PV Policy Information Set, accessible via the PV Policy Group website, collecting key data on 1 countries that may be updated and/or extended on an ongoing basis by Core Group members A sound Country & Benchmark Analysis, drawing qualitative conclusions with regard to current strengths and weaknesses, as well as ways for improvement and harmonisation of national policy frameworks A reader-friendly Best Practice Report summarising key findings for targeted dissemination across Europe

2.2 Concept of module 1: PV Policy database Key facts on all participating countries are entered into the database in a common format and structure. The information collected in the database should be as objective and unbiased as possible, not to be included are personal opinions or demands of single key actors. Basic structure The following basic structure was followed: Level 1: 1 countries Austria France Germany Greece Italy Japan Netherlands Portugal Sweden Slovenia Spain UK Level : 5 chapters (for each country) National PV market National PV industry National regulatory framework for PV National legislation for PV National support schemes for PV National monitoring systems for PV

A. Background PV Policy Core Group and European Best Practice Report

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Contents and conditions of legislation Amount and calculation model of feed-in tariffs Duration and guarantee period of feed-in tariffs Legal security of feed-in tariffs Specific requirements for PV operators Performance assessment of legislation Approach to monitoring and performance assessment of legislation Assessment of achievements of legislation Financing model of legislation Assessment of strengths and weaknesses of legislation General structure of chapter 5 National PV support schemes General information on support scheme History and background of support scheme Political objectives and targets of support scheme Duration and time schedule of support scheme Administration and actors involved in support scheme Budget and financing of support scheme Beneficiaries of support scheme Conditions of support schemes Performance assessment of support scheme Approach to monitoring and performance assessment of support scheme Assessment of achievements of support scheme Assessment of strengths and weaknesses of support scheme General structure of chapter 5 National PV monitoring systems National monitoring of PV markets Monitoring objectives defined Market data collection Market data processing, interpretation and dissemination Key results of national market monitoring Critical assessment of national market monitoring National performance management of PV policy framework Objectives and performance indicators defined Performance data collection Performance data processing, interpretation and dissemination Key results of national performance measurement Critical assessment of national performance management

indicators depend on a number of factors and cannot be related simply and solely to the performance of a single legislation and/or support scheme. As a result the analytical part of the research project follows a rather open and qualitative approach, also because Quantitative data on national markets have already been collected (e.g. IEA-PVPS) and can simply be used / transferred Qualitative assessments by selected experts are generally more appropriate to capture the topic in its complexity Overall the analysis is split into three chapters corresponding to the following logical steps: 1st step: Country analysis Based on the information gathered in the PV Policy Database an individual analysis of strengths and weaknesses of the current policy framework is conducted for each country. In addition to evaluating the country information, the analytical part focuses on personal judgements of different key actors questioned in the research phase (political actors, industry representatives, market actors), as well as the opinion of external experts on the European level (e.g. members of the Advisory Board of the PV Policy Group). 1 separate country profiles form the final outcome of this analysis. 2nd step: Benchmark analysis Based on the analysis of each country their national frameworks are assessed against the same set of performance criteria. For each criterion the best country or national system serves as a benchmark for the assessment of the others. The following overall assessment criteria (or success indicators, proxy measures) for national systems are suggested: Criteria to measure system effectiveness PV cost reduction National market development (installed MWp) National industry development (sales in , production in MWp) Acceptance by key actors and target groups Criteria to measure system efficiency Programme organisation and management Programme duration Programme monitoring Programme speed, esp. handling by authorities in practice (= lead time for investors) The ouput of the benchmark analysis is a differentiated ranking per research area and benchmark criterion. It should once again be emphasised that the aim is not to compare entire (heterogeneous) systems 1:1, but rather to highlight singular commonalities for better or for worse. 3rd step: Conclusion of European Best Practices Based on the benchmark analysis key conclusions are drawn with regard to potential ways of improvement and alignment for PV policy frameworks and monitoring systems. Whereas country and benchmark analysis focuses on the assessment of different national frameworks, the final Best Practice analysis is designed to

2.3 Concept of module 2: Country & Benchmark Analysis Obviously it is very difficult to assess and compare heterogeneous national support frameworks for PV. The national context is very different in each country, so are the political goals that have led to the respective policy framework. In addition, indicators to measure the performance of the framework are also diverse or not even clearly defined by the political decision-makers or programme managers themselves. Evidently the 1 PV Policy Group European Best Practice Report

develop a central theme of conclusions that are valid across national boundaries, especially Overall best practices in all benchmark areas in Europe Overall success factors for regulatory frameworks and support schemes in Europe Overall barriers / risk factors for regulatory frameworks and support schemes in Europe Finally, suggestions are made with regard to effective monitoring, performance management and controlling of national support frameworks. Potential key success factors (and risk factors!) for national systems that may be worked out in the analysis may be for instance Political backing, coherence with energy political strategy and other measures Backing and active involvement of key actors (authorities, industry, utilities, financial sector) Image and public interest Long-term commitment and continuity (of budgets) Flexibility (for improvements) Technical management, quality and commitment of people in charge

2.4 Concept of module 3: Best Practice Report The final Best Practice Report shall reflect the key findings of the analysis in a reader-friendly way. Its structure will be aligned to the aforementioned steps of the analysis: 1. Executive Summary . Country analysis (1 profiles) 3. Benchmark analysis 4. Conclusions / European Best Practices

A. Background PV Policy Core Group and European Best Practice Report

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3. Methodology of the Best Practice Report (How?) 3.1 Resources and constraints of the research project The methodology of the research project has been chosen in line with given resources and constraints. The most important resources, which the research team may count on: Access to data collected and methods applied in related EU projects and networks (PV-EC-NET etc.), ensured by active participation of Core Group members in them (esp. SenterNovem, CRES, WIP, EPIA) Active support of 8 energy agencies, acting as National Contact Points (NCPs) in the data collection process and ensuring access of researchers to national information and key actors (as interview partners) Active support of EPIA ensuring access of researchers to European industry information and experts (as interview partners) On the other hand, the research project has to face some constraints that have to be considered in the chosen methodology: Time constraints: very stretched timing for research design and data collection in 10 countries (only 3 months) Financial constraints: very small budgets for each NCP to be invested in technical support / specialist advice by external experts (e.g. lawyers), so single research activities can hardly be outsourced Manpower constraints: small centralised research team (3 persons) that depend a lot on the pro-active support of the other project partners (esp. NCPs, EPIA)

3.2 Research strategy and planning The overall programming of the research project may be summarised as follows: Nr. 0 1  3 4 5 6 7 8 Task Development research design Transfer methodological know-how and data from existing resources Fine-tuning of research design and concept, programming of database Collection of national data by means of questionnaire / checklist Data evaluation Presentation of first results to European Core Group Validation of results with external experts Composition of Best Practice report Presentation to thematic working groups TOTAL 2005 Main reTime frame sponsible WIP 01 0/005 WIP WIP NCPs WIP WIP WIP WIP WIP 9 months 03/005 03/005 04 05/005 05 06/005 06/005 06 07/005 07 09/005 10/005 Deliverable Research design, V 1.0 Feedback notes Research design, V .0 National data sets Intermediary report Presentation Feedback notes Best Practice report Presentation

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PV Policy Group European Best Practice Report

3.3 Research steps / elements Step I: Transfer of methodological know-how and/or data from existing resources (03/2004) Tasks: Examination of existing organisations and networks within Europe, and their outcomes (WIP) PV-EC-NET / PV-ERA-NET / PV-NAS-NET / PVNET IEA-PVPS PV-TRAC / PV Technology Platform PV Catapult Admire REBUS EurObservER Ener-IURE Personal exchange with managers of those EU-level networks and projects that are used as a starting point for the PV Policy Database and Best Practice study, in order to pre-check existing information, use synergies and align activities (WIP) Consultation of other specialists (esp. international lawyer, media agency) Collection of data and methodological input (WIP) Step II: Fine-tuning of research design and concept (03/2005) Tasks: Finalisation of questionnaire/checklist for national data collection Finalisation of research design, Version .0 Final consultations of project partners, adaptations and approval of final Version .0 (month 3) Deliverables: Database and research design, final Version .0 (MS Word document, month 3) Final questionnaire Step III: Data collection on national systems (0405/2005) Tasks: Collection of existing data at EU-level in co-ordination with external Advisory Board members (WIP) Collection of existing data at national level according to research design (by means of questionnaire / checklist) and delivery to WIP (NCPs) Analyse gaps between existing and required information (WIP) Personal visits of researchers with 10 national agencies to collect lacking information by direct primary research/ conducting structured interviews (WIP, NCPs) Review and completion of data sets by national agencies (NCPs) Deliverables: Filled-in questionnaires PV Policy Database, Version 1.0 (may be updated and extended on an ongoing basis!), consisting of 1 country profiles (descriptive data sets, month 5), later made accessible via project website with agreement of the Core Group members (month 10)

Step IV: Data evaluation (Country and benchmark analysis, 05/200406/2005) Tasks: (Based on research results) Fine-tuning of concept for country/benchmark analysis, including consultations with Advisory Board members and/or managers of other EU networks (WIP) Performance of country analysis systematic interpretation of collected data, taking into account the country-specific context (WIP) Performance of benchmark analysis measurement national data against common European benchmark in all relevant categories (WIP) Deliverables: Final concept and draft for country & benchmark analysis (month 6) Step V: Presentation to European Core Group and validation of findings (0607/2005) Tasks: Presentation of results of country and benchmark analysis to European Core Group and Advisory Board (month 6) for critical discussion (WIP) Final consultations and research based on feedback from European Core Group and Advisory Board (WIP) Validation of national analyses with NCPs (WIP) Validation of overall analysis with members Advisory Board & EPIA (WIP) Deliverables: Presentation to European Core Group meeting II and Advisory Board (MS PowerPoint document, month 6) Preliminary report, consisting of 1 analytical country profiles, benchmark analysis and ranking (MS Word document, month 7) Step VI: Composition of Best Practice Report (0810/2005) Tasks: Composition of Best Practice report for EU-wide publication, Version 1.0 (WIP), representing a concise summary of the aforementioned components and directed to project target groups: Executive summary Introduction Country analysis Benchmark analysis Final conclusions / outlook Presentation of final research results and Best Practice report to members of thematic Working Groups (at the same time comprising representatives of national NCPs) at their first meeting (month 10, WIP) Final adaptations according to feedback, Version .0 (WIP); close collaboration with EPIA who are in charge of final layout, printing and dissemination First review and update of PV Policy Database by project partners

A. Background PV Policy Core Group and European Best Practice Report

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Deliverables: Presentation to thematic Working Groups (MS PowerPoint presentation, month 10) Best Practice report (only text, English language), Version .0, for EU-wide dissemination (see WP 6, as MS word document without final layout and design, month 10) PV Policy Database, Version .0 (month 10)

4. Contributors to the Best Practice Report (Who?) The following institutions and persons are involved in the implementation of the research project: WIP WP co-ordination & operational management Ingrid Weiss overall co-ordination and researcher for EU-level information Johannes Stierstorfer and Ralph Gisler researcher for Austria, Japan, Netherlands, Portugal, Scandinavia, Sweden, Spain and UK Stephan Orthen (Karl Richter) researcher for France, Germany, Greece and Italy 12 NCPs collection of national market information (including questioning of national key actors) Austria: EVA (Otto Starzer) France: ADEME (Philippe Beutin) Germany: dena (Corinna Klessmann) Greece: CRES (Christos Protogeropoulos) Netherlands: SenterNOVEM (Job Swens) Portugal: ADENE (Luis Silva) Slovenia: ApE (Franko Nemac) Spain: IDAE (Amparo Fresneda) Italy: GIFI (Emiliano Fioravanti) Japan: RTS Corporation (Kaizuka Izumi) UK: PV-UK (Rod Hacker) Sweden: SPIA/SWITCHPOWER (Andrew Machirant) Special advisers technical support of research team Job Swens (SenterNOVEM) Special adviser for overall research methodology and collection of EUlevel information Michel Viaud (EPIA) Special adviser for collection of PV industry information Carsten Krnig (UVS Unternehmensvereinigung Solarwirtschaft e.V. German PV industry association) Special adviser for legal aspects of research concept Arnulf Jaeger-Waldau, EC-JRC Special adviser for overall research methodology and collection of EUlevel information and global Stefan Nowak, NET, Chairman of IEA PVPS, Special adviser for overall research methodology and collection of international-level information

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B. CountRy AnAlySIS ASSESSmEnt of 12 nAtIonAl PV PolICy fRAmEwoRkS

This chapter provides a synthesized overview of the research findings from a comprehensive survey conducted in the 1 participating countries in the PV Policy Group project (0107/005): Austria, France, Germany, Greece, Italy, Japan, The Netherlands, Portugal, Slovenia, Spain, Sweden and the United Kingdom. Each country is covered in an unbiased profile without comparison to other countries. The identical structure of each country chapter reflects the most important areas covered by the comprehensive questionnaire used in the survey to collect the national country data. Whereas the first part (country profile) is merely descriptive summarising the key information gathered in the questionnaire the second part already represents the first step for the following benchmark and best practice analysis: key conclusions from the analysis of the national policy framework, in terms of overall performance, lessons learned, strengths and weaknesses.

B. Country Analysis assessment of 1 national PV policy frameworks

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1. Austria 1.1 Country profile PV market Natural conditions Solar radiation: 1.100 150 kWh/m p. a. on average; Specific energy yield of PV plants: ranges from 700 to 940 kWh/kWp on average. Market background and history Historic development: the national PV market started with small stand-alone systems; since 1997 increasingly dominated by grid-connected systems; strong market dynamics until 003, then sudden slowdown in 004/005 due to change of regulatory framework; Current trends: key market barrier at the moment is the Green Electricity Act from 003 that introduced a guaranteed feed-in-tariff, but also a cap of 15 MWp as artificial barrier for growth; an amendment of this legislation is currently under discussion; PV image/acceptance: Austria is a pioneer country in solar energy and solar thermal market leader, so acceptance of PV is generally very high; strong hidden demand. Market size and growth Annual installed capacity: + ,31 MWp in 004 (+ 6,47 MWp in 003) sharp decrease by over 300 %!); No. 6 in Europe Total installed capacity: + 19, MWp in 004 (16,9 MWp in 003); No. 7 in Europe Annual growth rate: + 14 % in 004 (+ 63 % in 003) slump in comparison to 00 + 003 due to cap of 15 MW defined in Green Electricity Act; Installation density: ,4 kWp/1.000 habitants in 004; No. 4 in Europe Growth perspectives: forecasts range from only 1, MWp p.a. (Worst Case) to 14,8 MWp p.a. (Best Case) the actual development heavily depends on the amendment of the Green Electricity Act. Market structure Market segmentation: 86 % grid-connected, 14 % offgrid in 004; market share of grid-connected systems would increase further if artificial cap was not in place; Project size: clear dominance of small roof-top systems on private houses; no experiences with larger-scale PV projects (> 100 kWp) so far; Regional distribution: the national PV market is fairly concentrated on the Vorarlberg region next to Germany (> 55 % market share in 004). The Region of Vorarlberg was a pioneer in PV, which created an own campaign to foster PV development, and also had very high provincial feed-in tariffs. Administrative processes Complexity of planning process: administrative procedures for PV installations are fairly clearly defined; processes are widely decentralised, in charge are mainly provincial authorities, so in practice conditions may differ between the 9 provinces; there are simplified 18 PV Policy Group European Best Practice Report

procedures for small-scale plants; administrative procedures for the authorisation of PV plants vary slightly depending of the utilisation of generated energy (auto-consumption or feed-in) and the support scheme used (feed-in-tariff or grant); Number of permissions required: promoters have to obtain at least 5 permissions (plant authorisation, grid connection, registration as eco-energy plant, feed-in contract, commissioning); plants > 0 m additionally require a specific building permission by provincial government; in certain areas further special permissions are required (historic monuments etc.); Number of authorities involved: at least 3 (provincial government, local grid operator / utility, and one of the three local green power balance group representatives (GPBGR); Duration of planning process: the average lead time for permission procedures is 410 months it may differ considerably from project to project (plant size, environment, etc.) and from province to province. PV industry PV industry structure and development Silicon/wafer production: no national facilities in 004; Cell production: no national facilities in 004; Module production: five manufacturers with total output of 3,6 MWp in 004; production capacities > 9 MWp in 004; Other PV component production: some leading manufacturers of PV components (inverters, encapsulation materials for solar cells, batteries) are based in Austria; due to strong export orientation they are widely independent from current decline in their home market. Key industry data National cell production capacity (output): 0 MWp in 004 (0 MWp in 003); National module production capacity: > 9 MWp in 004 (4 MWp in 003, + 15 %); Annual sales of the national PV industry: 145 Mio. in 004 ( 105 Mio. in 003, + 9 %); Employment in PV industry: approx. 340 persons in 004 (00 in 003, + 70 %) Average PV module prices: 3,6 /Wp in 004 Average PV system prices: 5,08,5 /Wp in 004 PV policy strategy and regulatory framework (overview) National strategy and framework for PV promotion National PV targets: no official PV target until 010; the current Green Electricity Act limits the maximum total capacity to 15 MWp nationwide so actually blocks further market growth instead of promoting it; National PV strategy/plan: there is no specific PV strategy at the moment; promotion of PV is part of overall RES and RES-E policy; currently discussion on amendment of regulatory framework; National PV administration: national energy (and PV) policy is co-ordinated by the Federal Ministry of Economics; on the operational level provincial governments are in charge of permission procedures

and regional subsidy schemes; the national regulating authority of the electricity sector (E-Control) is in charge of monitoring. National PV incentive systems: Feed-in-tariff system: yes, key legislative instrument is the Green Electricity Act; Investment support schemes: yes, additional direct subsidies (partly soft loans) are granted both on the national level (Austrian Environment Support programme) by the Federal Ministry for Agriculture & Environment, and on the regional level by provincial governments; Fiscal incentives: yes, investment growth bonuses are granted by means of a 10 % tax credit on PV investments (003 and 004 only); Tendering systems: none; Quota obligation systems: none; Green pricing schemes: Some green offers by electricity suppliers. Austria has been the first country in Europe to introduce a mandatory disclosure scheme for electricity suppliers that have to display the portfolio mix on the electricity bill; RES producers are granted guarantees of origin (GO) certificates by the grid operator; RES plants are centrally registered by the regulating authority (E-Control);

Average payback period for PV investments (under given conditions): currently no tariffs in place for new plants. Electricity sector regulations relevant for the PV market Electricity plant authorisation: defined in Electricity Act from 000 in line with EU directives; in charge of procedures are provincial governments/administration; Grid access code: based on the national Electricity Act and in line with EU directives; in charge of procedures are local grid operators/utilities according to transparent technical and organisational rules (TOR); they also issue guarantee of origin (GO) certificates; feed-incontract is closed with other institution GPBGR that pays the tariffs; Sector regulation: legal rights and non-discrimination of PV operators ensured by independent regulator EControl; National plant register: in place, national register of ecoelectricity plants managed by E-Control; obligatory registration by PV operators; the number and capacity of registered plants are regularly published on the EControl website (www.e-control.at). Building sector regulations relevant for the PV market Building standards: various building standards have to be respected by PV promoters; regulations on protection of historical monuments and townscape are 19

B. Country Analysis assessment of 1 national PV policy frameworks

particularly restrictive; there are different building codes in all 9 provinces; normally no building permission required for PV plants < 0 m; Solar building obligations: none; Regulations for building-integrated PV: no specific promotion instruments for BIPV plants currently in place; a purchase obligation is defined in the Green Electricity Act, but no feed-in-tariff is guaranteed for plants exceeding the 15 MW cap. PV industry regulations relevant for the PV market Quality standards for PV products: international / European quality standards (IEC) for PV products and installations are applied in Austria as elsewhere in Europe; Quality standards for PV installations: national standard for grid-connected PV installations (VE/NORM E 750) in Austria that corresponds to the EU norm EN 6177; Quality standards for PV installers: PV installations have to be carried out by a licensed electrician. Key PV legislation: Green Electricity Act General characteristics of legislation Type of system: feed-in-tariff system, offering additional options for support by provinces; transposes EU directive 001/77/EC and harmonised the previous system of diverse regional feed-in-tariff systems to a nationwide system; Start/expiry date: in place since 01.01.003, no expiry date; Targets of the legislation: targets comprise all RESE excluding hydro (at least 4 % of the electricity final demand in the public grid until 008), but no specific (sub-)targets for PV defined; in addition, current version defines a cap of 15 MWp for total PV installations entitled to receive guaranteed feed-in-tariff; Long-term legal security: fairly high; the law may be amended by means of ordinance of the Federal Ministry of the Economy; by ordinance the feed-in-tariffs are fixed for a limited period of time ( years); the law may be abolished by /3 majority of the parliament. Contents and conditions of the legislation Feed-in-tariffs: 60 ct/kWh (plants < 0 kWp) 47 ct/ kWh (> 0 kWp); Decrease mechanism: none Guarantee period: 13 years; Cap: 15 MWp below current capacity installed, so market practically stalled by mid 005! Financing model: centralised compensation scheme surplus cost for feed-in-tariffs are charged by GPBGR to electricity suppliers who again charge them as support fee to the final consumer in the framework of green electricity schemes; Economic cost: In 004, 1,4 TWh of RES-E (except hydro) was fed into the grid and received a total of 18 Mio. Euro on feed-in tariffs and was financed by the customers with a support fee of 0,183 Cent/kWh at average on the electricity bill. For PV, 7,5 Mio. Euro feed-in tariffs were paid for 1 GWh. The respective

values for 003: RES-E (except hydro): 0,6 TWh, 53 Mio. Euro feed-in tariffs, support fee: 0,1 cent/kWh; PV: 11 GWh, 6,5 Mio. Euro feed-in tariffs. PV support schemes: 3 different systems General characteristics of support schemes Three different systems in parallel: 1. provincial support schemes under Green Electricity Act (not in all provinces!); . specific provincial housing (or environmental) subsidy schemes; 3. national support scheme by the Federal Ministry for Agriculture & Environment (Austrian Environment Support); theses schemes historically were the key instrument for PV promotion; for grid-connected systems now widely replaced by the national feed-in-tariff, but still predominant instrument for stand-alone systems; Administration: the provincial schemes are managed by the respective administrations; the national programme is managed by agency Kommunalkredit Public Consulting (KPC) on behalf of the ministry; Type of system: direct subsidies (grants), in some provinces also soft loans; Start / expiry date: generally no expiry date; Budget: 1. support scheme under the Green Electricity Act: for all RES-E except hydro: 003: 5 Mio. Euro; 004: 15 Mio. Euro; from 005: 7 Mio. Euro Funding: 1. provincial support schemes funded by final consumers paying support fees on their electricity bill; . other provincial schemes from provincial budgets; 3. national scheme from federal budget of the Ministry. Contents and conditions of the support schemes Beneficiaries: 1. Grid-connected PV installations; . mainly BIPV installations; 3. off-grid installations; Type of support: varies from province to province, mainly investment subsidies (partly soft loans); national support cannot be cumulated with feed-in-tariff so mainly used for off-grid-installations; Level of support: varies from province to province up to 40 % of total investment (Vienna); maximum amount up to 7.000 (Styria) or 3.700/kWp (Upper Austria). PV monitoring systems National approach to PV market monitoring General approach/instruments: annual monitoring report commissioned by the Federal Ministry of Transport, Innovation & Technology; Institutions in charge: Gerhard Faninger/iff Klagenfurt in co-operation with the Austrian PV association. Data collection & processing: 1. grid-connected installations covered by national plant register (GPBGR via E-Control) but only those plants receiving the feed in tariff; . market surveys of Austrian PV industry association et al.; Data dissemination: annual publication of report, which may also be downloaded on website of Ministry. National approach to performance measurement of PV policy framework General approach: regulator E-Control in charge of monitoring the effects of the Green Electricity Act has

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to deliver an annual monitoring report to the Federal Ministry of the Economy; no structured approach to monitoring especially for PV, just for the promotion instruments in general. Institutions in charge: E-Control (supported by GPBGR); Data collection & processing: 1. national plant register fed with data by GPBGR (number & capacity of plants, total fed-in-electricity, paid feed-in-tariffs etc.); . data from provincial authorities in charge of registering ecoenergy plants; 3. own investigations by E-Control; Data dissemination: 1. annual publication of report; . ongoing publication of data via website of E-Control.

(e.g. peak power vs. rated output of converter); the same applies to monitoring targets/performance indicators; Insufficient monitoring of off-grid market; Lessons learned PV needs a differentiated feed-in-tariff, depending of type of installation (roof-top, open ground, BIPV) and size; Long-term security of feed-in-tariffs is key to win trust of investors; in return decrease mechanism to reflect cost-reduction over time until reaching maturity and competitiveness with conventional technologies should have been installed; Need for a transparent and efficient political process for (re-)definition of feed-in-tariffs; Budgets for support schemes should be clearly limited according to targets, but secured, so that longish consultation processes every year are avoided. The cap for the Feed-in Law lead to a fast growth in the beginning and to a collapse of the market after the cap was reached.

1.2 Conclusions from country analysis General assessment of performance Market development: effectiveness was very high as market explosion in 00/003 shows; in spite of breakdown since 003 market development still ahead of schedule defined in Green Electricity Act (15 MWp cap); Industry development: Some branches in Austria (inverters, laminates) are world market players. Almost no home market, considerably exports; Cost reduction: Due to the shortages of the module sectors, only slight cost reductions could be achieved. Prices of PV installations show a wide variety between different providers/installers. PV acceptance: PV has a positive image in the public. From the point of view of political decision makers PV is the most expensive option to reach RES-E targets. In Austria, biomass and biogas are considered as most promising technologies for technology and market development. Strengths of national PV policy framework Secured conditions for investors within the cap; Stringent authorisation procedures; Transparency of fed-in energy and cost (support fee on electricity bill); Dual approach to promotion of grid-connected PV (either feed-in-tariff on the national level or investment support on the provincial level) makes sense. Extra investment subsidy scheme for off-grid market; Very consistent and transparent data basis in market covered by feed-in-tariff system due to centralised registration and monitoring (policy monitoring); however, this data basis does not cover plants receiving grants instead of the feed-in-tariff. Weaknesses national PV policy framework No continuity due to a cap (15 MWp) in feed-in-tariff system currently blocking market development; Short-term nature of the system; stop & go effect; Complex definition process of feed-in-tariffs with many involved parties; Funding of green electricity support payments not on a secure basis due to broad consultation process; Insufficient PV market monitoring; data bases used by different institutions are not complete and consistent

B. Country Analysis assessment of 1 national PV policy frameworks

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2. France 2.1 Country profile PV market Natural conditions Solar radiation: 1.50 50 kWh/m p.a. on average: Specific energy yield of PV plants: ranges from 900 kWh/kWp in Northern France, over 1.00 kWh/ kWp in Southern France up to 1 500 kWh/kWp in the overseas departments, on average. Market background and history Historic development: the national PV market started with small stand-alone systems for the electrification of rural areas in the early 80ies; this segment has sustained an important role until today especially in the overseas departments and is supported by the state as well as EDF; the grid-connected market started in the early 90ies mainly with research or demonstration projects, then took off between 00004 following the introduction of a feed-in-tariff system plus investment subsidy schemes on both federal and regional level; Current trends: the recent switch from the mainly subsidy-driven system to a stronger focus on tax credits in 005 is expected to stop the positive dynamics of the market; PV image / acceptance: quite high among general public, in spite of being clearly of second priority to other RES like wind, biomass, but also solar thermal in official public campaigns. Market size and growth Annual installed capacity: + 5,87 MWp in 004 (+ 3,66 MWp in 003) increase by almost 100 % in comparison to 003 mainly in the grid-connected segment; No. 3 in Europe Total installed capacity: 0,11 MWp in 004 (14,5 MWp in 003); No. 5 in Europe Annual growth rate: + 60 % in 004 (+ 63, % in 003) slight slowdown in comparison to 003); Installation density: 0,3 kWp/1 000 habitants in 004 No. 8 in Europe Growth perspectives: forecasts range from 8,74 MWp (Worst Case) to 58,75 MWp (Best Case) p.a. this corresponds to average growth rates of 1050 % depending mainly on the effect of the new tax credit scheme on the grid-connected market. Market structure: Market segmentation: 45 % grid-connected, 55 % off-grid in 004; market segment of grid-connected systems clearly growing stronger, but off-grid segment very stable; Project size: clear dominance of small roof-top systems on private houses; there are few experiences with larger-scale PV projects (100500 kWp), those generally have demonstration character and with strong public involvement; Regional distribution: a traditionally strong regional market are the DOM/TOM departments where offgrid PV is strongly promoted for rural electrification;  PV Policy Group European Best Practice Report

the grid-connected market in continental France is very fragmented, with one exception: the Rhone-Alpes region has taken a strong leadership position in recent years by means of advanced solar policy. Administrative processes: Complexity of planning process: planning procedures for smaller-scale PV installations are fairly clearly defined; processes are partly decentralised, in charge are provincial authorities; in so in practice there may be regional differences in the handling of procedures; in the past processes were first of all driven by the application for subsidies the approval was prerequisite for any further planning & implementation steps; Number of permissions required: at least 4 permissions are needed for any project (plant authorisation = certificate of authorisation to operate, grid connection, certificate of eligibility to purchase obligation, power purchase contract); a simple registration is required for existing buildings while building permission plus environmental impact analysis are required for largerscale plants (> 4,5 MWp); Number of authorities involved: at least 4 (ministry department DIDEME for plant authorisation), regional ministry department (DRIRE) for purchase obligation certificate, local grid operator (usually EDF-ARD) for grid access contract, the unique purchaser of the area (usually EDF-AOA) for feed-in-contract) Duration of planning process: the overall lead time for permission procedures is 41 months for a small-scale installation (< 5 kWp); for larger projects procedures are less standardised and clearly more time-consuming (14 months). PV industry PV industry structure and development Silicon production: none in 005, but several companies are preparing facilities; Wafer/cell production: one company (Photowatt International) produces wafers, cells and modules (7 MWp capacity in 004); Module production: four module producers, two of them focusing on crystalline and two on thin film modules; Other PV component production: various types of PV components (esp. charge controllers, batteries, mounting systems) are produced by French firms. Key industry data National cell production capacity: 30,6 MWp in 004 (14,6 in 003, + 137 %); National module production capacity: n.k. Annual sales of the national PV industry: 96,6 Mio. in 004 (51 Mio. in 003, + 90 %); Annual investments of PV industry: 15 Mio. in 004 ( 15 Mio. in 003, + 0 %) Employment in PV industry: 570 in 004 (500 in 003, + 14 %); Average PV module prices: n.k. Average PV system prices: 41 /Wp in 004; 7, / Wp in mainland France (10 % less than 003, but still high in comparison to European standards);

PV policy strategy and regulatory framework (overview) National strategy and framework for PV promotion National PV targets: only an indicative, non-binding PV target of 150 MWp installed capacity until 010 defined in multiannual investment plan; National PV strategy/plan: due the pre-dominance of nuclear power the promotion of RES is not top on the agenda of French energy (and environmental) policy; PV is still widely considered a not competitive niche technology subject to R&D rather than industrial or energy policy; a consistent, long-term strategy is lacking so far; National PV administration: national energy policy is co-ordinated by a department of the Ministry for Industry (DIDEME); on the operational level regional offices of this Ministry (DRIRE) and the grid-operators (mainly EDF) are in charge of permission procedures; the new regulatory framework based on tax credits is co-ordinated by the Ministry for Finance. National PV incentive systems: Feed-in-tariff system: national PV policy is more than ever a mix of various instruments; key legislative instrument is a feed-in-tariff system, the current tariffs for PV being defined in the Ministerial Order from 13.03.00 rated at 15,5 ct, with a 5 % p.a. abatement and inflation compensation (currently 13,85 ct); Investment support schemes: yes, additional support can be obtained by means of investment subsidies granted both on the national level by ADEME and on the regional level by regional governments; since the introduction of the new tax credit system in 005 the investment subsidies by ADEME have been drastically reduced; Fiscal incentives: yes, tax credits have been increased by the new Finance Law for 005 from 15 to 40 % of investment cost (excluding labour expenses) for private persons only, while companies are eligible to a oneyear accelerated depreciation Tax credit have been announced to be increased at 50 % for FY 006. Tendering system: foreseen in legislation, but not been applied for PV installations so far; Quota obligation system: none; Green pricing schemes are rare in France; some utilities offer green products to their customers, but without the same level of transparency as in Austria; Average payback period for PV investments (under given conditions): the average payback time for a typical small-scale private PV roof-top can be evaluated between 15 and 30 years, according to the Regional grant regime. Electricity sector regulations relevant for the PV market Electricity plant authorisation: defined in Electricity Sector Law from 000 in line with EU Directive 96/9 CE in charge of procedures is DIDEME at national level; Grid access code: based on the national Electricity Act from 000 (modified in 004) in line with EU legislation; in charge are local grid operators/utilities (usually

EDF-ARD); the feed-in-contract is closed with another department of utility (usually EDF-AOA); Sector regulation: legal rights and non-discrimination of PV operators supervised by regulator CRE; National plant register: none so far, but all authorisations granted by DIDEME are published in the Official Journal. Building sector regulations relevant for the PV market Building standards: new regulation RT 005 (due in 005) defines energy efficiency standards for new buildings; it is expected that for the first time PV installations are acknowledged to meet these standards; a regulatory barrier for PV is the town-planning code: a certified architect (ABF) may always refuse the building permission for conflicts with aesthetic standards; Solar building obligations: not yet been implemented in France; Regulations for building-integrated PV: no specific regulations for BIPV; current construction code is a barrier for BIPV systems mainly with regards to the compulsory traditional 10 years insurance system (garantie dcennale) imposing for each type of PV product a long-lasting and costly certification procedure (ATEC or ATEX) by a single body (CSTB) PV industry regulations relevant for the PV market Quality standards for PV products: international / European quality standards (IEC) for PV products and installations have to be complied with; an expert group works on new minimum standards with the electrical certification union (UTE); Quality standards for PV installations: national standard for grid-connected PV installations that corresponds to the German standard DIN VDE 016, except for ENS which is not required in France; Quality standards for PV installers: no standards in terms of service quality and qualification of PV installers; there are requirements defined in ADEMEs regulations to receive subsidies, but given the switch to the new tax credit system, this quality control measure loses relevance. Key PV legislation: Electricity law General characteristics of legislation Type of system: fixed feed-in-tariff system, offering additional options for tendering (not used yet); Start/expiry date: feed-in-tariffs in place since 03/00, but technical authorisation procedures were not defined before 004; no expiry date defined; Targets of legislation: indicative targets defined in multi-annual investment plan (PPI) for 003007: corridor of 150 MWp for solar energy; a new target for 010015 is expected with the new PPI due to be published until end of 005; Long-term legal security: rather low, since feed-intariffs can be modified or even suspended by simple Ministerial Order the new orientation law on energy passed on July 13th, 005 however sets a target for 010 of 200.000 solar DHW and 50.000 solar roofs, the later possibly including PV but without certainty.

B. Country Analysis assessment of 1 national PV policy frameworks

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Contents and conditions of the legislation Beneficiaries: all operators of RES installations < 1 W; Feed-in-tariffs: estimated in 005 14,17 ct/kWh (mainland France) 8,34 ct/kWh (overseas departments); Decrease mechanism: 5 % p.a. abatement associated with inflation compensation. Guarantee period: 0 years; Financing model: centralised compensation scheme surplus cost for feed-in-tariffs are charged by electricity suppliers to final consumers as contribution to the public service for electricity (CSPE); the overall surplus amount is calculated and made transparent by the regulator CRE; Economic cost: the additional cost of feed-in tariffs for PV as compared to the price of electricity for end-users can be evaluated in 004, at 160 k for 5 GWh, i.e. 0,00035 /kWh, i.e. an increase of 0,0035 % to the small consumer retail price (currently 0,11 /kWh) PV support schemes: national programme by ADEME General characteristics of support schemes Type of system: heterogeneous mix of instruments; until 004 direct investment subsidies, in addition to the low feed-in-tariff, were the key instrument for PV promotion in France; since 005 for grid-connected systems it has been widely replaced by the new tax credit system; but still pre-dominant instrument for stand-alone systems; Administration: subsidies by ADEME; tax credits by fiscal authorities;

Start/expiry date: subsidies from ADEME started in 1999, tax credits in FY 00 at 15 %, increased to 40 % for FY 005 (expected 50 % for FY 006) with and expiry date for FY 009; Targets: no specific target defined, only implicitly by annual budgets allocated and granted by ADEME; Total budget: 11,7 Mio in 004 (8,5 for grid-connected plants) by ADEME; in addition, approx. 10,7 Mio. in 004 (7 Mio. for grid-connected plants) by regional authorities; no figures available yet for tax credit Funding: 1. ADEME subsidies from federal budgets (by three ministries) (re-)defined on an annual basis; . regional subsidies from regional budgets; 3. tax credits from federal budget. Contents and conditions of the support schemes Beneficiaries: 1. private individuals; . corporations; 3. public bodies; Type of support: originally ADEME subsidies could be combined with feed-in-tariff, additional regional subsidies and a tax credit of 15 %; this combination resulted in payback times of 1015 years; Level of support: originally 4.600 /kWp, so combined with regional subsidies up to 80 % (only for individuals) of investment cost could be financed; since 005 maximum amount for individuals reduced to 1.000 / kWp while tax credit was increased to 40 %; corporations and public bodies may still receive < .800 /kWp.

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PV monitoring systems National approach to PV market monitoring General approach: national subsidy scheme is monitored by ADEME on a yearly basis when a report is published; no structured monitoring procedure for regional data consolidation, but regular surveys commissioned by ADEME; a more advanced system including public online portal in collaboration with EDF is planned; first pilot plants will be fully monitored in 06/005; Institutions in charge: no centralised public body for market monitoring; ADEME is in charge of data collection and evaluation on behalf of the federal government; Data collection & processing: quite consistent data basis so far from subsidy applications covered 90 % of the grid-connected market, far less representative for the off-grid-market; the switch to the tax credit system in 005 will harm validity of this approach; data processing: by Enterprise Resource Planning (ERP) system of ADEME; Data dissemination: annual publication of report, disseminated to key actors and the general public. National approach to performance measurement of PV policy framework General approach: ADEME in charge of policy performance measurement on behalf of the ministries; advanced monitoring project still under development, first tests start in 06/005; no specific approach known for new tax credit system, so transparency will be far lower; Institutions in charge: ADEME for subsidies and overall framework, fiscal authorities for tax credit system; Data collection & processing: PV systems will be equipped with monitoring cabinet that transfer performance data to SQL database managed by national energy secretary (CEA GENEC) via GSM; Data dissemination: daily, monthly & annual statistics available on CEA website; quarterly report to ADEME.

the learning curve of downstream activities so as to increase efficiency, such as installation works, building and grid integration, administrative procedures; PV acceptance: PV is among the most popular renewable energy sources among general public and most stakeholders such as commercial companies or local Authorities. A strong political commitment together with public campaigns should easily remove the remaining reluctance among grid operators and some Administrations. Clearly improved, but still behind European standards. Strengths of national PV policy framework Even a fairly low feed-in-tariff has aroused growth and hopes in France; Tax credit system is less bureaucratic than subsidies; Fairly representative and efficient monitoring system so far; Weaknesses national PV policy framework Complex administrative procedures both for general authorisation and subsidy applications; Feed-in-tariffs too low/unattractive; tax credit scheme in contrast offers no long-term security for investors beyond 009; Lack of political commitment and stability for PV policy; Support schemes depend on (always limited) public budgets and are therefore insecure (inevitable delays, stop & go effect); Negative effect of tax credit system: lower subsidy amount and longer delays until it is claimed after annual income tax declaration; in addition direct competition of PV with other RES technologies; Lessons learned National support scheme by ADEME has proved effective to kick-off an embryonic market when no feed-in-tariff was in place yet; Feed-in-tariff approach has proved as both effective and efficient support mechanism;

2.2 Conclusions from country analysis General assessment of performance Market development: although there is no official assessment available, recent growth figures are very satisfactory, clearly showing a strong and positive perception of PV by main stakeholders and the general public despite the lack of political commitment at national level for market-oriented support schemes; Industry development: noticeable efforts from the only French significant manufacturer with a considerable growth rate of its capacity in 004 (95 % of which for export) should be weaken on the short term if not supported by a market-oriented policy complementary to R&D support; Cost reduction: further reduction of average system prices by 10 %, but still behind European standards With modules and BOS costs mainly driven by the global market, this gap clearly reflects the need to accelerate B. Country Analysis assessment of 1 national PV policy frameworks 5

3. Germany 3.1 Country profile PV market Natural conditions Solar radiation: 1.000 150 kWh/m p.a. on average; Specific energy yield of PV plants: ranges from 750 to 950 kWh/kWp on average. Market background and history Historic development: in the last 5 years Germany has developed to the leading PV market worldwide; main driver of this development as been the Renewable Energy Law (EEG) launched in 000 and amended since 004 which guarantees sufficiently attractive and secure feed-in-tariffs for PV investors; Current trends: the solar boom is sustained in 005; however, against the risk of an overhaul of the EEG after the change of the government following the federal elections in 09/005 German PV companies are preparing for the exploration of foreign markets; PV image/acceptance: the image of PV in Germany is excellent for years and hardly affected by increasing polemics from political opponents against wind energy. Market size and growth Annual installed capacity: + 450 MWp in 004 (+ 300 MWp) increase by 00 % in record year 004; Nr. 1 in Europe and worldwide; Total installed capacity: 90 MWp in 004 (470 MWp in 003); Nr. 1 in Europe and worldwide; Annual growth rate: + 00 % in 004 (+ 87 % in 003) - further acceleration after amendment of EEG; Installation density: 4, kWp/1.000 habitants Growth perspectives: forecast of the German Solar Industry Association (BSi) predicts about 1.000 MWp (Best Case) p.a. in 010; this high growth rate is mainly concentrated on the grid-connected segment while the off-grid market is expected to sustain at approx. 3 MWp p.a. Market structure Market segmentation: 91 % grid-connected, 9 % offgrid; Germany is a pure on-grid market, the share of the stable off-grid segment will shrink further in the future; Project sizes: the average project size has been increasing constantly over the year; until the expiry of the 100.000 solar-roof programme in 003 small roof-top systems on one-family houses were clearly dominating; after the abolition of the former size limit an important share of current market is claimed by solar parks of the megawatt class on open fields; Regional distribution: PV installations in Germany are very much concentrated on the large Southern regions of Bayern and Baden-Wrttemberg (> 80 % of total installations in 003!); this domination is due to natural, but also demographic, economic and political conditions.

Administrative processes: Complexity of planning process: planning procedures for smaller-scale PV installations (5 kWp) are fairly straightforward; for larger-scale projects (500 kWp) the procedures only differ considerably if the system is installed on the ground (rather than on roof-top); Number of permissions required: for small projects at least 4 permissions are required (grid connection, grid use, feed-in, authorisation as power producer); usually no building permission is required; for largerscale projects on the ground a building permission has to be obtained from local administration and an environmental impact analysis be conducted; Number of authorities involved: for small projects  main authorities are involved (grid operator/utility, fiscal authority to obtain status of power producer); local authorities are generally well familiar with PV projects so that the administrative hassle is limited; Duration of planning process: lead times for small installations are nowadays below  months; for larger projects the process may take up to 1 year. PV industry PV industry structure and development In the last years, the German PV industry has experienced strong growth, but also high degrees of competition, industrialisation and innovation; many companies have developed into market leaders also on an international scale and follow an aggressive expansion path; Silicon and wafer production: with regard to solar silicon, the German PV industry is still very dependant on imports from the semiconductor industry; however, considerable investments of at least three companies are undertaken to extend or set up own production capacities until 007; the same development applies to wafer production; Cell production: in Germany mainly crystalline cells are used (> 90 % market share); total cell production capacities were 5 MWp in 004; 30 % of actual production (187,4 MWp) were exported; the currently six German cell manufacturers are all planning considerable investments in the extension of production capacities; Module production: more than 0 module manufacturers have production facilities in Germany (total capacity 00 MWp in 004); their production output (173 MWp in 004) in recent years has always been below national demand, so the share of imports has never been below 5070 %; all manufacturers have announced a further, massive extension of production capacities from 005 on; PV component production: due to over 10 years of experience with grid-connected PV, German producers of PV components are also leaders on an international scale; currently there are 1 inverter manufacturers. Key industry data National cell production capacity: 187,4 MWp in 004 (100 MWp in 003, + 87 %); National module production capacity: 00 MWp in 004 (83 MWp in 003, + 140 %)

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Annual sales of the national PV industry: 1 150 Mio. in 004 (650 Mio. in 003, + 77 %); Annual investments of PV industry: 00 Mio. in 004 (150 Mio. in 003, + 33 %); Employment in PV industry: 4.400 in 004 (3.500 in 003, + 6 %); Average PV module prices: 3 /Wp in 004 Average PV system prices: 5,3 /Wp in 004 PV policy strategy and regulatory framework (overview) National strategy and framework for PV promotion National PV targets: no official PV target until 010 or 00; National PV strategy / plan: strategy for PV promotion is based on a simple formula: fixed, but decreasing feedin-tariff (until 004 to be combined with investment subsidies as soft loans); National PV administration: the PV policy framework is widely homogeneous nationwide; on the federal level it is co-ordinated by the Ministry for the Environment; the HTDP programme is managed by the public promotion bank KfW; in addition, some German regions (still) run additional support schemes interesting for PV investors. National PV incentive systems: The history of the now successful German model build around the Renewable Energy law (EEG) started at the beginning of the 90ies with a first subsidy programme (1.000 solar roof-tops) and preliminary feed-in-law (Stromeinspeisungsgesetz). These measures, and

not even the new subsidy programme (100.000 rooftops HTDP) started in 1999 were sufficient to help the national PV market to take-off this effect was not achieved before the EEG started in 000; only the combination between EEG and HTDP secured commercially oriented PV investors a full payback of their investment and the breakthrough of the market; Feed-in-tariff system: yes, regulated by the Renewable Energy Law (EEG), recently amended in 004: its terms for PV investors have been improved further; Investment support schemes: yes, on the national level, the HTDP programme managed by the KfW has been abolished on behalf of the amended EEG; the same applies to many regional subsidy schemes, but in some regions they are still in place; Fiscal incentives: exist, but are of limited relevance; Tendering systems: none; Quota obligations systems: none; Green pricing models: yes, various municipal utilities offer green offerings as a voluntary option for their customers to support RES by paying a premium on their electricity bill.

Electricity sector regulations relevant for the PV market Electricity plant authorisation: defined in electricity act and EEG in line with EU directives; promoters obtain status as electricity producer by local fiscal authorities; Grid access code: included in the Renewable Energy Law (modified in 004) and in line with EU legislation; grid access and grid use contracts have to be signed with local utility;

B. Country Analysis assessment of 1 national PV policy frameworks

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Sector regulation: new independent regulator in place since 005; National plant register: no yet, but will be implemented until beginning of 006; obligatory registration of all EEG operators. Building sector regulations relevant for the PV market Building standards: a building permission is only required in special cases (e.g. installations in protected areas); new energy efficiency regulations for the building sector have no direct relevance for the PV sector; Solar building obligations: various pilot initiatives have been implemented by German municipalities, but their direct relevance for the PV sector is yet limited; Regulations for building-integrated PV: various regulations affect BIPV; it depends on the type of installation and the respective regional building code if a specific permission is required. PV industry regulations relevant for the PV market Quality standards for PV products: international/ European quality standards (IEC) for PV products and installations have to be complied with, Quality standards for PV installations: have to comply with general norms for electro-technical installations; Quality standards for PV installers: have to meet specific professional regulations and technical guidelines; installations and grid connection have to be undertaken by certified professionals. Key PV legislation: Renewable Energy Law (EEG) General characteristics of legislation Type of system: fixed feed-in-tariff system; Start/expiry date: EEG in place since 01.04.000; current version since 01.08.004; no expiry date; the current EEG is a further development of the old feedin law from 1991 whose terms were yet insufficient to leverage the PV sector; in retrospective the approval of the new law in 000 has to be credited to lucky conditions under the majority of the red-green-majority in the parliament at the time; Targets of legislation: no quantitative targets defined in the law; Long-terms legal security: fairly high; however, considerable modifications are possible after the expected change of government in the federal elections in 09/005. Contents and conditions of the legislation Beneficiaries: any PV producers; Feed-in-tariffs: 54,53 ct/kWh (< 30 kWp) 51,87 ct/ kWh (30100 kWp) 51,30 (> 100 kWp) for roof-top installations; bonus of + 5 ct/kWh for BIPV; 43,4 ct/ kWh for ground-based installations; Decrease mechanism: 5 % p.a.; Guarantee period: 0 years; Cap: none; Financing model: centralised compensation scheme surplus cost for feed-in-tariffs are charged to electricity suppliers an by them to final consumers;

Economic cost: only in 00 17,8 TWh RES electricity was fed into the grid and received 1,5 billion remuneration by the operators. For 003 these volumes were increased to 1 TWh and 1,9 billion respectively. 5,5 Mio for PV in 004. PV support schemes: 100.000 solar roof-top programme General characteristics of support schemes Type of system: soft-loan scheme for grid-connected PV installations; one part of two-column support model with EEG Start / expiry date: started in 1999 and expired in 003 (5 years); Administration: managed by public promotion bank KfW; Targets of programme: 100.000 solar roofs; targets defined are clearly industry political rather than energy or even environmental political: market development, industry development, cost reduction; Total budget: 1.700 Mio. over 5 years (65.70 projects), excluding regional funds; Funding: federal budget of Ministries for the Economy and Environment; Contents and conditions of the support schemes Beneficiaries: 1. private individuals; . corporations (SMEs); 3. associations, foundations the programme is mainly responsible on the current market structure in Germany (focus on small roof-top systems on private family houses); Type of support: soft loan (interest rate up to 4,5 % below market rates, e.g. 1,91 % in 003); Level of support: maximum budget 6.30 /kWp for installations < 5 kWp; max. 3.115 /kWp for each kWp for installations > 5 kWp. PV monitoring systems National approach to PV market monitoring General approach: three key sources of PV market monitoring in Germany: 1. company surveys conducted by industry associations et al.; . evaluation of support schemes by KfW; 3. registration figures by grid operators; since the expiry of the HTDP programme in 004 a consistent approach to PV market monitoring is clearly missing; the market actors are aware of the urgent need to improve the statistical basis; a key instrument will be the new national plant register from 006 on; Institutions in charge: until 003 KfW, in the future Federal Environmental Agency (UBA) managing the plant register; Data collection & processing: 1. market surveys incl. online data base (BSi production statistics soon to be extended to wholesalers & installers); . evaluation of HTDP applications; 3. obligatory online plant registration for operators > 500 kWp; Data dissemination: 1. annual reports by BSi et al.; . annual & final assessment report by KfW; 3. public plant register; in addition, working group RES statistics since 005 discussing further improvements.

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PV Policy Group European Best Practice Report

National approach to performance measurement of PV policy framework General approach: Federal Ministry for the Environment in charge of monitoring the effects of the EEG to the parliament as a basis for potential amendments; Data collection & processing: Ministry commissions comprehensive studies to scientific institutes and selected experts; KfW conducted programme assessment on its own; Data dissemination: 1. EEG monitoring report; . HTDP assessment report both publicly available.

for interest rate reductions were distributed between federal budgets over the entire lifetime of soft loans, so over 10 years; HTDP: The possibility to finance up to 100 % of initial cost enabled many investors to face such a considerable investment very important especially in an early stage of market development, eventually risk reduction for investors by 50 % liability exemption (risk taken over by the state). Weaknesses national PV policy framework HTDP: limited duration/timeframe; HTDP: limit (cap) building an artificial barrier of market growth. HTDP: like all subsidy programmes the HTDP financed by federal budgets was exposed to stop & go effects; this fact reduces planning security for investors considerably. Market monitoring is still insufficient, especially since HTDP programme has expired; especially off-grid sector, as well as import/export relations are not considered in a sufficient way. Lessons learned Essential success factor for a feed-in-tariff system is the exact, country-specific calculation of the threshold for the profitable operation of PV plants (break-even point) + 56 % risk surplus. Market demand does not respond proportionally to the amount of the feed-intariff (like politicians tend to think), but very sensitively to the smallest investment barriers. Subsidy programmes can be a very effective shortterm measure to stimulate the market (PR-effective); however, a sustainable promotion strategy for PV should not depend on the usual budget constraints of subsidy schemes; without the parallel introduction of the EEG the German HTDP programme would definitely not have been successful; Survey results have to be handled with caution, since PV companies tend to be dishonest with figures, in different ways and for different reasons. Requirements for a valid market monitoring system are extremely high, therefore considerable budgets to set up and run a system are compulsory. At the same time, rather than only improving national approaches there is a need for a consistent monitoring system on a European scale.

3.2 Conclusions from country analysis General assessment of performance Market development: very positive market development, mainly leveraged by the EEG; Germany is the leading PV market worldwide; Industry development: very positive industry development; the Germany PV industry is a worldwide leader; Cost reduction: Germany is the most competitive market in Europe, where pressures for cost reduction and innovation are very high; specific cost per performance unit (/Wp) have strongly decreased especially for larger-scale systems. PV acceptance: really a success story, excellent perception by the general public, but also by professionals and politicians of all parties; various representative surveys reveal that solar energy is seen as one of the most positive topics whatsoever by the Germans. Strengths of national PV policy framework EEG enables profitable operation of PV plants EEG: long-term security of investments, legally guaranteed EEG: Feed-in-tariff avoids administration problems (easier to handle than subsidy programmes); EEG: No artificial limitation (cap) of market growth of the new EEG; EEG: No stop & go policy due to budget constraints and administrative processes; HTDP: Specific charme of the HTDP programme was that not major budgets within the medium-term financial planning had to be provided for; the cost

B. Country Analysis assessment of 1 national PV policy frameworks

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4. Greece 4.1 Country profile PV market Natural conditions Solar radiation: 1.500 00 kWh/m p.a. Specific energy yield of PV plants: ranges from 1.300 kWh/kWp in the North to 1.500 kWh/kWp in the South on average. Market background and history Historic development: the Greek PV market traditionally is dominated by small off-grid installations for the electrification of rural areas and island communities that were promoted since the 80ies; in recent years standalone applications for the power supply of antennas of mobile telephony or lighthouses play an important role as well; in contrast, the grid-connected market is still in an embryonic stage; only few demonstration projects with strong public funding have been realised; Current trends: a fresh start for the grid-connected PV market is expected after the release of the new feed-inlaw later in 005; PV image/awareness: Greece is a pioneer country in the use of solar thermal energy, so the level of awareness is far higher than current market levels reflect. Market size and growth Annual installed capacity: + 1,03 MWp in 004 (+ 0,36 MWp in 003) strong increase, but only in the off-grid segment, while the on-grid segment decreased from already low levels in 00 + 003); Total installed capacity: 3,38 MWp in 004 (,35 MWp in 003); Annual growth rate: + 186 % in 004 (- 10 % in 003) only boost of off-grid segment; Installation density: 0,34 kWp/1.000 habitants in 004; Growth perspectives: forecasts range from only 0,43 MWp (Worst Case) to 114,83 MWp (Best Case) p.a. this huge gap is due to the uncertain impact of the new feed-in-law on the embryonic on-grid-market (esp. roof-tops of private households), while the offgrid market will be sustained, but limited in volumes. Market structure Market segmentation: 39 % grid-connected, 61 % offgrid; Project sizes: Projects in Greece are generally small to medium size, typically ranging between 3 kWp and 100 kWp; no experiences with larger than 00 kWp, gridconnected installations so far; Regional distribution: no official figures; however, the dominating stand-alone installations are concentrated on the Greek islands and rural regions. Administrative procedures Complexity of planning process: extremely complex and time-consuming; typical case studies in Greece so far refer to the installation of small-scale standalone systems for the electrification of buildings in 30 PV Policy Group European Best Practice Report

remote areas (e.g. tourist resorts); these procedures are fairly simple and driven by the application for state-subsidies; there are no experiences with largerscale, grid-connected systems in Greece so far; there is a regulatory framework for all grid-connected RES applications, which in practice is hardly appropriate for smaller-scale PV installations; Number of permissions required: even after a recent reform at least 17 permissions are required (e.g. installation license, building licence, civil works licence, grid connection, operation licence, feed-in contract see questionnaire for full listing); Number of authorities involved: in the past more than 40 (!) authorities had to be contacted for permissions, since the recent reform all permissions can all be obtained via one co-ordinating authority; Duration of planning process: for small-scale lead times are around 61 months on average; for largerscale projects duration would be infinite, so projects are hardly feasible under given circumstances. PV industry PV industry structure and development Silicon and wafer production: none; Cell production: none; Module production: none so far, but in an early stage of development; at least two Greek companies are setting up production facilities, one of them already in operation since 005; PV component production: some small-scale producers of PV components (BoS, batteries). Key industry data National cell production capacity: 0 MWp in 004 (+ 0 %); National module production capacity: 0 MWp (+ 0 %) in 004, but 1 MWp in 005; Annual sales of the national PV industry were 3,3 Mio. in 004 ( 3 Mio. in 003, + 10 %); Annual investments of PV industry: 1,5 Mio. in 004 (0,5 Mio. in 003, + 00 %); Employment in PV industry: 70 in 004 (60 in 003, + 17 %). Average PV module prices: 3,03,7 /Wp Average PV system prices: 610 /Wp PV policy strategy and regulatory framework (overview) National strategy and framework for PV promotion National PV targets: no official PV target until 010 or beyond; National PV strategy/plan: so far there is no consistent strategy or regulatory framework for the PV sector in Greece; however, a new RES legislation based on a fixed feed-in-tariff is being prepared its release is expected until end of 005; National PV administration: key actor within the current regulatory framework is the regulating authority RAE that collaborates with the Ministry of Development in the adaptation of current regulations; in addition,

the electricity grid operator PPC plays a key role in permission procedures; National PV incentive systems: Feed-in-tariff system: the current regulatory framework for the electricity framework includes a uniform tariff system for all RES producers alike, linked to overall electricity price levels and without specific terms for PV; this system will be reformed by introduction of the new feed-in-law due to be published until end of 005; Investment support schemes: no specific support schemes for PV so far; however, PV investors may receive subsidies from general programmes such as OPC (Operational Programme for Competitiveness) that are partly co-financed by EU programmes; Fiscal incentives: do not exist since 003 anymore; Tendering systems: none; Quota obligation systems: none; Green pricing system: none. Electricity sector regulations relevant for the PV market Electricity plant authorisation: current electricity sector framework is result from the transposition of the respective EU directives in Greek law; the basic legislation is from 1999; administrative procedures until commissioning of a grid-connected system are extremely bureaucratic and time-consuming; at the moment promoters have to obtain at least 17 permissions (from various authorities on national, regional or local level), in addition to the energy production licence granted by RAE; PV systems < 0 kWp are excluded from the licensing procedure, but requirements by grid-operator PPC are still high; Grid access code: electricity act from 1994 ensures rights for independent power producers; grid access is granted by utility PPC; procedures are supposed to be in line with EU directives; Sector regulation: ensured by regulator RAE; National plant register: none so far. Building sector regulations relevant for the PV market Building standards: requirements for PV installations from overall building regulations are fairly low; PV systems < 500 kWp are classified as low annoyance, so there their installation is ruled out only in few areas; Solar building obligations: none; Regulations for building integrated PV: none. PV industry regulations relevant for the PV market Quality standards for PV products: international/ European quality standards (IEC) for PV products have to be complied with; Quality standards for PV installations: nothing specific other than overall technical regulations for electricity production facilities; Quality standards for PV installers: nothing specific. Key PV legislation: Electricity sector regulation General characteristics of legislation Type of system: general electricity sector regulations ensuring grid access of any kind of independent producers; specific feed-in-tariffs for RES self-

producers (SP) or independent power producers (IPP) not fixed, but linked to overall electricity price levels; a fundamental reform and new feed-in-tariff system under preparation until 005; Starting/expiry date: the current system is in place since 1994 (with later amendments), no expiry date; Targets of legislation: no specific targets for RES defined; Contents and conditions of the legislation Beneficiaries: all operators of RES installations < 50 MWp; Feed-in-tariff: 70 % (for SP) 90 % (for IPP) of current electricity retail price; this leads to maximum price levels of 6,36 ct/kWh (for SP) and 8,17 ct/kWh (for IPP); new legislation shall introduce differentiated tariffs according to system size and location (continent vs. island) Decrease mechanism: none Guarantee period: 10 years; Financing model: centralised compensation scheme managed by the Transmission System Operator (TSO) ensures that tariffs are paid to producers and endconsumers are charged a RES fee of 60c per MWh (annual amount gathered is about 0M); Economic cost: n.k. PV support schemes: OPC programme General characteristics of support schemes Type of system: direct investment subsidies (grants); competitive procedure, proposals are evaluated by a centralised committee. Administration: co-ordinated by Federal Ministry of Development by means of regular calls-for-proposals; various institutions (incl. RAE, CRES) are involved in its management; Start/expiry date: 000006 (7 years); Targets: programme focus is rather broad, not only RES projects are promoted; no specific targets are defined; Total budget: 58,7 Mio for RES projects in OEP I (001/00) and 67,5 Mio. in OEP II (003/004); Funding: EU, national and private funds. Contents and conditions of the support schemes Beneficiaries: energy investors, mainly companies and municipalities; Type of support: direct investment subsidies (grants); Level of support: subsidy covering up to 70 % of investment cost (for PV projects); PV monitoring systems National approach to PV market monitoring General approach: no systematic approach to market monitoring so far; Institutions in charge: there are various institutions collecting and holding data on PV projects (ministries, regulator RAE, energy agency CRES, industry associations HELAPCO etc.);

B. Country Analysis assessment of 1 national PV policy frameworks

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Data collection & processing: the evaluation of existing data is not undertaken in a consistent way, so market data tend to be hardly valid; Data dissemination: market data are not published in a systematic way. National approach to performance measurement of PV policy framework General approach: no systematic approach to PV policy monitoring; Institutions in charge: programme management bodies (e.g. CRES); Data collection & processing: a systematic evaluation is undertaken of the OPC support programme; at the end of each period (every 6 years) an assessment of projects takes place; apart from general data, each subsidised project is evaluated by one of the programme managers; Data dissemination: there are no dedicated assessment reports on the policy framework.

Outlook New law for RES under development is expected to be approved by the Parliament this year. Will open the market for grid-connected PV applications.

4.2 Conclusions from country analysis General assessment of performance Market development: satisfactory off-grid development, but little activities in the on-grid segment Industry development: fair representation relatively to the small national market Cost reduction: following trends in EU PV acceptance: very high public acceptance Strengths of national PV policy framework High subsidy on the capital cost Utility is obliged to connect RE systems to the grid Weaknesses national PV policy framework Lack of long-term political vision and strategy Feed-in-tariff: insufficient tariff PV is treated as other, more mature & larger-scale applications Feed-in-tariff: guarantee period too low Extremely confusing and bureaucratic regulatory framework partly purposeless licensing processes even for small-scale applications authorities in charge are unable to handle procedures efficiently Requirements by utilities for grid-connection for smallscale systems are so complicated that potential investors are put off No dedicated promotion of roof-top systems in private households where hidden demand is highest Insufficient market monitoring and programme performance measurement Lessons learned Very effective investment support schemes/pilot programmes in the solar thermal sector, creating a leading market and industry in Europe (can be seen as a reference for PV)

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PV Policy Group European Best Practice Report

5. Italy 5.1 Country profile PV market Natural conditions Solar radiation: 1.400 300 kWh/m p.a.; Specific energy yield of PV plants: ranges from 1.100 kWh/kWp in the North to 1.500 kWh/kWp in the South on average. Market background and history Historic development: after a phase of considerable investments in demonstration plants in the 80ies and early 90ies the Italian PV market has been experiencing a very sluggish development in recent years; main reasons have been long delays and implementation problems of political initiatives; Current trends; the current market is clearly dominated by small, grid-connected systems < 0 kWp as promoted by the national support scheme Tetti Fotovoltaici; the Italian PV industry is now expecting the implementation of the new feed-in-tariff system launched in 09/005; PV image/acceptance: the level of awareness is still very low. Market size and growth Annual installed capacity: + 6 MWp in 004 (+ 4 MWp in 003) slight increase in comparison to 00 + 003; No. 4 in Europe Total installed capacity: 36 MWp in 004 (30 MWp in 003); No. 4 in Europe Annual growth rate: + 50 % in 004 (+ 0 % in 003); constant development in comparison to 003; Installation density: 0,6 kWp/1 000 habitants; No. 7 in Europe Growth perspectives: forecasts in the past ranged from  MWp (Worst Case) to 30 MWp (Best Case) p.a.; since release of the new feed-in-tariff system some market actors even reckon a growth up to 80 MWp p.a. in 007/008 in spite of the new feed-in-tariff market insiders growth expectations are more moderate than those of foreign analysts tend to be. Market structure Market segmentation: 68 % grid-connected, 3 % offgrid; the grid-connected market is increasing its share, a development promoted by the new feed-in-tariff system; Project sizes: due to the conditions of the Tetti Fotovoltaici programme, Italy by now is a 10 kWp market; also under the new system the lion share of installations will be < 50 kWp Regional distribution: no official data on regional distribution; however, projects funded under the Tetti Fotovoltaici programmes were distributed across the whole country, with a certain focus in Southern regions. Administrative processes: Complexity of planning process: very bureaucratic; planning procedures for smaller-scale PV installations

are very much dominated by the application of subsidies granted by means of regional call-for-proposals; before the approval is not given, the actual planning and implementation phases cannot be started; there are no experiences with larger-scale PV projects in recent years, but the wind energy sector gives an indication of the difficulties to be expected by promoters; with the start of the new feed-in-tariff system the transmission grid operator GRTN is in charge of the centralised authority process; Number of permissions required: investors have to obtain at least 4 permissions (building permission, RES plant registration to participate in feed-in-tariff system, grid access concession, feed-in contract); a building permission is obligatory, other requirements depend on local conditions and have to be figured out by the promoter; for larger projects on the ground a environmental impact analysis (V.I.A.) may be required; Number of authorities involved: at least 3 (local administration, local grid operator / utility, national grid operator GRTN); Duration of planning process: so far the average lead time for investors has therefore been at least 18 months (subsidy application > 1 year on average); larger projects can take up to 3 years; the new regulations foresees a streamlining of administrative processes: max. 3 months for approval by GRTN; grid access approval by utility within further 1 month; commissioning of the plant within 1 months after approval by GRTN (4 months for installations > 50 kWp). PV industry PV industry structure and development Silicon/wafer production: none; Cell/module production: companies produce cells and modules mainly for supplying the world market rather than Italy; their output was increased considerably in 004 (8,4 MWp) and production capacities will be further extended in 005 (13 MWp); PV component production: there are 8 national producers of PV components like inverters, charge controllers or batteries, as well as 15 importers or distributors of foreign products. Key industry data National cell production capacity: 8,4 MWp in 004 (4,3 MWp in 003, + 95 %); National module production capacity 8,4 MWp in 004 (4,3 MWp in 003, + 95 %); Annual sales of the national PV industry: n.k. Annual investments of PV industry: n.k. Employment in PV industry: 750 in 004 (750 in 003, + 0 %). PV policy strategy and regulatory framework (overview) National strategy and framework for PV promotion National PV targets: in 1999 the national White Paper set a clear target for PV: 300 MWp until 00801; however, this target was reduced two years ago given 33

B. Country Analysis assessment of 1 national PV policy frameworks

the sluggish market development, the new Renewables act sets a new target of 100 MWp until 01 that could be increased in the future; National PV strategy/plan: the Italian government has been working on a strategies and policy framework for RES promotion, but has not been very successful in the past; the national support scheme Tetti Fotovoltaici though fairly well budgeted never achieved its targets due to administrative problems in implementation; the introduction of a quota system on the basis of green certificates in 00 was also inappropriate for the PV sector a new system based on fixed feed-in-tariffs decided (new Renewables Act published in 1/003); however, again the actual implementation was delayed due to tough discussions on the exact terms of this new system was launched not before 09/005; one reason for these developments is the strong opposition against decentralised RES and PV by the conventional energy lobby; Key actor of Italian energy policy is the Federal Industry Ministry (MAP) that regarding RES shares responsibilities with the Environmental Ministry (MATT); for the actual regulations of the electricity sector regional authorities and grid operators play an important role; the future feed-in-tariff system will introduce a competitive tendering system co-ordinated by GRTN as centralised authority. National PV incentive systems: Feed-in-tariff system: After long negotiations on in 09/005 the new Renewables Act introducing a fixed feed-in-tariff (combined with a net metering component for plants < 0 kWp, as well as a competitive procedure for plants > 50 kWp) for PV formally entered into force; Investment support schemes: main incentive system for PV investors so far have been subsidy schemes managed by the Environmental Ministry and regional authorities by means of bureaucratic call-for-proposals, the three sub-programmes run under the heading Tetti Fotovoltaici promote small, grid-connected PV installations < 0 kWp; with the release of the new feedin-tariff system these schemes will widely run out in 006; Fiscal incentives: reduced VAT rate on solar products (10 %) and possibilities to deduce up to 36 % from PV investment cost from personal income tax; Tendering system: the new feed-in-tariff system has introduced a competitive tendering procedure for installations > 50 kWp from 006 on; the projects offering the lowest feed-in-tariff will be selected by GRTN; Quota obligation system: Green Certificate system is in place since 00, but excludes PV; Green pricing systems: not known from Italy. Electricity sector regulations relevant for the PV market Plant authorisation: large number of electricity sector acts and decrees transform the corresponding EU directives; in charge of authorisation is the provincial administration; Grid access code: current code applies only for PV installations < 0 kWp, the new regulations for largerscale plants has been published by AEEG in 005; 34 PV Policy Group European Best Practice Report

Sector regulation: ensured by regulator AEEG; National plant register: none so far, but planned. Building sector regulations relevant for the PV market Building standards: initiatives to promote energy efficiency measures in buildings are clearly in the focus of Italian energy policy now; PV will indirectly capitalise on these measures; Solar building obligations: various initiatives being launched by some Italian regions and municipalities; they have positive effects for the solar thermal sector rather than PV; Regulations for building-integrated PV: so far only proposals by industry associations, not implemented yet. PV industry regulations relevant for the PV market Quality standards for PV products: European and national quality standards (IEC) for PV products to be complied with; Quality standards for PV installations: not known; Quality standards for PV installers / professionals: no obligatory standards. Key PV legislation: new renewables law (Conto Energia) General characteristics of legislation Type of system: fixed feed-in-tariff system (for installations < 50 kWp combined with a net metering component for plants < 0 kWp), including a competitive tendering system for installations > 50 kWp; release in 09/005; the new framework has a long history of battles between different lobbies; the PV industry has now settled for a compromise solution, hoping for potential amendments in the future; Start/expiry date: start in 09/005, no expiry date defined; Long-term legal security: rather low, since feed-intariffs can be modified or even suspended by simple Ministerial Decree. Contents and conditions of the legislation Beneficiaries: all operators of PV installations < 1 MW; Feed-in-tariff (consisting of  components: fixed bonus +net metering or electricity (retail price): approx. 0,61 / kWh (< 0 kWp) - 0,59 /kWh (050 kWp), competitive pricing (50 kWp1 MWp); Decrease mechanism:  % p.a.; Guarantee period: 0 years; Cap: for the moment 100 MWp (60 MWp for systems < 50 kWp) will be soon lifted to 300 MWp in line with official target; Financing model by centralised compensation scheme: surplus cost for feed-in-tariffs will be charged to final consumers. PV support schemes: Tetti Fotovoltaici programme General characteristics of support schemes Type of system: subsidy scheme promoting small, grid-connected PV installations < 0 kWp upon private, commercial and public buildings; separate sub-

programmes for private individuals/corporations and public institutions; Start/expiry date: the programme was already announced in the late 90ies, but postponed various times due to administrative times; even after finally being put into force in 001 its actual implementation by most Italian regions took further 3 years, forcing the PV sector in a state of limbo (negative announcement effect); Target: originally ambitious target of 10.000 solar roofs soon banned from programme title and reduced to .000; Total budget: 1. Sub-programme 1 (Enti Pubblici) 10,3 Mio by MATT; . Sub-programme  (Bandi Regionali) 50 Mio. by MATT & regions; 3. Subprogramme (PV ad alta valenza architettonica): 1,6 Mio. by MATT; Funding: 1. federal budget by the Environmental ministry (50 %); . regional budgets (50 %).

Institutions in charge: Ministry for Environment (MATT), national energy agency (ENEA); Data collection & processing: so far only applications from national Tetti Fotovoltaici programmes are systematically evaluated; obviously the transfer of data delivered by the regions to MATT does not work smoothly so that overall programme evaluation is delayed; in addition, industry associations conducts surveys among its members; Data dissemination: sluggish market development is reflected in the quality of data material; publications by MATT are outdated, the information policy is not satisfactory. National approach to performance measurement of PV policy framework General approach: new Renewables act from 1/003 foresees introduction of a monitoring group (Osservatorio) with delegates from the key political institutions (such as MAP, MATT, ENEA, GRTN, AEEG); details of the approach are not known; Institutions in charge: MAP, MATT and ENEA officially in charge or policy monitoring; Data collection & processing: roundtable with key actors hosted by MATT; Data dissemination: no assessment reports available so far.

Contents and conditions of the support schemes Beneficiaries: 1. private individuals; . corporations; 3. public bodies; Type of support: direct subsidies (grants) covering up to 75 % of total investment; Level of support: depending on project size, from max. 7.30 /kWp (0 kWp plants) to max. 7.750 /kWp (15 kWp); PV monitoring systems National approach to PV market monitoring General approach: so far market monitoring consists of the evaluation of the Tetti Fotovoltaici programme by MATT that is supposed to cover most of the market; in addition, associations like GIFI and ISES Italy are surveying the market;

B. Country Analysis assessment of 1 national PV policy frameworks

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5.2 Conclusions from country analysis General assessment of performance Market development: very disappointing given the high natural potential, but also the considerable budgets invested in the PV sector so far; fundamental upswing expected following the change in the regulatory framework in 09/005; Industry development: due to the sluggish home market fairly weak national PV industry; however, relatively large number of players, so a high growth in line with overall market development is expected from 006 on; Cost reduction: price levels (and margins) for turn-key systems in Italian PV market fairly high in comparison with more competitive markets such as Germany; however, with market growth and influx of foreign competitors will drive prices down and make margins for system suppliers shrink; PV acceptance: still fairly low level of awareness; however, high hidden demand by key target groups such as installers, planners, public authorities, investors and the general public. Strengths of national PV policy framework Feed-in-tariff system (Conto Energia) Increase of maximum capacity from 300 kWp to 1.000 kWp Inclusion of open-land installations in feed-in-tariff system Possibility for connection to the medium-voltage grid Sufficient level of feed-in-tariff for installations < 50 kWp Increase of guaranteed period of feed-in-tariff from 15 to 0 years Annual decrease of feed-in-tariff of only  % p.a. (instead of 3 %) Competitive procedure limited to installations > 50 kWp Possibility to combine feed-in-tariff with regional investment subsidies Flexibility regarding capacity cap of 100 MWp until 010 (may be revised) Weaknesses national PV policy framework Feed-in-tariff system (Conto Energia) New competitive mechanism for installations > 50 kWp; Hybrid remuneration system forcing operators to deal with two different authorities (regulator appointed by AEEG and local utility; Centralised permission procedure that could extend the required lead-time of max. 34 months for investors considerably; No specific feed-in-tariff for building-integrated PV installations (BIPV). Support scheme Tetti Fotovoltaici The regions were technically unprepared for the requirements of an efficient programme administration; this fact led to enormous implementation problems;

The single regions put the common regulations into practice in a very different way, what led to inefficiencies and confusion among market actors; However, all call-for-tenders were characterised by long, bureaucratic procedures; Due to the fairly limited budgets the call-for-tenders could not satisfy the existing demand; only 150 % of applications were accepted overall; The programmes did not require effective monitoring systems for performance measurement of the plants; however, it may be suspected that a large part of PV plants was falling short of performance targets; The programmes promoted only small installations, that naturally have a weak leverage effect in the public; Due to the capacity threshold of 0 kWp per installation operators were offered only limited business opportunities; as a result, commercial investors were hardly attracted by Tetti Fotovoltaici; Local authorities (municipalities, provinces) mainly opted for single, small-scale installations, instead of common, large-scale projects of a wider public impact. Other areas: Very bad market monitoring and policy performance measurement; Lessons learned Overall, the outcomes of national support schemes were very disappointing. Although public budgets were fully invested, the success in terms of a sustainable market development is more than modest: Larger-scale installations with a leverage effect for the PV sector were not promoted at all; The installations had no real impact in terms of falling PV system prices; Operators were not able to make profits with their installations, which could have been re-invested; Awareness or acceptance of PV in the Italian public was not raised, so no critical mass in demand (pull effect) was triggered.

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6. Japan 6.1 Country profile PV market Natural conditions Solar radiation: n.k. Specific energy yield of PV plants: ranges from 1.000 1.100 kWh/kWp Market background and history Historic development: the long-term Japanese PV research and development programmes as well as the measures of market implementation started in 199. In the framework of the New Sunshine Project 1st Stage (1993001) PV was one of the new energies under investigation. This highly successful programme underwent a basic review in 000, which lead to the outline of the new PV technology programme called Advanced PV Generation. Basic guidelines: reduce dependence on petroleum imports, commitment under the Kyoto Protocol, establishment of a prospering market; Current trends: in the residential PV market, dissemination of PV systems for newly built and existing houses has been successfully ongoing, and the market size has expanded to annual sales of over 60.000 systems. PV image/acceptance: generally very high profile in the general public. Market size and growth Annual installed capacity: 7 MWp in 004 (3 MWp in 003); Nr.  worldwide behind Germany Total installed capacity: 1.13 MWp in 004 (860 MWp in 003), Nr. 1 worldwide Annual growth rate: + % in 004 (+1 % in 003) Installation density: 8,87 kWp/1.000 habitants Growth perspectives: stable market growth of about 30 % per year Market structure Market segmentation: 9 % grid-connected, 8 % offgrid; Japanese regulations are mainly pushing the gridconnected segment Project sizes: Residential PV systems very clearly dominate the domestic PV market with about 85 % of the share. The average residential PV system in Japan had a size of only 3,8 kWp Regional distribution: n.k. Administrative processes Complexity of planning process: n.k. Number of permissions required: n.k. Number of authorities involved: n.k. Duration of planning process: n.k. PV industry PV industry structure and development The PV industry in Japan has been rapidly growing toward self-sustainability of the industry. The annual

production of solar cells and PV modules in Japan reached the 100 MW level in 000, and it increased to 500 MW scale in 004. Silicon and wafer production: Several companies are active in producing ingot and wafer: M.Setec, JFE Steel, Sumitomo Mitsubishi Silicon, Metal Reclaim, Tokuyama, Kyocera. They all purchase Si feedstock from outside. Cell production: The worlds biggest cell producers are located in Japan: Sharp (market share of 5,8 %), Kyocera (8,3 %), Mitsubishi Electric (6,0 %), Sanyo (5,4 %). Japan dominated the market for PV cells with a share of 47,3 % (594,1 MW) in 004. Module production: All cell manufacturers mentioned above are vertically integrated and therefore produce PV modules too. With the exception of Mitsubishi Electirc, these corporations are setting up additional module lines abroad, while expanding cell production at home. All this new Japanese module capacity in Europe, together with the expansion plans of domestic companies, will result in a combined capacity of around 970 MW by the end of 005. PV component production: With the growth of the PV system market, manufacturers of balance of systems (BOS) have been actively increasing their capacity investment.

Key industry data National cell production capacity: 594,1 MW (004) National module production capacity: 970 MW by the end of 005 (estimation by Photon International, March 005, p. 66 et seqq.) Annual sales of national PV industry: 1.68 Mio (003) Employment in PV industry: 11 300 (003) Average PV module prices: 3,3 /Wp (004) Average PV system prices: 5,0 /Wp (004)

PV policy strategy and regulatory framework (overview) National strategy and framework for PV promotion National PV targets: Cumulative volume for PV system introduction was set at 4.80 MW by FY010. National PV strategy / plan: The strategic promotion of PV is based on a combination of different instruments: Net-billing, subsidy schemes (residential PV system dissemination programme), fiscal incentives, quota regulations for utilities (since 00). The Japanese policy is much more market oriented than the European and aims at establishing a prospering market. National PV administration: The main implementation programmes are carried out by METI the Ministry of Economy, Trade and Industry. Under the direction of METI, NEF (New Energy Foundation) is responsible for the support schemes for residential PV systems and NEDO (New Energy and Industrial Technology Development Organisation) for the support schemes for public and industrial uses. Also the number of local governments providing their own subsidies and preferential loans has been increasing over the years.

B. Country Analysis assessment of 1 national PV policy frameworks

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National PV incentive system Feed-in-tariff system: There is no actual Feed-in-tariff in place but Net-billing: average electricity prices for grid-connected PV, 4 Yen/kWh for residential use and 101 Yen/kWh for industrial use. Investment support system: The main subsidy programme is the Residential PV System Dissemination Programme initiated in 1994. The total number of PV systems installed under this program expanded to the scale of 00.000. Other programmes: Project for Promoting the Local Introduction of New Energy (support of regional projects developed by local governments), Project for Supporting New Energy Operators (support for industrial entrepreneurs), Field Test Projects for industrial and other applications and for new PV technologies. Fiscal incentives: There are fiscal incentive programmes for government buildings and schools. Some house manufacturers offer interest reduced mortgages for homes with PV systems included. The reduction in interest rate is 1 to  percentage points and is not only available for the financing of the PV system, but often for the whole mortgage. (PV Status Report 004, A. Jger-Waldau) Tendering systems: none Quota obligation system: RPS Renewables Portfolio Standard, imposes an obligation on electricity retailers to use a certain amount of electricity from new energy (solar, wind, biomass, hydro, geothermal) Green pricing models: Electric power companies established Green Power Fund in October 000. The utilities bill an additional charge as a contribution at 500 JPY/share/month to the supporters among their

customers, and contribute the same endowment as the amount of their supporters contribution for installation for PV systems and wind power generators. Electricity sector regulation relevant for the PV market Electricity plant authorisation: n.k. Grid access code: n.k. Sector regulation: n.k. National plant register: n.k. Building sector regulation relevant for the PV market Building standards: In the building standard law, PV modules were defined as building materials in 1999 Solar building obligations: n.a. Regulations for building-integrated PV: n.a. PV industry regulations relevant for the PV market Quality standards for PV products: Japan Electrical Safety & Environment Technology Laboratories (JET) started a certification program of PV modules, jetPV-certification in October 003 (consistent with international IEC standards). Quality standards for PV installations: JET conducts a certification program for the performance and reliability of grid connection protecting unit for small-sized residential PV systems. Quality standards for PV installers: n.a. Key PV legislation: n.k.

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Key PV support scheme: residential PV system dissemination programme General characteristic of the support scheme: Type of system: Subsidy scheme Focus area: residential, grid-connected PV systems Start/expiry date: 1994 to March 006 Administration: New Energy Foundation (NEF) Targets of the programme: Perception to PV, dissemination of PV, creation of the initial market for residential PV systems, collection of PV operation data Total budget: 5,5 bn. JPY for 004, carry over from 003 not known (PV Status Report 004, A. JgerWaldau) Funding: The programme is funded by METI, the Ministry of Economy, Trade and Industry, and ANRE, the Agency for Natural Resources and Energy. Contents and conditions of the support scheme: Subsidy: 45 000 Yen per 1 kWp in 004, level of subsidy is declining constantly year per year (PV Status Report 004, A. Jger-Waldau) In the residential PV market, dissemination of PV systems for newly built and existing houses has been successfully ongoing, and the market size has expanded to the annual sales of over 60 000 systems. (IEA, Japan Photovoltaic technology status and prospects 004). Qualifying for subsidy a PV system must meet the technical specifications established by NEF and at the same time satisfy the following provisions: system capacity below 10 kW, new systems only, system installation work must be completed after the date of receipt of subsidy application. (www.nef.or.jp/english/) After two years of installation of the PV system, the subsidized user will be required to report on system operation etc. on a regular basis. PV monitoring systems National approach to PV market monitoring No information National approach to performance measurement of PV policy framework: No information

in 1998, , mill. JPY in 00, est. 1,9 mill. JPY in 004. It is interesting to note, that despite a considerable price reduction, the percentage share of the module within the system increased between 1998 and 003, whereas the construction costs decreased. PV acceptance: PV is highly accepted. An increasing number of customers focus their attention on economic efficiency as well as environmental impact. Strengths of national PV policy framework Japanese PV policy is market-oriented and aims at establishing a prospering market. Long-term policy and commitment, which the industry can rely on. Housing manufacturers developed houses, which combine PV installation, energy efficient water supply and an airtight housing structure and offer reduced interest rates for homes with PV systems. There is a strong focus on the establishment of international standards and the transfer of new Japanese business models worldwide. A considerable number of municipalities are offering additional subsidies. Weaknesses of national PV policy framework It is planned to phase out the METI subsidies after 005. Critics fear that this would also lead to the withdrawal of many Prefectures supports schemes and eventually would end willingness of utilities to grant net-metering. (PV Status Report 004, A. Jger-Waldau) Lessons learned It is the combination of different policy instruments that leads to a successful PV market implementation. Also the time of their introduction has to be well coordinated. Long-term commitment is essential for the industry and investors.

6.2 Conclusion from market analysis General assessment of performance Market development: In 004 Japan lost its position as biggest PV market to Germany. But still Japan has a stable market growth of more than 0 %. Industry development: Japan dominates the market for PV cells with a share of 47,3 % (594,1 MW) in 004 and all manufacturers announced massive increases of production capacities. Also the biggest module manufacturers are located in Japan. Cost reduction: The average price for a 3 kWp system is declining constantly: 6,0 mill. JPY in 1994, 3,0 mill. JPY

Outlook More and more industries such as the building material industry, the housing industry, the construction industry and the power source equipment industry, have been engaged in the PV market. The PV system market is expected to expand and grow to be a selfsustainable market in the near future, by achieving cost reduction with the governments support for research, development and introduction of PV systems. The residential PV system dissemination programme will run out in March 006. Nevertheless a stable market growth is expected. Further price reductions shall compensate the no more available subsidies.

B. Country Analysis assessment of 1 national PV policy frameworks

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7. Netherlands 7.1 Country profile PV market Natural conditions Solar radiation: 1.000 50 kWh/m p.a. Specific energy yield of PV plants: ranges from 700 kWh/kWp in the South-East to 800 kWh/kWp in the North-West regions. Market background and history Historic development: the PV market in the Netherlands developed in the 80ies, first mainly with stand-alone applications, later increasingly with grid-connected systems; in the meantime also several large-scale projects of MW class have been realised; until 00 the overall market development was very dynamic; however, since the change of the government in 00 RES policies in general were cut and PV in particular fell back in the short-term policy agenda in favour of wind and biomass; Current trends: currently the PV market of small roof-top systems typical for the NL so far practically collapsed, is in a state of limbo; PV image/acceptance: fairly high due to successful policies in recent years. Market size and growth Annual installed capacity: + 3, MWp in 004 (+ 19,6 in 003) very sharp slump in comparison to 003! Total installed capacity: 49,08 MWp in 004 (45,9 MWp in 003) No. 3 in Europe; Annual growth rate: + 7,0 % in 004 (+ 745 % in 003) sharp slowdown; Installation density: 3,01 kWp/1.000 habitants; No. 3 in Europe; Growth perspectives: forecasts range from 1,05 MWp (Worst Case) to 7,65 MWp (Best Case) p.a. the actual development will depend heavily on the new replacement support schemes currently being discussed. Market structure Market segmentation: 91 % grid-connected, 9 % offgrid; Project sizes: the average size of PV projects in the Netherlands is around 0 kWp. The Dutch market however is characterised by small (0,6 kWp), gridconnected roof-top systems; larger-scale installations (up to 1, MWp) exist, but are highly customised demonstration projects with a high level of public involvement; Regional distribution: no exact data on regional distribution available; however, PV installations are not concentrated in certain regions, but well distributed across the country. Administrative processes: Complexity of planning process: since the cutting of the national support scheme EPR a typical small-scale installation is realised without any public support; the 40 PV Policy Group European Best Practice Report

procedure is relatively straightforward and lead times for the investor short; Number of permissions required: none, following a change in legislation in 003, PV no longer falls under the building regulations regarding the external appearance of buildings. Number of authorities involved: none Duration of planning process: none PV industry PV industry structure and development Silicon / wafer production: not known; Cell production: at least four Dutch producers of solar cells, all of them just entering this business; Module production: the same applies to the three module manufacturers who are partly entertaining production facilities in Germany; further module productions are in a planning stage; PV component production: the Netherlands are basis for some of the leading inverter manufacturers in Europe; overall, there are five producers known, as well suppliers of specialised PV components such as deposition machinery. Key industry data National cell production capacity: 0 MWp in 004 (+ 0 %); 15 MWp in 005 National module production capacity: 0 MWp in 004 (+ 0 %); Annual sales of the national PV industry: 59 Mio. in 004 (350 Mio. in 003, - 83 %); Annual investments of PV industry: n.k. Employment in PV industry: 57 in 004 (430 in 003, - 40 %); PV module prices: 3,54,5 /Wp in 004 (project size dependent) PV system prices:.4,56,0 /Wp in 004 (project size dependent)

PV policy strategy and regulatory framework (overview) National strategy and framework for PV promotion National PV targets: no specific PV target anymore, the overall RES targets are supposed to be accomplished mainly by wind and biomass; National PV strategy / plan: currently PV is not top on the political agenda and only part of national R&D strategies (national energy research programme); market stimulation activities are close to zero; the current PV policy framework mainly includes a feedin-tariff (MEP) and net metering system, some fiscal measures (REB, EIA) and a few investment subsidy schemes; National PV administration: energy policy is coordinated by the Ministry of Economic Affairs; on the operational level, the national energy agency SenterNOVEM plays an important role.

National PV incentive systems: Feed-in-tariff system: the feed-in-tariff is combined with a net metering system, providing  sources of revenue for PV investors: the MEP regulation imposes the obligation on utilities to pay a fixed price for green certificates acquired by PV operators; in addition, the electricity fed into the grid is remunerated at market prices (net metering); Investment support schemes: since the abolishment of the old EPR system there is currently no directive incentive system in place; Fiscal incentives; yes, include so-called green financing instrument, which means that PV investments are exempt from wealth tax and partly eligible for income tax reductions; in addition, companies receive a 44 % extra reduction from corporate tax (EIA energy investment rebate); until 005 RES were subject to a reduced rate of Energy Tax (REB), but have lost this advantage to conventional energies by now; Tendering system: not in place on a nationwide level; however, authorities on the municipal level may callfor-tenders for PV projects; Quota obligation system: none. Green pricing systems: yes: Sales of electricity is subsidised by the government with 0,097/kWh Up to 3000 kWh / yr, utilities are forced to deduct the produced PV power from the consumed power. green electricity is sold at around the same price as grey electricity. This is done without subsidy. Utilities take the losses as marketing/promotion costs. Electricity sector regulations relevant for the PV market Plant authorisation: there are no specific regulations for installation and grid connection of PV systems; covered by general Electricity Act in line with EU directives; in charge of authorisation procedures are provincial governments/administration; Grid access code: grid-connection agreement and feed-in-contract is closed with local utility; Sector regulation: ensured by regulator E-Control; National plant register: none so far. Building sector regulations relevant for the PV market Building standards: the Bouwbesluit building directive defines new energy efficiency standards for new buildings; currently the relevance for PV is limited, but will when these standards are sharpened from 006 on so that PV installations could become economic solutions to meet requirements; in addition, PV installation have to comply with the Dutch NEN 1010 regulation; Solar building obligations: none known in the Netherlands; however, municipalities may impose energy performance standards (EPC, EPL) for new buildings for which PV may be an option; Regulations for building-integrated PV: while BIPV installations cannot be banned by building inspection authorities anymore, there are no specific promotional measures for this segment in place.

PV industry regulations relevant for the PV market Quality standards for PV products: international/ European and national quality standards (IEC, EN, TV) for PV products have to be complied with; Quality standards for PV installations: have to meet NTA standards and NEN safety requirements for low voltage installations; Quality standards for PV installers: no different than for other installers Key PV legislation: MEP + net metering system General characteristics of legislation Type of system: fixed feed-in-tariff in place since 003, from 005 on to be combined with net metering system; the competitive Dutch philosophy led to no specific feed-in-tariff for a less economic technology as PV, but the same as for offshore wind energy; so levels are fairly low; the MEP (environmental quality of electricity production) regulation obliges utilities to remunerate green certificates obtained from regulating body CertQ; in addition, the net electricity fed into the grid (max. 3.000 kWh p.a.) is paid at market prices; Starting/expiry date: fixed feed-in-tariff since 003, net metering since 005; no expiry date defined in legislation; Administration: co-ordination by Ministry of Economic Affairs, but operational management by EnerQ (for payments) and CertQ (for plant certification), as well as utilities (net metering); Targets: no specific targets other than the overall Dutch RES targets; Long-term legal security of the MEP regulation: fairly high as it is embedded in the electricity sector law; the net metering system with recent amendment of the electricity sector law has also become part of the overall energy legislation. Contents and conditions of the legislation Beneficiaries: mainly operators (private households and companies) of larger-scale systems since high access fees (charged by EnerQ) do not pay off for small operators; Feed-in-tariffs: 0,097 /kWh + electricity tariff 0,0,3 /kWh, so overall 0,30,4 /kWh Decrease mechanism: none; Guarantee period: 10 years; Financing model: tariffs are directly paid by the local utilities; compensation of extra cost by grid-connection fees, so may eventually charged to final consumers; Economic cost of legislation: MEP: to apply for MEP subsidy a connection fee of 5, an annual membership fee of 5, and often the purchase of a new meter are required. These have to be paid by the PV energy producer. Net metering: Only a bidirection meter is required. Costs for the exchange of the meter (where necessary) are for the utility.

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PV support schemes: EPR programme General characteristics of support schemes Type of system: directed investment subsidies; key market stimulation instrument started in 000 for energy saving applications. PV was supported from 001. The scheme was suspended in 003; attractive conditions triggered a run of applications and a 300 % market growth in the Netherlands, so politicians had to stop it to avoid outstretching budgets; Administration: launched by the Ministry of Finance, but operationally managed by the utilities; Starting/expiry date: 001003; Targets: no specific target defined, in line with overall RES targets of the Dutch government; Total budget: no fixed budget, actual subsidies estimated at 4070 Mio in 001003 (8,5 for gridconnected plants), triggering overall investments of 150 Mio. only in 003. Funding: federal budget (revenues of the Ministry of Finance from the REB energy tax on electricity and gas consumption). Contents and conditions of the support schemes Beneficiaries: mainly private households; Type of support: investment subsidy (grant); Level of support: 3.500 /kWp could be extended by 5 % in case of an EPA (Energy Performance Advice) certification of the installation.

PV monitoring systems National approach to PV market monitoring General approach: Monitoring of the produced electricity. Mainly as part of the monitoring of the contribution of RES to the energy production. Specific questions concerning installed power, production capacity, etc. are added to fulfil the IEA PVPS Task 1 requirements. Institutions in charge: association Holland Solar, the energy agency SenterNOVEM (also IEA-PVPS partner); in addition the national statistical institute CBS; Data collection & processing: data are collected by the research institute ECN in collaboration with SenterNOVEM and Holland Solar; data delivered are then processed by CBS according to a monitoring protocol developed by SenterNOVEM; Data dissemination: results are finally published on the websites of CBS, SenterNovem and IEA-PVPS; partly also by ECN; in addition, there is targeted dissemination towards national key actors. National approach to performance measurement of PV policy framework General approach: policy measures are monitored and results measured against overall political RES targets; Data collection & processing: usually specialist consultants (e.g. PWC) collects data by means of interviews/surveys on behalf of the Ministry of Economic Affairs; the programme performance is measured also in commission of the Ministry; Data dissemination: the management organisations usually perform annual or semi-annual assessments and report to the Ministry, who take results as a basis for amendments; no official reports are published for the general public.

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7.2 Conclusions from country analysis General assessment of performance Market development: Market development was strong until 004. Cumulating subsidies caused excessive growth in 003. Ending of the main support schemes caused a fallback in 004. Present schemes are complicated. Industry development: In 003 the main cell industry left the Netherlands. No significant production is left. In spite of the low Dutch PV market AKZO and Solland Solar may start production in the near future Cost reduction: In spite of the low Dutch PV market, serious price reductions were achieved. This was caused mainly by the large market at the end of 003, allowing suppliers, contractors and installer to gain experience and develop cheaper constructions and procedures PV acceptance: Acceptance is and was high and has not changed significantly over the last years. Application still strongly depends on government support Strengths of national PV policy framework MEP: Basically MEP considered as a strong instrument; however, tariffs are too low MEP: according to last assessment report MEP functions rather well: more long term support guarantee (10 yr) than previous incentives, no money flow out of the country, the direct relation between MEP and increase of initiatives can not be established yet, a clear relation in the near future is expected. ERP-PV: investment security for private investors (households as key market segment in NL); ERP-PV: very good PR effect, made PV very popular in NL; Net metering: easy to apply; stimulating individuals and thus increasing awareness. EIA: instrument is closely related to long-term incentives between government and industry; this makes it effective and uncomplicated instrument; Weaknesses national PV policy framework MEP: Feed-in-tariffs too low since they are defined on uneconomic assumptions (same level a offshore wind parks!), so PV installations far from attractive for investors MEP: for the MEP no budget limit is fixed. Politicians see this as a danger. EnerQ and the government will evaluate the controllability of the scheme. MEP: High membership fee and complicated registration for EnerQ make it uneconomic especially for small investors; Net Metering is arranged by the utilities. They are obliged to provide the individual house- and PV system owner with a two directional meter or two separate meters for in- and outgoing energy. This however appear to be hard to arrange. Furthermore presently utilities think they are free to decide upon the purchase price, which may fall down to the wholesale price of 0,040,05/kWh. This hardly compensates for the effort to get the net metering arranged. The law however clearly describes that the kWhs delivered to the grid should be deducted from the kWhs purchased from the grid before billing;

ERP-PV: lack of budgetary control for the government as there was no built-in limit on the budget. The number of applications depended thus solely on market conditions. ERP-PV: time scale. This made the EPR hard to use for large scale building projects. Commitments had to be made at the beginning of the project. Application for the subsidy however could only be done by the owners, after the completion of the houses. As this often took place more than a year after the orders for the PV systems were made, the probabilities of changes in the tax regime were high. Therefore no certainty for eligibility for a subsidy could be given at the time of ordering the systems. This caused many construction companies not to invest in PV. Net metering: difficult to organise as the collaboration of the utility (who does not take any advantage from it) is required; still insufficient to make PV competitive; Lessons learned MEP: Expenditure on such a regulation can be rather predictable in a stable and reasonably elastic market. But in 003 the Dutch market became unstable due to other PV investment subsidies. Some of them came from local authorities. These influenced the market only locally. Others were set up by the utilities, using MAP fund reserves (funds entrusted to them from earlier REB earnings and that the government would claim back if not used before the end of 003). These subsidies had a much larger impact. In some cases the combined use of the subsidies rendered the PV systems free for the end-user, while being quite profitable for the industry. In a few months the number of PV installations soured and so did the number of EPR PV applications, leaving the Ministry with no other option than to close the regulation (with a notice of one month, in which period the number of applications doubled again) In hindsight one can conclude that the EPR was very popular with the target group, rather efficient and effective, but for such a regulation to be budgetary controllable, stacking with other subsidies should be limited and controlled. Performance measurement: One common factor in all the evaluation is the struggling of the evaluators with programme objectives. Program objectives are not always clear and often change during programme execution. Outlook Under the present regime no significant changes in public support are expected. PV is considered a longterm option. The government has therefore chosen to support PV RTD rather than PV implementation. The Dutch PV market will stay low. PV RTD however will keep (regain) its strong position. The Energy Performance Requirements for Buildings (EPC) may force parties to at least consider the application of PV in new buildings. Some real estate developers are experimenting with this approach. In the present market, only very few installers are willing to acquire experience with implementation of PV.

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8. Portugal 8.1 Country profile PV market Natural conditions Solar radiation: 1.700 300 kWh/m Specific energy yield of PV plants: ranges from 1.400 kWh/kWp in the North to 1.650 kWh/kWp in the South on average. Market background and history Historic development: Up to 001 very little activity. In 001 under the E4 programme a national target of 50 MWp was announced. Together with the defined feed in tariffs, split in system under and above 5 kWp, increasing interest in grid connected PV. In 003 the government published a new goal of 150 MWp total installed capacity until 010. Current trends: 75 % of the installed total capacity of .5 MWp was in the off-grid sector by the end of 004 PV image/acceptance: in spite of a improved market development PV has not built a strong image in the general public; Market size and growth Annual installed capacity: 0,574 MWp in 004 Total installed capacity: ,6 MWp in 004 Annual growth rate: 8 % in 004 but the low level of the absolute numbers needs to be taken to account Installation density: 0,3 kWp/1 000 habitants in 004 Growth perspectives: not taking into account the 64 MWp centralised PV plant in Moura, which is planned to get started in 006, a steady growth of 50 % up to 010 is expected Market structure Market segmentation: in 004 75 % of the total installed capacity is in the off-grid market. But due to the feed in tariff 0,554 MWp of the 0,575 MWp installed in 004 was in the grid connected market. Project sizes: n.k. Regional distribution: n.k. Administrative processes Complexity of planning process: clear administrative structure, but the process from the initial project idea to the final connection to the grid is very time consuming and quite complex. Number of permissions required: n.k. Number of authorities involved: Directorate-General for Geology and Energy (DGGE), the Energy Purchase Office (GBCE) of the distribution grid utility (EDP Distribuio), Duration of planning process: lead time for investors 1 months and more this is seen as one of the main barriers for market deployment.

PV industry PV industry structure and development Silicon /wafer production: none so far; Cell/module production: 1 module production site from Shell Solar with a capacity of 17 MWp PV component production: A dozen companies are supplying and installing PV modules. A few of them produce power electronics for stand-alone PV applications. Key industry data National cell production capacity: none National module production capacity: 10,8 MWp in 00. Annual sales of the national PV industry: estimated .5 Mio in 005 with 410 % increase compared to 004. Annual investments of PV industry: n.k. Employment in PV industry: 175 in 004 PV module prices: 3,5 /Wp PV system prices: 6-8,5 /Wp PV policy strategy and regulatory framework (overview) National strategy and framework for PV promotion National PV targets: an indicative target of 150 MWp installed by 010 has been set by the government in 003, replacing the old target of 50 MWp National PV strategy/plan: No specific plan of activities has been designed to reach this indicative target. National PV administration: The ministry of Economics is responsible for energy policy. The indicative target was set by the Resolution of Councils of Ministers No 63/003. PV is part of the plan for RES, but no special activities for PV are foreseen. PV is seen as support for the two major goals defined under the aforementioned RCM, which are national security of supply and the promotion of sustainable energy. National PV incentive systems: Feed-in-tariff system: most important instrument; it is valid for the first 15 years or the first 1 GWh produced per MWp whatever happens first (Decree-Law 33A/005). Different tariffs for systems smaller and bigger that 5 kWp. Investment support schemes: MAPE this support measure gives refundable grants for all types of PV systems (ends in 006). It is not focused on PV but very general aims at RES as RUE and natural gas conversion projects. Fiscal incentives: VAT for PV and all other RES equipment is reduced from the maximum rate to the intermediate rate of 1 %; it is possible to deduct from the total amount of the annual income the amount spent on the purchase of new renewable energy conversion equipment. Tendering system: No formal tendering procedure is in place, Quota obligation system: none; Green pricing systems: n.k.

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Electricity sector regulations relevant for the PV market Plant authorisation: procedures are clearly defined in Decree-Law 68/1999, which deals with the specific authorisation of independent power production using RES. Detailed specifications of the technical requirements are included; The power production activity for systems below 150 kW (including gridconnected PV systems) used for self-consumption (minimum 50 % of production) and delivery of surplus to the grid or to a third party at low voltage are covered separately in Decree-Law 68/00 Grid access code: exists in detail, even model contracts between a independent power producer and the public grid management entity are provided; Sector regulation: n.k. National plant register: n.k. Building sector regulations relevant for the PV market Building standards: there are not yet any building codes and regulations specifically related to PV Solar building obligations: There are no such regulations yet Regulations for building-integrated PV: no specific regulations for BIPV. PV industry regulations relevant for the PV market Quality standards for PV products: no official national certification or homologation system in place yet Quality standards for PV installations: No such standards or regulations yet Quality standards for PV installers: Nothing specific for PV yet. Of course all safety standards of general application are valid. Key PV legislation: feed-in law for renewables General characteristics of the legislation Type of system: Feed-in tariff for all renewable energies. Start / expiry date: Since 1988, although to most recent changes are dated early 005; expiry date: n.a. Targets of legislation: the aim for PV is to install 150 MWp of power capacity by 010; this corresponds to the need to comply with the Kyoto Protocol. Long-terms legal security: This legislation can be abolished or amended by ministerial decision, following all the necessary administrative steps for that purpose. However, in most previous changes care has been taken to assure that producers are not damaged and that was done either by giving them the opportunity to choose between the old and the new system or by giving them better conditions under any circumstances. Contents and conditions of the legislation Beneficiaries of the legislation: All single or collective, public or private entities can act as independent power producers and, consequently, benefit from the feed-in law. Feed-in-tariff: the price paid for PV in power plants below and above 5 kW has set to 0,5 and 0,35 EUR/kWh, respectively. However, in April 15, an Amendment (n 9/005) performed a slight change in the formulation, which affects those projects that produce and deliver

most of its power in daytime (full hours), like PV. A nearly 0 % decrease in the tariff arise from that situation. Decrease mechanism/guarantee period: the feed in tariff for a PV power plant shall remain valid for the first 1 GWh produced by each MW of installed capacity or for 15 years after the plant comes into operation, whatever happens first. After this period, the producers shall be paid according to the market prices plus any additional benefits coming from the sale of green certificates. Financing model: The feed-in tariff is paid to producers by the grid utility operator (EDP Distribuio), which is a state owned company. However, these costs incurred by the government with the feed-in tariff are then included by the Energy Services Regulatory Body in the price defined for electricity sold to final consumers, so it is the final consumers of electricity who are actually paying the additional cost set by the government for the power coming from renewables. Economic cost: n.a.

PV support schemes: MAPE (support measure for the maximisation of energy potential and for streamline consumption) General characteristics of support schemes Type of system: refundable grant (it can be replaced by payment of interests) Start / expiry date: 000/006 Administration: the actors involved in the management of the MAPE are the Institute for Support to Small and Medium Enterprises and to the Investment (IAPMEI), and the Regional Directorates for Economy (DRE). The Directorate General for Geology and Energy (DGGE) is the entity in charge of providing a specialised technical opinion on the projects. Targets of programme: No specific targets for PV or any other RE technology. The general target of the MAPE is to provide support to projects for the power and heat production based on renewables, as well as to RUE (rational use of energy) and natural gas conversion projects. Total budget: For enterprise stimulation there are several measures, one of which is Measure 3 Improving Business Strategies, where MAPE is included, together with other programmes. The total public budget for all of Measure 3 is 63.413.010 EUR. 45

B. Country Analysis assessment of 1 national PV policy frameworks

Further 77.36.094 EUR is expected to come from private investment. There is no specific budget for PV. Funding: of the public budget, 330.497.58 EUR is Community support (ERDF European Regional Development Fund) and the remaining 301.915.75 EUR are national funds. Contents and conditions of the support schemes Beneficiaries: Only companies/firms can apply for support in the case of PV power project. If the PV plant is considered as part of a Rational Use of Energy project, then also municipalities, business and labour associations, schools, health and social action bodies, and civil protection entities can apply. Level of support: 40 % maximum refundable aid, maybe less if the plant is to be sited in more developed regions of the country. Refunding should take place in 9 years following a 3 years leave. Only investment projects of more than 5.000 EUR are eligible and the programme defines the major limits to eligible investment for PV as 3.500 EUR/kW. PV monitoring systems National approach to PV market monitoring General approach: monitoring of market development is made by DGGE and by ERSE. The main objective for DGGE is to keep track of progress regarding the installed capacity for reaching the 010 target of 150 MW PV and the contribution of PV to the 010 target of 39 % of electricity from renewables and to the global energy balance of the country. As for ERSE, the objective is to quantify the additional cost imposed on the electrical system by the payments made based on the feed-in tariff and, together with all other production in special regime, reflect those costs in the price of electricity to final customers. Institutions in charge: ADENE has been monitoring, on behalf of DGGE, the global installed capacity (including off-grid applications) and other market aspects. Data collection & processing: the original information on grid connected systems is collected by the distribution grid operator (EDP Distribuio) based on the contractual relationship it has with the independent power producers and the monthly invoices they submit for payment. This information on power purchase is then passed on to the transport grid utility (REN), which then forwards it to the Energy Sector Regulatory Body (ERSE). Consultation of the main actors. Data dissemination: the monitoring activities performed by ADENE on behalf of DGGE for the IEA-PVPS Implementing Agreement, data processing and interpretation is performed according to defined guidelines and then published by the IEA for public dissemination. National approach to performance measurement of PV policy framework General approach: The objective of the PV policy framework is to reach 150 MW by 010. The objective regarding the grid-connected systems is to evaluate the impact the feed-in tariff must have on the electricity paid by consumers.

Data collection & processing: For the feed-in Law, monitoring of power production is made by the distribution grid utility (EDP Distribuio), which reports this data to the national transport grid utility (REN) which, on its end, informs the Energy Sector Regulatory Body (ERSE), so they can reflect the additional costs of the special tariff in the global use costs of the power system and, consequently, in the final price of electricity charged to consumers. Data dissemination: for MAPE, periodic reports with the state of the Programme are issued. The information made available to the public on MAPE through the website (available on http://www.prime.min-economia.pt) states the number of applications and supported projects by sector (industry, building, commerce, transports, tourism, services and other), as well as the amounts of investment and incentive involved.

8.2 Conclusions from country analysis General assessment of performance Market development: the Portuguese PV market develops slowly. Once, most of the projects currently in the licensing stage are actually installed and producing, this will cause a tremendous growth in comparison the little capacities installed so far. Industry development: still very small PV industry. Cost reduction: n.k. PV acceptance: Limited awareness of PV among the general public and investors. Strengths of national PV policy framework Feed-in law: Raised a lot of interest in grid-connected applications of PV systems. Constant update according to inflation and having a relatively high price paid for the power. Support scheme MAPE: The maximum level of support (40 %) and the time for reimbursement (1 years) can be considered, to some extent, positive aspects Weaknesses national PV policy framework Feed-in law: Only valid for the first 150 MW of installed capacity. 15 years validity is less than the lifetime of an average PV plant Lack of stability in the law that has already changed twice in 005. Delay in licensing process. Support scheme MAPE: PV only plays a minor role in the programme. Programme is not accessible by private individuals Minimum threshold of 5.000 for investment. The limit for support set by the government as 3.500 EUR/kW is still below the average price of the technology in the market

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No tailoring of the programme to the specific characteristics of each type of technology. Monitoring systems: A specific PV policy performance measurement approach, with critical assessment and evaluation aspects, has not yet been introduced. Lessons learned The fact that the feed-in tariff has been reduced twice in a few months time arose the feeling that market is not stable. Companies are afraid that this may drive investors away. Administrative procedure need to be short, in order not to deter potential users/investors Outlook The future of the Portuguese market will depend heavily on the realisation of the 64 MWp plant in Moura. This would reduce the market for other PV projects by 43 % with reference to the goal of 150 MWp installed by 010. The future market development will also be determined by the ability to reduce the administrative effort for a grid connected PV system and by the reduction of the time needed for this.

B. Country Analysis assessment of 1 national PV policy frameworks

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9. Slovenia 9.1 Country profile PV market

Number of authorities involved: three authorities (distribution company, ministry of environment and space, operator of the distribution grid) Duration of planning phase: more than five months PV industry

Natural conditions Solar radiation: 1.300 +/- 100 kWh/m p.a. Specific energy yield of PV systems: ranges from 950 kWh/kWp to 1.100 kWh/kWp (Primorska Region). Market background and history Historic development: in the beginning the market in Slovenia consisted only of off-grid system. An investment programming is subsidising off-grid PV systems up to 60 % through a public tender but with limited budget. In 00, the government accepted the Decree of Qualified Producers, which allows to feed electricity into the grid from PV systems for a defined feed-in tariff (0,7 /kWh up to 36 kWp). Current trends: in 004, the government increased the price to 0,37 /kWh for PV systems up to 36 kWp. PV image/acceptance: still low levels of awareness Market size and growth Annual installed capacity: + 0,007 MWp in 004 (+ 0,005 MWp off-grid in 003) growth of 500 % in ongrid sector! Total installed capacity: 0,113 MWp by the end of 004 (0,106 MWp by the end of 003); most of the applications are installed in the off-grid sector Installation density: 0,003 kWp/1.000 capita Growth perspectives: 0,3 b the end of 010 (Worst Case) and 5,5 MWp by the end of 010 (Best Case) Market structure Market segmentation: 5 % on-grid applications, 95 % off-grid applications by the end of 004; on-grid market increasing if barriers for the grid-connection will be overcome. Project sizes: only few grid-connected PV system exist; ranges from 1.1 kWp to 16,3 kWp (installed in 005). Regional distribution: only three grid-connected PV systems are installed and they are located in three regions Administration processes: Complexity of planning process: procedure to get all formal permissions by the governmental authorities and electrical distribution utilities and operators are very complicated. The requirements are coming from the experience for bigger conventional power plants and not adequate for relatively very small standardised PV plants. Number of permission: The implementation of a lowvoltage PV system requires five permissions which include: 1) project conditions for connections to the electrical grid, ) consent for connection to the grid, 3) contract for connection, 4) acquisition for status of qualified electricity producer, 5) contract for selling electricity

PV industry structure and development Silicon/wafer production: none Cell/module production: one Module manufacturer is planning to start production by the end of 005 PV component production: There five manufacturers of BOS components including inverters, charge controllers, batteries, lightning and over voltage protection, electronic meters Key industry data National cell production capacity: none National module production capacity: establishment of a PV module (crystalline) production facility in 005; estimated capacity of 15 MWp; Annual sales of the national PV industry: n.k. Annual investments of PV industry: n.k. Employment in PV industry: n.k.

PV policy strategy and PV regulatory framework (legislation) National strategy and framework for PV promotion National PV targets: no specific PV target only as part as one of the renewable energy sources within the National Energy Programme National PV strategy/plan: no specific PV strategy see above National PV administration: key actor of PV policy: agency for energy efficiency and renewable energy is in charge to promote and support the development of RES and rising awareness in this field. National PV incentive systems Feed-in tariff system: regulation and rules for definition of prices and for purchase of electricity from qualified producers of electricity (official gazette RS, No 5/00; Decree on prices and premiums (official gazette RS, no 5/00, 8/004); Regulation of conditions for acquirement (official gazette RS, no 9/001/, 99/001) Investment support schemes: subventions for small PV systems through public call launched once a year; soft loans from environmental funds through tender for crediting ecological investments Fiscal incentive system: no fiscal incentives Tendering system: no tendering systems Quota obligation system: no quota obligation system Green pricing system: no official and obliged green pricing system; some electricity companies have issued voluntary systems for consumers

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Electricity sector regulations Plant authorisation: no regulations regarding building a power plant, but other directives and regulations force the investor to get several permissions which could prevent from building a PV plant. Grid-access code: grid access is guaranteed only if technical conditions of the grid allow it, model contracts for connection to utility grid and selling of the electricity are available. Sector regulation: none National plant register: The grid connected PV plants are formally registered by few governmental institutions. There is a register of Qualified electricity producers by the Ministry of the economy, Register of power producers by the regulatory Energy Agency of the RS. The producers are mandatory obliged to rapport monthly the main data of the plant and electricity production to the National Statistical Berau. Building sector regulations Building codes and standards: general construction legislations exist and define the necessary documents for installations of a PV system on the roof. Solar building obligations: no obligations exist Regulations for building-integrated PV: not existing PV industry regulations for the market Quality standards for products: Design qualification and type approval for crystalline silicon terrestrial PV modules (SIST EN 6116:001) and photovoltaic devices part 10: methods of linearity measurements (SIST EN 60904-10:001). Quality standards and regulations for PV installers: Electric wiring in buildings, of low voltage, safety requirements, protection against heat rating and electrocution, electrical installations Safety regulations for PV installers: Rules on industrial safety with regards to electric current hazards, rules on health and safety requirements for the use of work equipment, occupational health and safety act

Key PV legislation: regulation of rules for definition of prices and for purchase of electricity from qualified producers of electricity General characteristics of legislation Type of system: fixed feed-in tariff for a period of ten years, governmental decree on prices and premiums for qualified producers of electricity and is adjusted once a year. Start/expiry date: .03.00; no expiry date defined; Long-term legal security of legislation: no guarantees, can be changed or abolished any time by the government Contents and conditions of the legislation Beneficiaries: all potential investors in electricity production facility from RES Feed-in tariff: Size of the PV system Up to 36 kW Above 36 kW Fixed price 0,37 /kWh 0,065 /kWh Premium* 0,34 /kWh 0,031 /kWh

* Fixed price and Premium are two separate options and could not be combined. The producers could select to sell to the operator of distribution grid at fixed price or sell the electricity by their own and get the premium. Source: Official Gazette RS, no. 8/04. Decrease mechanism: fixed and guaranteed price for ten years, the government has the right to change the price and other conditions. Changes of prices are regulated with annual annexes. Guarantee period: 10 Years Cap: no cap Financing model: financed from an addition for priority dispatch service as a part of price of electricity

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PV support schemes: a) Scheme 1: Public call for financial incentives of investment measures for the use of renewable energy sources in households. b) Scheme 2: call for tender for crediting ecological investments. General characteristics of support schemes Type of systems: a) subsidy for small grid-connected and off-grid systems up to 1 kW, call launched every year for a one year period or until the available resources run out, b) soft loans without specific focus of an area. Start/expiry date: a) 01.04.005/at the end of the year or until the available resources run out, b) 18.0.005/ expiry date is the same like a) Target: a) no specific target, limitation not given but depends on the amount of resources available for all RES, b) no specific target, limitation not given but covers a very large area of ecological investment Total budget: a) 500.000 available in 005 for solar thermal, heat pumps and PV systems (on- and off-grid up to 1kW). For it is up to 40 % of investment costs, but max. ,5 /Wp or .080 for the whole system, b) 1,5 million for ecological investment Funding sources: a) State budget of Republic of Slovenia, b) State budget or the Republic of Slovenia and Environmental Fund Contents and conditions of the support scheme Beneficiaries: a) mainly households, b) municipalities, private sector and households, depending on the call Type/level of support: a) direct subsidy covering up to 40 % of investment costs, but max. ,5 /Wp or .080 for the whole system, b) 70 % soft loans of the investment costs PV monitoring systems National approach of PV market monitoring General approach: Register of qualified electricity producers, Currently, only a 1,1 kWp PV system is registered, objective is to monitor and collect data of the installed qualified producers in Slovenia, Institution in charge: Ministry of Environment and Spatial Planning, but also the Statistical Office of the Republic of Slovenia and Energy Agency are collecting data Data collection and processing: Regarding the PV Market, installed capacities and produced electricity is collected with the register of qualified producers managed by the Ministry of Environment and Spatial Planning. Data of capacities and production are monthly collected by the Statistical Office of the Republic of Slovenia and the forecast for electricity production has to be reported to the Energy Agency of the Republic of Slovenia; Data dissemination: because of the small market no data have been published

National approach of performance measurements related to PV policy framework General approach: no control regarding the PV policy framework Institution in charge: n.k. Data collection and Processing: Although there is no monitoring system in place for the PV policy framework, the qualified electricity producer have to send monthly and yearly reports to few formal authorities (see above) Data dissemination: For now even that there are data collected no publications were performed or published

9.2 Conclusions from country analysis General assessment of performance Market development: PV market development in 005 was for the first time more important. The installed capacities were increased from about 100 kW by the end of 004 to more than 150 kW, or more than 50 %. Industry development: up to now there were no important industries in the PV sector in Slovenia, which would be willing to promote the photovoltaics on the basis of the expected economical interest. In 004 we have established a cluster for PV power plants managed by ApE and it consists of three research faculty institutions, ten private companies with broad experience in production of electrical equipment for BOS and in designing and installation and four big energy companies interested for investing in PV. As first visible result the company BLUES Solar, one of the partner, decided to invest in production of PV modules with the anual capacity of 15 MW. The investment is ongoing and will be completed by the end of 005. Cost reduction: n.k. PV acceptance: Generally the acceptance is high but there is still relatively low level of knowledge and availability of information on PV technologies. Strengths of national PV policy framework Feed-in tariff system Feed-in tariff is in full operation and first results are positive Most effective instrument to stimulate RES market and PV respectively Subsidy system Subsidies are available for off-grid PV systems and for small grid-connected PV systems Promotion of PV technology Soft loans Lower interest rates than commercial loans Possibility to receive 70 % of the PV investment costs

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Weaknesses national PV policy framework Feed-in tariff system Feed-in tariff is to low for bigger investments Casual subsidies available for small PV systems are even negatively influence on development of the market Very long-lasting procedure until actual the PV system is in operation Subsidy system Subsidies are only available for small PV systems and serious projects are not taken into account Only available for very short periods during each year Potential investors are not acting continuosly but mainly waiting for new calls and better conditions Soft loans Procedure for applying is time-consuming and complicated Forms of applying require financial insurances, which increases the real costs of the loan Lessons learned Adequate, well defined and long-term guaranteed feedin tariff would enable a stable market development Procedures for connection to the grid and getting the right for the fixed price should be simplified Subsidies should be abolished as they negatively influence more serious market development Outlook The Slovene government could support the implementation of PV plants on public buildings (for example schools), by implementing the investment capital of the governmentally owned energy companies. The initiative by the government would demonstrate its real believes and interest in PV technology and in the renewable energy sources in general. The specific investment costs for PV plants are relatively high compared with the power producers from other renewables or fossil fuels. Beside this fact, the natural conditions of solar radiation in Europe, gives us a rather low equivalent production time. In Slovenia we could count with the equivalent full operating hours for PV plants between 900 and 1.100 hours/year. The first step for developing the market is to raise the economical interest of investors. With the feed-in tariff system introduced in Slovenia in 00, we have followed the example of Germany and the first signal was given. The penetration of the PV on the market is anyhow still rather low. Reasons are the following: The governmental support is available but at the same time not transparent and unnecessary complicated. The comparison with Germany gives a clear signal that Slovenian approach should be revised and substantially simplified. The requirements for connection to the grid represent a serious barrier for potential investors. Connection to the grid must be safe, simple and standardised. At the time being there are no important industries and other actors in the PV sector in Slovenia with the

interest to promote PV. The role of the government is so very important and could be implement through supporting instruments, institutions and enterprises in its ownership. The level of general knowledge is low; majority of people just believes that the electricity from PV is clean and cheap. There is a need to introduce or support the education about sustainable development, environmental problems, renewable energy sources and in this regard also PV, at all levels of education. PV plants are not known as opportunity for architects, designers of building, erecting companies and investors. There is a need of execution of installations, what will bring criticism and approval of good implementations. There is a lack of bigger institutional energy investors. The government could support the implementation of PV plants on public buildings, especially schools, trough the investment capital of its energy companies.

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10. Spain 10.1 Country profile PV market Natural conditions Solar radiation: 1.500 300 kWh/m p.a.; Specific energy yield of PV plants: ranges from 1.000 kWh/kWp in the North to 1.500 kWh/kWp in the South on average, for systems without solar tracking. Market background and history Historic development: since publication of the national Plan de Fomento (PFER) in 1999 the Spanish government follows a clear strategy to promote PV; the Spanish PV industry plays a leading role in Europe, even before the national market really took off; Current trends: the publication of the royal decree 436/004 has given the decisive boost to the Spanish PV market; investment conditions suddenly are among the best across Europe and attract investors from Spain and abroad; the market is currently at a similar stage as Germany about 5 years ago; PV image/acceptance: in spite of the strong market development PV has not built a strong image in the general public; however, the attractive framework conditions are changing this perception. New PER 005010, approved on 6th august 005 raise the objective up to 400 MW in 010. Market size and growth Annual installed capacity: + 10 MWp in 004 (+ 6,5 MWp in 003) sharp increase in comparison to 00 + 003, mainly due to small, grid-connected installations < 0 kWp; second largest market in Europe; Total installed capacity: 37 MWp in 004 (7 MWp in 003) No.  in Europe; Annual growth rate: + 54 % in 004 (+ 31 % in 003); strong acceleration after publication of RD 436/005 since mid-004; Installation density: 0,87 kWp/1 000 habitants; No. 6 in Europe Growth perspectives: forecasts range from 30 MWp (Worst Case) to 300 MWp (Best Case) p.a. the political target is 60 MWp p.a. (58,5 MWp grid-connected). Market structure Market segmentation: 6 % grid-connected, 38% offgrid; market share of the grid-connected segment raising sharply; projects are realised on open ground rather than roof-tops as in Germany; Project sizes: Spain so far has been a 0 kWp market now developing in a 100 kWp market; the innovative huertas solares concept enables MW projects by grouping a large number of 100 kWp plants together; in addition, there are already various megawatt plants with demonstration character; Regional distribution: Spain is a highly federal country, so market development is very diverse across the country, depending on regional policies and support schemes; in the future, natural conditions (solar radiation) will be the main driver; Navarra has been 5 PV Policy Group European Best Practice Report

the leading region in recent years (+ 1,8 MWp in 003; + 0,55 MWp in 004), due to a strong collaboration between political and industry players; other regions like Andalucia (+ , MWp in 004), Cataluna (+ 1, MWp), Valencia (+ 1,1 MWp) and Castilla y Len (+ 1,1 MWp) have shown the highest growth rate in 004. Administrative processes Planning procedures for smaller-scale PV installations are very clearly defined, but sometimes practice by regional authorities is more complex; specific regulations and handling in practice may differ considerably from region to region; Number of permissions required: at least 5 permissions; there are three different areas where 1 authorisations are required respectively (building permission, plant authorisation (prior and final), registration as RES producer under special conditions of rgimen especial (prior and final), grid connection and feed-in contract). Number of authorities involved: at least 3 (local authorities for building permission, regional authorities for plant authorisation (prior and final) and for RES registration (prior and final), local grid operator/utility for grid access and feed-in contract). Duration of planning process: lead-time for investors 46 months. PV industry PV industry structure and development Spain hosts one of the leading PV industries in Europe and worldwide; Silicon/wafer production: none so far; Cell/module production: three major cell producers that at the same time produce solar modules; production output in 004 was over 108 MWp, a large share was exported to the world market; PV component production: least 10 producers of PV components based in Spain, esp. inverters, mounting, tracking or monitoring systems. Key industry data National cell production capacity: 150 MWp in 004 (95 MWp in 003, + 58 %); National module production capacity: n.k. Annual sales of the national PV industry: n.k. Annual investments of PV industry: 4, Mio. in 004 (19,6 in 1999004); Employment in PV industry: 5.58 in 004 (4.00 in 003, + 38 %); PV module prices: ,753,5 /Wp (004) PV system prices: 57 /Wp (004) PV policy strategy and regulatory framework (overview) National strategy and framework for PV promotion National PV targets: the national promotion plan (PFER) of the Spanish government defines very clear targets for PV: 135 MWp total capacity until 010; requiring 1 Mio. total investment; this target is broken down to regional as well as annual targets and neatly controlled by national authorities;

National PV strategy/plan: Spain follows a clear political strategy to which the policy framework has been aligned; key elements of the regulatory framework is a feed-in-tariff system combined with soft loans and direct subsidies granted by the national energy agency IDAE and regional counterparts; National PV administration: PV policy as outlined in the national promotion plan is co-ordinated by the Ministry for Industry and Energy which has assigned operational management functions to IDAE; initiatives on the national, regional and local levels are coordinated by so-called Consultative Committees. National PV incentive systems: Feed-in-tariff system: key instrument is the special regime offering specific feed-in-tariffs for RES producers including PV; the feed-in-tariff system has been amended in 004 with publication of the RD 436/004; Investment support schemes: additional support can be obtained by means of a centralised funding scheme called financing line ICO-IDAE which combines soft loans with direct subsidies granted by IDAE; in addition, all autonomous regions and various municipalities offer subsidies, although most have been cut down following the amendment of the feed-in-tariff system to avoid over-subsiding of the market; Fiscal incentives: exist, but are of minor importance in comparison to the aforementioned instruments;

Tendering system: none; Quota obligation system: none; Green pricing systems: not known. Electricity sector regulations relevant for the PV market Plant authorisation: procedures are clearly defined in Electricity and Renewables Act RD 436/004; in charge of authorisation procedures for electricity producers and final commissioning permission are the respective authorities of the Autonomous Region; they also facilitate the centralised registration under the special regime; National grid access code: PV installations > 100 kWp (medium/high voltage grid) are regulated by different grid access code than installations < 100 kWp (low voltage grid); Sector regulation: ensured by national regulator CNE; National plant register: very transparent register for all installations under the special regime (REPE) in place since 004 and is accessible for the general public on DGPEM website. Building sector regulations relevant for the PV market Building standards: the new technical building code (CTE, due in 005) defines energy efficiency standards for new or refurbished buildings; it is expected that for the first time PV installations are acknowledged to meet these standards;

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Solar building obligations: Spain has been the first country to implement solar building obligations on municipal levels (Barcelona model); PV market are indirectly capitalising on these > 50 ordenanzas solares that have been implemented in the meantime; Regulations for building-integrated PV: no specific regulations for BIPV. PV industry regulations relevant for the PV market Quality standards for PV products: international/ European quality standards (IEC) for PV products and installations have to be complied with; Quality standards for PV installations: specific national regulations regarding safety standards of installations; Quality standards for PV installers: have to comply with the general standards of electricians; specific qualification labels for solar installers are voluntary so far. Key PV legislation: RD 436/2004 General characteristics of legislation Type of system: feed-in-tariff system, offering two general options for PV operators to choose between: 1. fixed feed-in-tariff and participation in regulated market or . fixed premium on variable electricity price and participation in liberalised market; installations < 100 kWp are tied to option 1; feed-in-tariffs are re-defined on an annual basis and oriented at an overall reference price (TMR); for instance PV tariff 575 % of TMR over 5 years, 460 % afterwards; Starting / expiry date: current system in place since 004; no expiry date, but regular revision, the first at 006, and afterwards every 4 years. Revision takes effects after  years. Another revision will be made when the market have 400 MWp installed (PER 005010); Long-term legal security of system: limited, since feedin-tariffs can be modified or even suspended by simple royal decree. However, a new royal decree never can be retroactive. Contents and conditions of the legislation Beneficiaries: all operators of RES installations < 50 MW; Feed-in-tariffs: 41,44 ct/kWh (< 100 kWp) 1,99 ct/kWh (> 100 kWp) in 005; Decrease mechanism: reduction of tariff after 5 years; Guarantee period: indefinite (operational lifetime of plant) maximum legal security for investors; Financing model: centralised compensation scheme: surplus cost for feed-in-tariffs are charged by electricity suppliers to final consumers; Average payback period of PV investments (under given conditions): 81 years.

PV support schemes: financing line ICO-IDAE General characteristics of support schemes Type of system: current programme is a merger of two different instruments: soft loans of public promotion bank ICO and direct subsidies of IDAE; not exclusively PV, but solar energy clearly the focus; Administration: IDAE; applications decentralised via house bank; Starting/expiry date: programme in place since 1999, current line since 003; generally no expiry date of support scheme, but annual re-definition of budgets and conditions; PER foresees no direct subsidy in 006; Targets: no specific target defined, only implicitly by annual budgets allocated and granted by IDAE; Total budget: 189,6 Mio in 004 (39,6 direct subsidies by IDAE); Funding: federal budget managed by IDAE; Contents and conditions of the support scheme Beneficiaries: 1. private individuals, . corporations; financed are grid-connected PV systems; Type of support: combined loan and direct subsidy (grant) covering up to 80 % of investment cost; Level of support: max. 7.000 /kWp per plant; max. 0,6 Mio. per investor and year. Only 1 PV system per investor. PV monitoring systems National approach to PV market monitoring General approach: survey Institutions in charge: IDAE Data collection & processing: IDAE, CNE Data dissemination: annual reports and publications by IDAE and ASIF (download on website). National approach to performance measurement of PV policy framework Very systematic approach to measure achievement of PFER under co-ordination of IDAE; there is a PFER monitoring project in collaboration with regional authorities centred around a computer database (BDFER) in which all projects are entered; the BDFER database is in place since 000 and not accessible to the general public; Data collection & processing: decentralised online entering of data by project partners in BDFER database that works like a modern MIS (management information system) so customised queries can be defined by users; Data dissemination: regular reports and publications by IDAE.

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10.2 Conclusions from country analysis General assessment of performance Market development: ICO-IDAE financing line is seen as a great success; in 003 + 004 1 39 projects (7,5 MWp) + 3 879 projects (30 MWp) were approved; Industry development: Strong PV industry even before the national market boom started in 004; Sector continuously growing, with new manufacturers, installers. Cost reduction: Due to limited competition not yet the same reduction effects as for instance in Germany, but expected in the coming years (influx of foreign competitors is a key driver); price levels for PV systems still clearly above German levels. PV acceptance: PV in 005 start to be interesting for the general public; Invertors with motivations merely financial put their eyes on solar sector, due to the availability of public support; as a result investors are all commercially driven (e.g. wealthy individuals, entrepreneurs). Strengths of national PV policy framework Excellent conditions: specific solar yields + feed-in-tariff + loans up to 80 % extremely attractive for investors in 005 (ICO-IDAE); Direct subsidies up to 0 % in 005 (Grid connected systems) 30 % (isolated systems) + regional subsidies. Very consistent PV strategy: clearly defined targets, ambitious promotion plan, well-conceived mix of instruments; full commitment of relevant authorities on federal and regional level Advanced approach to market monitoring and policy performance measurement. Weaknesses national PV policy framework Limited budget led to suspension of the whole ICOIDAE programme in summer 004 bringing the exploded market to a sudden halt; Bureaucratic application procedures for grants (esp. on regional level); Most focus of investors on subsidies/public aid; It is coming funds of financial sector (banks etc.) In 005, there are some private funding models (commercial bank credits, project financing etc.); Cap limiting large-scale megawatt parks; Lessons learned Subsidies will be abolished in 006 (for grid connected systems), as the feed-in tariffs are enough for the adequate development of the market. Maintenance of premiums establishes by RD 436/004. Next revision of premiums in 010 or when the market gets 400 MW of power installed. Administrative procedure simple is basic for achieving a good development of PV solar sector. Outlook The Spanish Renewable Energy Plan (PER) 005 010 represents a revision of the Spanish Promotion Plan for Renewable Energy 000010, in force up until now. The aim of PER 005010 is to maintain the commitment to meet at least 1 % of total energy

use from renewable sources by 010. In PV area, PER identifies a new target for an increase in photovoltaic potential of 363 MWp, over the period 005010 within the overall renewable energy plans, assuming the measures proposed in it are implemented. The new goal is 400 MWp installed. The proposed measures are aimed at overcoming the economic, technological, regulatory and social barriers that have been identified. The principals measures are: Maintenance of premiums established by RD 436/004. Approval of Technical Building Code (CTE). Solar building obligations and building standards (CTE) will promote a bigger development for solar sector.

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11. Sweden 11.1 Country profile PV market Natural conditions Solar radiation: n.a. Specific energy yield of PV plants: ranges from 650 to 850 kWh/kWp on average. Market background and history Historic development: The use of solar photovoltaics in Sweden was initiated through off-grid industrial applications in the late 1970s. Since then the offgrid domestic sector, predominately small standalone systems for remote country houses for summer vacationers, has become the largest user of photovoltaics. Today this sector constitutes 80 % of the PV market. The grid-connect sector has been slow to develop. During the 1990s to present day this sector has seen 7 sporadic demonstration projects usually involving commercial, utility or public buildings. There is presently no domestic grid-connect market in Sweden. Current trends: Until now, there have been no general subsidies aimed directly at promoting PV in Sweden. Beginning in 005, there will be a subsidy for PV on public buildings. Policies, which could indirectly promote PV, are taxes and fees related to conventional electricity production and a market based renewable energy certificate scheme, which was launched in 003. PV image/acceptance: Little interest in PV among investors due to a lack of subsidies for PV projects. However, since PV is recognized as a sustainable energy technology, the attitude among the public is positive and has been expressed in form of increased consumer demand for renewable electricity and PV power. Market size and growth Annual installed capacity: + 0,85 MWp in 004 (+ 0,84 MWp in 003); Nr. 11 in Europe Total installed capacity: 3,866 MWp in 004 (3,581 MWp in 003); Nr. 10 in Europe Annual growth rate: + 7 % in 004 (+ 9 % in 003) Installation density: 0,43 kWp/1.000 habitants; Nr. 9 in Europe Growth perspectives: The market growth for PV continued to be fairly slow with about 7 % in 004. Market structure Market segmentation: 5 % grid-connected, 95 % offgrid; Project sizes: The average project size is clearly below 10 kWp, with only a few exceptions. Regional distribution: n.a. Administrative processes: Complexity of planning process: n.k. Number of permissions required: n.k. Number of authorities involved: n.k. Duration of planning process: n.k. 56 PV Policy Group European Best Practice Report

PV industry PV industry structure and development Silicon/wafer/cell production: none; presently all wafer and cells are imported from Norway and Germany Module production: There are 4 companies in Sweden that assemble modules: Gllivare Photovoltaic AB, ArcticSolar AB, ScanModule AB and PV Enterprise Sweden AB. Together these manufacturers produce on average more than 0MW annually of mostly polysi, most of which (95 %) is delivered to the German market. PV component production: none Key industry data National cell production capacity: none National module production capacity: 49 MW in 004 Annual sales of the national PV industry: 6,9 Mio. in 003 Annual investments of PV industry: 1,81 Mio. in 003 Employment in PV industry: 155 in 003 Average PV module prices: n.k. Average PV system prices: n.k. PV policy strategy and regulatory framework (overview) National strategy and framework for PV promotion National PV targets: no specific target for PV; Increase renewable electricity share by 10 TWh between 00 and 010 (from 7.4 % to 16.9 % of electricity consumption) National PV strategy/plan: Renewable Energy Certificates Scheme; Investment subsidy programme for public buildings National PV administration: STEM is Swedens National Energy Agency (the energy authority and primary funding agency). During 005 it will assess the current status of Swedish and International PV technology developments, together with results from the new 70 % investment subsidy for public buildings. This will inform future policy directions. SolEl is presently the national PV programme (coordinated by Elforsk AB) for the application and demonstration of PV, with some research into building integrated applications. However, it is not a direct market development instrument. Svenska Kraftnt is the National Grid operator. Along with STEM, these two agencies coordinate the electricity certificates scheme. Approved renewable energy generators must be registered with STEM, and certificates are created and registered with Svenska Kraftnt. National PV incentive systems: Feed-in-tariff system: Presently there are no feed-intariffs specific for PV installations. Investment support schemes: Support for investment in energy efficiency and conversion to renewable energy sources (including PV) in public buildings. Fiscal incentives: The legislation mentioned above provides the subsidy in the form of a credit paid into to applicants tax account.

Tendering systems: none Quota obligations systems: The electricity certificates scheme; 8,1 % renewable energies of total electricity consumption in 004 Green pricing models: Apart from the cost of electricity certificate quota compliance, which is passed on to the consumer as a price mark-up, energy retailers can market green power under the Bra Milj label. Electricity can also be sold as EPD (Environmental Product Declaration) certified according to the ISO 14005 standard. Electricity sector regulations relevant for the PV market Electricity plant authorisation: There is a significant metering and reporting charge which PV installations may be required to pay regardless of their size to the local network owner or other third-party when they export power. Grid access code: There are no specific standards or codes for the connection of PV systems to the national grid, but the general regulations for electric power installations should be followed as far as possible. However, in order to be eligible to create electricity certificates, the installation must comply with the law regarding electricity certificates in addition to any STEM regulations. Sector regulation: n.k. National plant register: n.k.

Building sector regulations relevant for the PV market Building standards: n.k. Solar building obligations: n.k. Regulations for building-integrated PV: n.k. PV industry regulations relevant for the PV market Quality standards for PV products: n.k. Quality standards for PV installations: Standards and codes, which apply specifically to PV installations in Sweden, follow the applicable European standards (CENELEC or IEC). Any work on electrical installation must comply with the Swedish electrical safety regulations. Quality standards for PV installers: n.k. Key PV legislation: Electricity Certificates Scheme General characteristics of legislation Type of system: Certificate scheme Start/expiry date: 003 to 010 Targets of legislation: The scheme intends to promote electricity generated from renewable energy sources like biomass, wind, small-scale hydro, and PV. In 004, the consumers were required to buy certificates corresponding to 8,1 % of their consumption. Long-terms legal security: n.k.

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Contents and conditions of the legislation The certificate scheme is a market-based mechanism, which is intended to promote electricity generated from renewable energy sources. For every MWh of renewable electricity that an electricity company produces it receives one certificate. The electricity consumers are then required to buy certificates in proportion to the amount of electricity they consume. The certificates can then be traded on the open market. In 004, the consumers were required to buy certificates corresponding to 8,1 % of their consumption, which resulted in a market price of about 5 EUR per MWh. The Swedish certificates can be exported to RECS, the European Renewable Energy Certificate System, but the RECS certificates cannot be imported to the Swedish certificate system. The scheme makes no distinction between technologies, with the effect that cheaper technologies will tend to be the major beneficiaries. Biofuel-fired generation presently accounts for around 75 % of elcertificates traded, while hydro and wind power account for 18 and 8% respectively. Obviously, PV is almost irrelevant in the frame of this scheme. Financing model: n.k. Economic cost: n.k. Key PV support schemes: Investment subsidies for PV on public buildings General characteristics of support schemes Type of system: Investment subsidy in form of tax deduction for grid-connected PV installations on public buildings, for example sport halls, libraries, schools etc. Start/expiry date: May 005/December 007 Administration: STEM; Applications will be evaluated by local county administrative boards and the National Board of Housing, Building and Planning. Targets of programme: Promotion for PV and Renewable Energies in general. Total budget: SEK 100 Mio. Funding: up to 70 % Contents and conditions of the support schemes Beneficiaries: buildings for public use Type of support: see above Level of support: For PV the subsidy will be 70 % of the total installation cost including materials and work up to 5 Mio. SEK maximum per building. The total allocated funds of SEK 100 million approximately correspond to a total installed capacity of around  MWp. PV monitoring systems National approach to PV market monitoring General approach: n.k. Institutions in charge: n.k. Data collection & processing: n.k. Data dissemination: n.k.

National approach to performance measurement of PV policy framework General approach: Presently the performance of all grid-connected PV systems in Sweden is monitored by the national SolEl program through the interactive web site www.solcell.nu. Data collection & processing: n.k. Data dissemination: n.k.

11.2 Conclusions from country analysis General assessment of performance Market development: The annual growth rate is expected to increase from 005 on to 007 (3 % in 007) due to the introduction of 70 % subsidies for BIPV on Public Buildings which started in May 005, and runs until December 007. Industry development: The four module manufacturers are steadily increasing their production capacity. But the home market is too small for the development of a self-sustaining PV industry. Cost reduction: Annual sales are too small to make a reliable statement. PV acceptance: Positive attitude among the public. Strengths of national PV policy framework n.k. Weaknesses national PV policy framework The metering and reporting cost can be prohibitive for smaller PV installations. The Certificate scheme is technology-neutral. This has meant that thus far it has encouraged the development of the least cost, nearest market renewable energy technology, which unfortunately is not PV. The time-horizon of the Certificate Scheme should be longer considering that significant investments are involved. Lessons learned The Swedish Government has indicated an interest for the subsidy scheme to be extended to include the domestic grid-connect sector, although this is presently uncertain. It depends on this decision, whether the growth rate will collapse again after 007 or not.

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12. UK 12.1 Country profile PV market Natural conditions Solar radiation: n.k. Specific energy yield of PV plants: ranges from 750 to 950 kWh/kWp on average. Market background and history Historic development: Until the mid-90s PV technology was used exclusively for small, isolated applications (e.g. remote homes and professional installations). Expansion of the market for grid-connected PV started in 1993 with industry studies and early demonstration projects. Nevertheless, real growth started in 00 with the introduction of two small field trial programmes of monitored installations and the Major Demonstration Programme (MDP) which offers capital grant. Current trends: The major market is for PV on buildings supported by the MDP, which is due to end in early 006. The follow on programme will also be grant-based but it is proposed to cover all renewable technologies in one scheme and the level of funding is unknown. The industry fears that growth will stall. PV image/acceptance: Limited awareness of PV among the general public. PV is still seen as to expensive for homeowners. The Department of Trade and Industry (DTI) launched the Its only Natural campaign during 004, which aims to promote renewables and to provide information on the subject to planners, local councillors and the general public. (IEA PVPS National Survey Report UK 004) Market size and growth Annual installed capacity: + ,61 MWp in 004 (+ 1,767 MWp in 003); Nr. 7 in Europe Total installed capacity: 8,164 MWp in 004 (5,903 MWp in 003); Nr. 8 in Europe Annual growth rate: + 8 % in 004 (+ 7 % in 003) Installation density: 0,14 kWp/1.000 habitants; Nr. 11 in Europe Growth perspectives: Under the assumption that the Major Demonstration Programme is followed by a significant programme of continuing support and increased public awareness, 50 MW of installed PV (cumulative) can be projected. Even 100 MW might be achieved if other barriers are removed and more systems included in new build. Without an effective follow up programme to encourage the market, 5 MW are realistic. Market structure Market segmentation: 90 % grid-connected, 10 % off-grid. After the implementation of the Major Demonstration Programme, UK became almost a pure on-grid market; the share of the off-grid segment will shrink further in the future. Project sizes: Within the Major PV Demonstration Programme, PV systems in the range of 0,5 to 100 kWp

are eligible for funding. Almost 90 % of installations are between 0,5 and 5 kWp. Regional distribution: PV installations in the UK are concentrated on the following regions: East, South East, South West and London. Administrative processes: Complexity of planning process: Planning procedures for smaller-scale PV installations (5 kWp) are fairly straightforward: After choosing an accredited installer, he will help to complete the grant application. The installer also issues the commissioning certificate and advises the Distribution Network Operator that a new PV system is being installed. Number of permissions required: for small projects at least 3 permissions are required (commissioning certificate, grid connection, buy-back scheme or authorisation as independent energy generator); Planning permission is normally not required. Number of authorities involved: Energy Saving Trust (if you apply for a grant), installer, grid operator/utility, Gas and Electricity Markets Authority (if you want to register as independent energy generator) Duration of planning process: For small systems a few weeks are required to obtain the grant, other permissions can be accomplished within the delivery and installation period. Large systems take two to three months to get grant approval. PV industry PV industry structure and development Silicon and wafer production: Crystalox produces multicrystalline silicon ingots. Its total production in 004 was sufficient for 170 MW of cells. Ingots are exported mainly to Japan and also to Germany, where they are wafered by PV Silicon, a sister company. Crystalox employs 9 staff and is the UKs largest employer in the PV sector. Cell and module production: ICP UK manufactures thin-film amorphous silicon cells and modules and its production decreased from ,5 MW in 003 to 1,5 MW in 004. The company plans to move production to India. July 004 saw the opening of Sharp's new 0 MW capacity PV module manufacturing facility in Wrexham (which already expanded to 40 MW) and Romag, a specialist glass manufacturer started production at its new 6 MW lamination facility in Consett, County Durham. Its facility uses BP Solar PV cells in the manufacture of semi transparent crystalline PV laminate. PV component production: There are several smaller component manufacturers producing inverters, storage batteries, battery charge controllers etc. Key industry data National cell production capacity: n.k. National module production capacity: 49,5 MW by the end of 004 (IEA PVPS National Survey Report UK 004) Annual sales of the national PV industry: GBP 78 Mio. in 004 (IEA PVPS National Survey Report UK 004)

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Annual investments of PV industry: n.k. Employment in PV industry: 38 in 004; 580 when R&D, distributors, installers etc. are included Average PV module prices: 3,4 /Wp Average PV system prices: 7,46,8 /Wp PV policy strategy and regulatory framework (overview) National strategy and framework for PV promotion National PV targets: No specific target for PV, but for the overall RES share in electricity production: 10 % by 010 and 0 % by 00. National PV strategy/plan: Quota system (Renewable Obligation) combined with a subsidy programme (Major Demonstration Programme). PV is seen as a very small part of the overall RES strategy, held back by the government perception that PV can only contribute effectively after 00 and then in a small way. National PV administration: The Department of Trade & Industry (DTI) is the lead Department on matters of UK energy policy. The implementation of UK energy policy is delivered by a Sustainable Energy Policy Network, which includes representatives from the DTI, the Department of Environment, Food and Rural Affairs, the Office of the Deputy Prime Minister and the Department of Transport. The PV Major Demonstration Programme of the DTI is coordinated and administered by the Non-Profit Organisation Energy Saving Trust. National PV incentive systems: Feed-in-tariff system: There is no actual feed-in-tariff in place but a number of electricity utilities offer to pay for exported electricity from a PV system in the range of 0,050,075 GBP/kWh. However, these schemes are voluntary and subject to uncertainty. Investment support schemes: PV Major Demonstration Programme from 00006 (see below); Domestic PV Field Trials from 000003: The DFT aimed to use the design, construction and monitoring of the installations as a learning opportunity for utilities, building developers and other key players. A total of 660 kW was installed by the end of 003; Large Scale Building-Integrated PV Trial started in 001: funding has been made available for 18 projects totalling almost 1,15 MW on public buildings but only 1 have been constructed with 597 kW. Fiscal incentives: VAT for PV systems, which are installed by accredited installers, is reduced to 5 % instead of 17,5 %. Tendering systems: none Quota obligations systems: The Renewables Obligation (RO) began in 00 and sets out targets for electricity suppliers to source an increasing amount of their electricity from renewable resources. Renewable Obligation Certificates, or ROCs, are awarded to suppliers using renewable sources. ROCs can be traded between suppliers to make up any shortfall. Green pricing models: n.k. Electricity sector regulations relevant for the PV market Electricity plant authorisation: There is a high degree of freedom under the Electricity Act and the Utilities 60 PV Policy Group European Best Practice Report

Act to connect small and medium sized distributed generation providing the electricity network operator has no technical objection. The regulations for internal wiring of buildings include some special cases that include PV. Grid access code: G 83/1 Recommendations for connection of small-scale embedded generators (up to 16 A per phase) in parallel with public low voltage distribution networks was issued in September 003. It addresses the network requirements of all distributed micro-generators, including PV, complemented by a series of annexes focusing on technology-specific issues. Sector regulation: n.k. National plant register: n.k. Building sector regulations relevant for the PV market Building standards: Presently most authorities accept PV status as a new technology but there are delays and confusion caused by lack of suitable standards and codes as well as lack of knowledge by the authorities and building control officers. Some authorities insist on special tests, the main concerns are for fire, water penetration and wind resistance. Solar building obligations: An increasing number of local development control authorities are now requiring developers of multiple homes or large buildings to consider renewables as one method of reducing carbon emissions. Regulations for building-integrated PV: No specific regulations. PV industry regulations relevant for the PV market Quality standards for PV products: International/ European quality standards (IEC) for PV products and installations have to be complied with; ER G83/1 Grid connection requirement and type test for inverters is the key UK special. Quality standards for PV installations: see above Quality standards for PV installers: Under the MDP programme the installers are required to be accredited for technical competence, provision of customer service and product warranties. Key PV legislation: The Renewables Obligations Order 2002 General characteristics of legislation Type of system: Quota system Start / expiry date: April 00 to 07 Targets of legislation: The primary importance is to stimulate the take up of renewable generation to reach 10 % of electricity sold by 010 and 0 % by 00. Long-terms legal security: All political parties have agreed the principal that the obligation has to remain until 07 with only essential change in order to ensure that confidence is retained by the capital markets. Contents and conditions of the legislation The Renewables Obligations Order require all licensed electricity suppliers in Great Britain to provide the Gas and Electricity Markets Authority (Ofgem) with certificates, issued under one of the orders,

demonstrating the supply of a specified and growing proportion of renewables electricity to customers. As an alternative to providing these certificates, suppliers can make a buy-out payment to Ofgem for all or any part of that percentage which is not covered by the presentation of certificates or they can combine the two options. Financing model: The scheme is ultimately financed by the consumer through higher electricity prices and is cost neutral to the Treasury. The Obligation certificates are purchased and sold by electricity supply companies. Economic cost: n.k. PV support schemes: The Major Photovoltaic Demonstration Programme General characteristics of support schemes Type of system: grant for on- and off-grid PV applications Start/expiry date: April 00/March 006 Administration: EST Energy Saving Trust Targets of programme: The programme aims at creating a competitive and sustainable market for PV in the UK, which shall lead to high quality installations and cost reduction. The awareness of the customers for PV shall be raised. Total budget: GBP 31 Mio., approximately 11 Mio. for Stream 1 (0,55 kWp) and 0 Mio. for Stream  (5100 kWp) Funding: Department of Trade and Industry (DTI) Contents and conditions of the support schemes Beneficiaries: Target audience for Stream 1 (0,55 kWP): individual homeowners, SMEs, Public sector organisations, social housing groups, voluntary, charitable organisations and community groups. Target audience for Stream  (5100 kWp): large commercial organisations, SMEs, social housing groups, local

authorities, health trusts, schools, voluntary, charitable organisations and community groups Type of support: grants Level of support: 50 % of total eligible costs for Stream 1, between 40 and 55 % of the total eligible costs for Stream . Also, maximum grant levels have been defined for Stream 1. Halcrow, sub-contractor to EST, is responsible for site inspections and provision of technical assessment and guidance. After two years, 4,9 MW of PV has been approved.

PV monitoring systems National approach to PV market monitoring General approach: National survey of the IEA PVPS programme. Institutions in charge: IT Power under contract to the DTI Data collection & processing: Mainly carried out by telephone and email survey to all known actors. Data dissemination: Annual report is published on the UK PVPS website (www.iea-pvpsuk.org.uk/).

National approach to performance measurement of PV policy framework General approach: Only within the Major PV Dissemination Programme EST collects data on PV costs, take up of the scheme and barriers identified which is published in limited form in the annual project report. Data collection & processing: n.a. Data dissemination: Annual project report

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12.2 Conclusions from country analysis General assessment of performance Market development: The development of PV depends heavily on the Major Demonstration Programme and whether it is followed by a significant programme of continuing support. Industry development: UK PV industry is set to grow in 005, following the opening of two new manufacturing facilities by Sharp and Romag during 004. Cost reduction: n.a. PV acceptance: Limited awareness of PV among the general public and investors. Strengths of national PV policy framework The Renewables Obligation is committed to 07 to give confidence to industry and its investors. A strength of the MDP is the requirement for installers to be accredited for competence and offer a minimum warranty of two years on the complete system. This is backed up by the inspection process. Weaknesses national PV policy framework The Renewables Obligation is complex in design, administration and enforcement. A quota system favours large plants and is less suited for small investors. The MDP is only applicable to a system size of 100 kWp. The MDP is limited to March 006. Lessons learned The Renewables Obligation is a technology-neutral support mechanism. This has meant that thus far it has encouraged the development of the least cost, nearest market renewable energy technology, but has not thus far incentivised the longer-term technologies that are presently more expensive such as PV. Outlook Further installations under the Major Demonstration Programme will facilitate a continued healthy rate of grid-connected PV installation until 007. The current programme is due to end in March 006 and will be replaced by a new programme, which will support PV as well as other renewable energies suitable for building integration. PV is seen as a very small part of the overall strategy, held back by the government perception that PV can only contribute effectively after 00 and then in a small way.

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C. BEnChmARk AnAlySIS ComPARISon of 12 nAtIonAl PV PolICy fRAmEwoRkS

In the previous chapter, the PV policy frameworks and markets in 1 countries have been analysed independently from each other. The benchmark analysis presented in this chapter tries to compare the respective PV policy frameworks with regard to their overall effectiveness, but also to the efficiency of their implementation in practice. In different assessment areas the policies of exceptionally well performing countries (benchmarks) are analysed in greater detail, in order to draw conclusions for the countries lagging behind in these aspects.

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1. Overview It is obviously a difficult task to compare heterogeneous national policy frameworks and to isolate the effects of single support measures as there are a variety of factors influencing the development of national PV markets. The national context is very different in each country, so are the political goals that have led to the respective policy framework. Performance measurement of the various framework approaches differ or lack clear definition by political decision-makers or programme managers. Indicators cannot be simply be related to the performance

of a single legislation and/or support scheme. As a result, the benchmark analysis follows a rather open and qualitative approach (following the Delphi method), rather than comparing countries exclusively on the basis of quantitative figures. The overall idea of the benchmark analysis is to define a number of assessment areas in which the 1 countries should be compared separately. For each assessment area appropriate criteria have been defined to measure and compare the performance of the 1 countries. The following figures illustrate the idea of the benchmark analysis as well as the overall assessment areas:

Objective: to measure & compare the performance of national PV policy frameworks Input (= Efficiency) PV regulatory framework National PV Policy Framework National PV Sector Development Output (= Effectivness) Market Development Industry Development PV Price Development PV Image & Acceptance

PV support schemes

PV monitoring systems

Figure C1-1: Performance measurement of National PV policy frameworks On the one hand, there is the national policy framework, for which this project a priori has defined three key assessment areas: PV regulatory measures (legislations, regulations, standards, etc.); PV support schemes (subsidies, incentives etc.) PV monitoring systems These areas form the toolbox for politicians to implement their national PV promotion strategy and therefore constitute key input factors to the system. Obviously, the performance of countries in these assessment areas must not only be measured with regard to their internal efficiency (e.g. economic cost, implementation in practice), but should naturally also reflect external effectiveness in terms of national PV sector development. For the benchmark analysis four assessment areas were defined as most relevant output factors of the system: National PV market development (esp. installed capacities); National PV industry development (esp. revenues, investments, employment); National PV price development (esp. price reductions); National PV image & acceptance After defining the assessment areas the following methodology was applied in the benchmark analysis: Definition of relevant assessment areas (see above) Definition of appropriate performance criteria (quantitative or qualitative) for each assessment area Performance measurement for each country and assessment area/criterion (scoring model) Identification of benchmark country for each assessment area/criterion Gap analysis between benchmark and the other countries for each assessment area/criterion

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Methodology to measure and compare performance of 12 heterogeneous national policy frameworks (+ single instruments) 1. Define Assessment Areas . Define Performance Criteria 3. Measure performance (for each country & criterion 4. Identify benchmarks (No 1, for each criterion) 5. Analyse gaps to benchmark (for each country)

e.g. PV support schemes (investment subsidies & soft loans)

e.g. Programme efficiency: organisation/management according to opinions of market actors

e.g. Germany (HTDP Programme) Stop & Go programme management in 001, 00

e.g. Spain (Linea ICO IDAE): good programme management

e.g. Spain vs. Germany

Figure C1-2: Methodology of Best Practice and Gap Analysis

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2. Efficiency of National PV policy Framework 2.1 PV regulatory framework (legislation) This assessment area covers the efficiency of the PV regulatory framework. It is split up in four sub-areas: Ambition of political targets and consistency of PV strategy; Attractiveness of conditions for target groups; Economic cost of regulatory framework; Administrative implementation of regulatory frame-work. The last three areas mainly refer to feed-in laws. 2.1.1 Ambition of political targets and consistency of PV strategy Political targets are a good indicator for the political commitment, which is important to convey reliability to the PV industry and investors. Three performance criteria and indicators were defined for this assessment area: Official PV target 010 (yes/no) Consistency of PV strategy / plan (measured by qualitative estimation) Consistency of PV policy (measured by qualitative estimation) The consistency of the PV strategy and the policy framework has been evaluated in a qualitative way, largely based on overall expert opinions. Performance measurement Performance Official PV target 2010 criterion Performance Yes / no indicator Austria no France Germany Greece Italy Japan Netherlands Portugal Slovenia Spain Sweden UK yes, indicative target of 150 MWp until 010 no no yes, 100 MWp until 01 Yes, 4.80 MW in 010 no Yes, 150 MW in 010 no Yes, 135 (new 400) MWp until 2010 no no Nr. 1 (= Benchmark) Benchmark definition Spain can be considered a European benchmark for a consistent PV strategy, oriented along clear political targets. An official target of the Spanish government was already stated in the national Promotion Plan (PFER Plan de Fomento de las Energas Renovables) from 1999. This plan envisaged an installed PV capacity of 144 MWp until 010 (135 MWp grid-connected). The new feed-in law 66 PV Policy Group European Best Practice Report RD 436/004 lifted this threshold to 150 MWp. Given the dynamic market development a further increase to 400 MWp was announced in 005. The entire Spanish policy framework is aligned to the achievement of these targets and has been amended on separate occasions since the actual market development was lagging behind. The framework combines the following key instruments: Consistency of PV strategy/plan Qualitative estimation ++ + ++ + + +++ + ++ + +++ + + Consistency of PV policy framework Qualitative estimation ++ + +++ + ++ +++ ++ + + +++ + +

Feed-in-law (regimen especial) amended in 004 with publication of the RD 436/004 National subsidy scheme (ICO-IDAE lnea de financiacin) amended various times, especially by merging ICO soft loan programme with IDAE grants to a uniform financing line for PV investors Specific administrative regulations for PV installations (procedures for authorisation, grid access, registration of plants) amended for installations > 0 kWp in 004 Overall, the policy framework can be considered very transparent and aligned to the specific needs of the sector. Differences between benchmark and other countries In most European countries a consistent strategy for the promotion of PV is missing: PV is not considered a top priority for achieving energy and/or environmental political goals. In many countries PV is still seen as a technology in research & development phase and therefore neglected in economic politics. In most countries focus is placed on more competitive and larger-scale technologies such as hydropower, wind energy or biomass; PV has not reached the status to be considered a top priority for achieving industrial political goals by developing an important future industry even attractive feed in tariffs often fail to achieve an impact when political caps block the development of an industry that requires critical mass of investments; In light of a uniform feed-in tariff for all RES, PV installations are not competitive and payback periods for investments are considered unattractive only countries with a specific regime for PV have managed to trigger reasonable market development; PV promotion is undertaken by a patchwork of political initiatives rather than a coherent, long-term strategy subsidy programmes are often tied to public budgets and thus lead to a negative perception in the general public (tax payers) or stop & go effects that block rather than foster the development of an embryonic market in many cases programmes merely cease to exist and fail to provide sustainable impact in terms of PV acceptance, market or industry development during government change-overs policies frequently tend to be amended without consideration for detrimental industry effects (e.g. Netherlands). In Greece the utility (PPC-Public Power Corporation) is obliged to provide grid access to power stations based on renewable energy sources. This is provisioned by Act No 44 of 1994 which also obliges the utility to buy all energy produced by the renewable energy systems under a 10 year contract, while retaining the exclusive right to supply third parties with electricity.

2.1.2 Attractiveness of conditions for target groups: feed-in-tariff This chapter summarises the attractiveness of conditions for target groups. As it is the most predominant regulatory instrument currently employed in Europe,, the following section will concentrate on the feed-in law. Attractiveness refers to the characteristics of the feed-in laws: tariffs, guaranteed periods and return on investments (ROI). The target group encompasses all potential investors in PV. Other regulations, such as tax reduction are not considered in this chapter. Three performance criteria were defined for this assessment area: Level of feed-in-tariff (measured by /kWh and % decrease) Safety (guarantee period in years) Specific energy yield and payback times of investments (kWh/kWp and years) Further information on conditions for attractiveness of feed-in tariffs will be further discussed and elaborated in the working group of the PV policy group project.

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Performance measurement Performance Name / type of system criterion Performance indicator Austria Mix of instruments (max. cap in MWp) Feed-in-tariff + investment subsidies + fiscal incentives (cap currently 15 MWp) Feed-in-tariff + investment subsidies + fiscal incentives (cap currently 50 MWp) Feed-in-tariff (no cap anymore); Attractiveness (feed-in-tariff + decrease) /kWh (%) 60 ct/kWh (< 0 kWp); 47 ct/kWh (> 0 kWp); no decrease 14,17 ct/kWh (mainland France); 8,34 ct/kWh (overseas); no decrease 54,53 ct/kWh (< 30 kWp); 51,87 ct/kWh (30 100 kWp); 51,30 ct/kWh (> 100 kWp); bonus of + 5 ct/kWh for BIPV; 43,42 ct for groundbased PV; decrease 5 % p.a. 8,17 ct/kWh (for IPP); no decrease Safety (guarantee period) years 13 Specific energy yield + payback time of investments kWh/kWp + years 700900 13 years 9001.00 (mainland France) + 1530 (together with different regional grants) 750950 + 812 years

France

0

Germany (2005)

20

Greece

Feed-in-tariff (amendment due in 005!) + investment subsidies; (no cap) Feed-in-tariff incl. net metering & tendering system (launch in 005!) + investment subsidies + fiscal incentives (cap currently 100 MWp) Subsidies + fiscal incentives + Quota obligation Feed-in-tariff + net metering system + fiscal incentives (no cap) Feed-in-tariff + investment subsidies + fiscal incentives

10

Italy

approx. 61 ct/kWh (< 0 kWp); 50 ct/kWh (050 kWp); competitive procedure (> 50 kWp); decrease  % p.a. 3040 ct/kWh (volatile)

0

1.3001.500 + approx. 530 years for grid-connected systems 1.1001.500

Japan Netherlands

10

700800

Portugal

Slovenia Spain

Sweden UK

valid for the first 1 GWh produced by each MW of installed capacity or for 15 years Feed-in-tariff + subsidy + 37 ct/kWh (< 36 kWp), FIT too low, to soft loans 6,5 ct/kWh (> 36 kWp) complicated Feed-in-tariff + investment 41,44 ct/kWh (< 100 kWp) infinite (maxisubsidies (cap currently 21,99 ct/kWh (> 100 kWp) mum security 400 MWp) decrease after 25 years for all investors) Quota obligation Subsidies + fiscal incentives + Quota obligation

5 ct/kWh (< 5 kWp); 35 ct/kWh (> 5 kWp); no decrease

n.k.

1.0001.100 115 years 1.0001.500 +

Nr. 1 (= Benchmark) Benchmark definition Benchmarks for a successful feed-in-tariff system that combines attractive conditions and long-term security for investors are Germany and Spain: In Germany, the feed-in-tariff for solar electricity is differentiated according to the size and the location of the installation: PV installations on buildings for 005: 1. 54,53 ct/kWh (< 30 kWp) . 51,87 ct/kWh (30 kWp to 100 kWp) 3. 51,30 ct/kWh (> 100 kWp) Calculation example (for a 50 kWp plant): 30 x 54,53 ct + 0 x 51,87 ct /50 = 53,47 ct/kWh Building-integrated installations: Bonus of + 5 ct/kWh Other PV installations, especially freestanding on the ground: 43,4 ct/kWh

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Decrease: the feed-in-tariff is reduced by 5 % for plants on building installed in 006, by a further 5 % in 007 etc.; for installations on the ground the decrease is 6,5 % p.a. The feed-in-tariff granted in the first year of operation is guaranteed for 0 years. The period starts on the 1 January of each year. Installations that are commissioned e.g. in June, receive the remuneration over 0,5 years and so on. The development of the German EEG and its key success factors have already been described in chapter 3.1 National PV market development. The combination of the two instruments HTDP and EEG has proved particularly effective in motivating ecologically and socially motivated consumers. The advantage of the two-pillar support model is due to the fact that the initial investment costs are by far the most dominant factor in financing PV installations. As a result, a soft loan programme enabling the funding of up to 100 % of initial investment costs, is a decisive leverage for any investor. Unfortunately, the high number of subsidy requests lead to a stop & go, but the overall trend still indicated strong PV market growth. On the other hand, even in the year 001 the soft loan under the HTDP programme led to specific electricity production cost of 516 ct/kWh(depending on the size of the installation). Given an average electricity price in the liberalised energy market of ,4 ct/kWh (in 00), there was still a financial gap of nearly 50 ct/kWh to make PV electricity production profitable. The Renewable Energy Law (EEG) introduced a higher feed-in-tariff for all investors in April 000. The EEG feed-in-tariffs were 50,6 ct/kWh for PV plants installed during 000 to 001, and 48,1 or 45,7 Cent for plants installed from 00 to 003. The fact that the feed-in-tariff was guaranteed for at least 0 years reassured investors of secure, longterm cash flows that ensured a full payback of the initial investment in combination with the HTDP loans. However, the EEG and HTDP were not only complementary; there were further synergies that contributed to overall market leverage. The guaranteed feed-in-tariff reduced the credit risk of PV investments, which enticed commercial banks to offer 100 % financial coverage by means of the HTDP loans (that are never given directly by the public KfW bank, but via private banks). On the other hand, the public soft loan programme led to the introduction of commercial credit offerings for PV projects by the banks themselves. This is an important issue as previously the technology had been virtually unknown, which in itself denied access to economically feasible financing (due to prohibitively high interest rate, security requirements, etc). Overall, the German PV Policy model turned out to be very successful with exception of intermediary stop & go effect caused by the HTDP programme (details later). Differences between benchmark and other countries Although feed-in tariffs have been introduced in a number of other countries , their implementation has been far less successful than in the German case. Several explanations can be offered in this respect. Germany has the most generous feed-in tariffs on a national level compared to other European PV markets such as Spain, Italy or France. This is of major relevance to investors due to expected payback time. Solely Austria has comparatively

high feed-in tariffs though the current maximum cap of 15 MW unnecessarily stifles market growth whilst the cap on installed PV capacity has been removed in Germany. Removal of market caps contributes to the perception of long-term planning security for the PV industry. Most other countries have defined caps: 50 MWp in France, 400 MWp in Spain and currently 100 MWp in Italy (with an option to increase to 300 MWp). Whilst tariffs decrease by 5 % year-on-year in Germany, other countries(Austria, France, Spain) have not foreseen annual decrease or a lower rates such as in Italy ( %). The German sun-set has two important effects: on the one hand, it fuels considerable growth in an early stage of market development and will lead to considerable industry growth; on the other, the PV industry is forced to transfer reduced production costs to investors prices for PV thus have to be reduced if investments are to remain profitable at lower feed-in tariffs,. Finally, in Germany there is no upper limit for PV system size to the feed-in-tariff system. This also enables large solar parks to be installed. For example in Italy the limit of installation capacity is at 1 MWp. Austria had a very attractive system (besides the cap) in terms of present net value and security for investors. The Austrian Green Electricity Act provided a rather powerful and effective instrument, especially in light of the growth figures from 1997 to 004 (see C-1), during which feedin tariffs schemes were effective merely from 000 to 004 (first on a county/municipal level, later on federal level) which implies that that the support was even more effective during the years in which the system was in operation,. Slovenia introduced the feed-in tariff system for all renewable energy sources and cogeneration plants as early as 199. The experiences with this instrument are positive, especially following the price increase for PV plants to 37 ct/kWh in the beginning of 004. PV applications have started to appear in 005 new capacities of 70 kW were connected to the electrical grid. With reference to installed capacities of 100 kW by the end of 004, the cumulative increase in 005 was 70 %. 2.1.3 Attractiveness of conditions for target groups: tax incentives In this section different tax incentive schemes for target groups are compared. The target group contains all potential investors in PV. Three performance indicators were defined for this assessment: Attractiveness of tax measures (measured by /kWh and % decrease) Consistency (expected duration and stability of the measure) Accessibility of the measure (complexity of the process of application) The rating of the different schemes was based on the information provided by the national contact persons and comparison by the authors.

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Performance measurement Performance Name / type of system criterion Performance (Mix of) instruments indicator Austria tax credit of 10 % of any investment above annual average France tax credit for private persons of 40 % of PV investment 14,1 % VAT reduction 30 %40 % tax deduction in overseas departments freedom in choice of year for tax deduction of PV investment cost 10 % VAT reduction Attractiveness /kWh (%) 10 % 40 % Consistency years n.n. till 2009 Accessibility qualitative + + ++ 10 %0 % depending on tax level under discussion n.a. 10 % n.a. n.n. n.n. 0 + n.a. ++

Germany Greece Italy

Japan Netherlands Portugal

36 % tax deduction for house owners and 1 %18 %, tenants depending on tax level n.n. n.n. no tax on investment profit 44 % tax deduction for companies 30 % tax deduction for investments till 78 for private persons intermediate VAT rate (1 %) tax credit of 10 % of PV investment for companies 50 % reduction of property taxes 7 % 14 % 10 %15 % depending on tax level 7% n.a. 10 %

n.n. n.n. n.n. n.n. n.n. n.a. n.n. n.n.

n.n. 0 + + ++ n.a. +

Slovenia Spain

Sweden UK

property tax dependent tax credit of 70 % of investment for PV 70 % on public buildings 1,5 % VAT reduction 1,5%

until End of 2007 + n.n. ++

Nr. 1 (= Benchmark) Benchmark definition A successful tax measure should have the following characteristics:easily accessible, considerable contribution, simple and generally accepted requirements / obligations (e.g.: IEC standards + Grid Code requirements). Though less profitable than the investment subsidy scheme, which it has replaced, the French tax credit scheme is one of the most effective and attractive tax schemes in Europe. The total refund level is high (40 %) and accessibility is acceptable. Furthermore the French scheme is the only scheme with a guarantee of continuation past 006. The Swedish system consists of the most generous tax refund level in the European Union and is exemplary for its combination of simple accessibility with guaranteed duration (until the end of 007). The investment subsidy is specifically designed as a demonstration system to (A) increase the technologys visibility in the eye of the general public, which is why eligibility is confined to public buildings such as schools, sports arenas, churches, congregation centres, city halls etc and (B) to jump-start the PV market and transfer of know-how particularly to SMEs such as installers, project developers, electricians, architects, building materials manufacturers and other BIPV actors. As such, the Swedish system has been extraordinarily 70 PV Policy Group European Best Practice Report effective in driving the installation of some 650 kW in new capacities to date since its recent introduction in May 005. Compared to the French system, however, the scheme has the disadvantage of being limited to a rather short time frame of  years and neglecting the already noticeable increase in demand from private households and villa-owners. Dangers for stifling stop & go effects in the absence of timely announcements of a continued market development programme that includes private households and commercial buildings are a cause for concern in the developing Nordic BIPV sector. Differences between benchmark and other countries Most other countries also run tax schemes albeit with a disadvantage compared to the benchmark. Tax deduction: the scheme is often quite complicated to use, the benefit is not general, but depends on the tax level, the actual contribution is rather low (10 % 18 %) VAT reduction: though extremely easy to implement and use, the contribution of this scheme is rather low ( max VAT tariff) Caps for system sizes and limits for deduction.

2.1.4 Budget of regulatory framework (feed-in tariff) The discussion of the economic cost of a regulatory framework, in contrast to its effectiveness in terms of market and industry development is certainly a relevant assessment criterion. However, it is a highly complex task to capture, quantify and compare these costs from country to country. When calculating the economic cost of a regulatory framework (e.g. feed-in tariff) benefits from PV such as contribution in peak demand hours when energy costs are high and PV ancillary services (e.g. reactive power for voltage control) must be taken into account. Therefore the assessment of the real (macro-economic) value of PV cannot be easily done against the production cost of the utility at the power plant. The cost arguments will be further discussed and elaborated in the working group within the PV Policy project. As a first result, instead of conducting a benchmark analysis we summarise the results from previous studies and expert opinions on the issues. Performance Budget for feedcriterion in tariffs in 2004 Cumulative Installed PV Power Grid-connected MWp 15,01)
)

Performance indicator Austria France Germany Greece Italy Japan Netherlands Portugal Slovenia Spain Sweden UK

M 7,51) 5,5 approx. 0 for all RES annually 0,0004

768) approx. 1,4 0,001 0.3

1) (Source: E-Control, figures refer to end of 004) ) IEA-PVPS Report, September 005 To achieve an ambitious target, high investment for PV systems is needed. Germany has achieved the target with the feed-in tariff. The general public in Europe only invest if they receive a reasonable return on investment. The feed-in tariff system provides the following advantages: The return on investment depends on the system performance over the guaranteed period of 0 years this ensures a maximised generation of solar electricity in this period long-term perspectives, high quality of products (to ensure maintenance free operation for 0 years), hardly any administration, reducing system prices, independent from the budget of the government high driver for the industry to reduce costs

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2.1.5 Administrative implementation of regulatory framework in practice This sub-area assesses the administrative processes in practice, which are required to qualify for public support / feed-in tariffs and actually install a PV system. These procedures can be a decisive factor for the success of a policy instrument. The aim must be to commission a PV system as fast as possible and not to frighten off potential investors by administrative barriers. Three performance criteria and indicators were defined for this assessment area: Overall complexity of administrative processes (measured by qualitative estimations); Permissions required and authorities involved (numbers) Duration of planning processes / average lead time for investors (months) Performance measurement Performance criterion Performance indicator Austria France Germany Greece Italy Japan Netherlands Portugal Slovenia Spain Sweden UK Overall complexity of administrative processes Qualitative estimation ++ ++ +++ + + +++ +++ + + ++ +++ ++ Permissions required / authorities involved Number 5+ permissions / 3+authorities 4+ permissions / 4+authorities Duration of planning processes / average lead time Months 410 (only small-scale projects)

41 (small-scale projects) 14 (large-scale projects) 4+ permissions / 2+ < 2 (small-scale projects) authorities 812 (large-scale projects) 17+ permissions / 3+ authorities 61 (small-scale projects) indefinite (large-scale projects) 4+ permissions / 3+ authorities > 18 months (small-scale projects) 436 (large-scale projects) n.k. n.k. n.k. n.k. 5+ permissions / 3+ authorities 5+ permissions / 3+ authorities 1 permission/1 authority n.k. n.k. n.k. >6 814 3 n.k.

Nr. 1 (= Benchmark) Benchmark definition Certainly administrative procedures of PV projects in Germany can be considered a benchmark since they have been developed by ongoing practice over the years. Not to be ignored, however, is the swift and unbureaucratic manner by which Swedish authorities (county councils) are handling permit and funding applications.

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The following table gives an overview of the 5-step process: Step 1 Activity GENERAL INVESTMENT DECISION + request for 23 offers from PV suppliers Conditions / Requirements Responsibility Owner/Investor in collaboration with PV system supplier/architect

The investor disposes of an adequate place with southward orientation; roof or facade or ground space; Feasibility study to define size, financing and profitability. Check of different financing concepts (own resources versus loans); Simulation of energy output for the selected PV system; payback time calculation with fixed feed-in tariff, guaranteed over 0 years. Definition of the Decision for one of the offers from PV suppliers; financing scheme Decision for the most viable financing concept; and SELECTION Application for a loan from the bank (either via private bank or OF THE PV German Bank for Reconstruction) including submission of INSTALLER the offers if required; Contract with the selected PV company/ installer. INSTALLATION OF Basic design (or project design for Construction Permit); THE PV PLANT Architectural design for PV installation

Owner/Investor in collaboration with system supplier (Installer)

Owner/Investor in collaboration with system supplier (Installer) CONTRACT Owner/Investor CONNECTION FOR GRID Technical regulations and standards exist, e.g. regulation for low and local utility CONNECTING power connection to the grid, ENS for the inverter; AND SELLING OF A certified electrician acknowledged by the local utility conducts THE ELECTRICITY measurements on AC power output, connects the system to the grid, installs counters and seals it; The electrician can also be provided by the PV system supplier; The price of electricity is fixed for specific power size for PV and defined in the EEG (Renewable Energy Law); CONTRACT: Utilities have to close a contract with owner/investor, standard / model contracts are available, but they slightly differ from utility to utility ACQUISITION The investor submits the application to the financial authority in Owner/Investor OF THE STATUS and Fiscal order to obtain the status of a power producer; POWER Authorities VAT is refunded by the fiscal authority. PRODUCER

Source: WIP (2005) Differences between benchmark and other countries In most countries, administrative procedures for authorisation, grid access and approval of subsidies for PV installations represent a major market barrier. Even small-scale PV installations are treated as any electricity production facility, so the requirements are often inappropriate for this type of technology (e.g. building permissions, environmental impact analysis) only in some countries have sector regulators introduced specific technical or administrative guidelines for PV developers; The application of general regulations in practice is rather diverse from region to region (or county, even municipality), so the PV system developer depends very much on the co-operation of local authorities and utilities in most countries common rules for practical issues such as approval periods, costs or contracts remain undefined. NB: a national standard for the installation of small PV systems does exist in the Netherlands and was composed in close collaboration with installers and the PV industry: NTA 8493 (NTA = Nederlandse Technische Afspraak (Dutch Technical Agreement)). Local authorities in charge are still unfamiliar with PV installations and often overchallenged or overcharged with applications this leads to uncertainties, timeconsuming administrative delays and inappropriately long lead times or pre-project phases for promoters; Electricity sector regulations relevant for the PV market In the Netherlands grid connected systems with an Imax ,5 A can be connected to the grid as any other domestic appliance. Grid connected systems with an Imax ,5 A have to be reported to the utility, the utility forwards the notification to the grid manager. The grid manager is responsible for verification of system connection in accordance with the Grid-Code. No building requirements are defined for building integration and since 003 building integration is exempt from permits from the building inspection authorities. To guide installers NEC 8, the Dutch division of the IEC TC8, published a national technical agreement (NTA), an official guideline. 73

C. Benchmark Analysis comparison of 1 national PV policy frameworks

2.2 Efficiency of PV support schemes This assessment area deals with the efficiency of PV support schemes. The efficiency of PV policy instruments can be measured by the policy monitoring. It is split up in four sub-areas: Attractiveness of conditions for target groups; Economic cost of support schemes; Administrative implementation of support schemes. Given the predominance of these programmes, the analysis mainly refers to soft loans or investment grants. 2.2.1 Attractiveness of conditions for target groups The attractiveness of a support scheme is reflected in the overall amount of the subsidies, the total budget allocated to the programme and the lead-time required for application processes. Three performance criteria and indicators were defined for this assessment area: Subsidy terms (measured by max % of investment cost) Total budget/public spend (Mio or max. number of projects/MWp subsidised) Handling in practice/time required for applications (qualitative estimations) Performance measurement Performance Name / type of criterion scheme Performance indicator Austria Mix of instruments Subsidy terms Total budget (public spend) Handling in practice (time required for applications) Qualitative estimation (months) Application via programme agency and provincial authorities

Max. % of investment cost

Austrian Environment Support - national grant scheme + diverse provincial schemes still running National grant scheme by ADEME + regional schemes (+ tax credits) still running

France

Germany

100 000 roofs programme national soft loan scheme by KfW expired in 003! OPC programme national grant programme for RES and others

Greece

Mio. (number of projects / MWp subsidised) diverse from province to Austrian Environment province; Support: 001003: < 40 % of investment; 0,17Mio. < 3.700 /kWp (Upper (number of projects/ Austria) to 7.000 /inMWp subsidised) vestor (Styria) Until 004 < 80 % of 11,7 Mio. (ADEME) investment; < 4.600 / + 10,7 Mio. (regions) kWp (+ 10 % tax credit); in 004; Since 005 < 1.000 / (number of projects/ kWp (+ 40 % tax credit) MWp subsidised) for private persons; <  800 /kWp for companies / public bodies Soft loan (approx. 1 700 Mio. over 5 1,91 % interest rate); years (65.70 projects, < 6.30 /kWp (< 5 MWp subsidised n.a.) kWp); < 3.115 /kWp (> 5 kWp) Between 40 % and 50 % 58,7 Mio. (001/0) of investments depend- + 67,5 Mio (003/04) ing on the region for RES projects (number of PV projects / MWp subsidised n.a.)

Applications via ADEMEs regional offices (61 months)

Application via house banks (3 months)

Application via programme agencies

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Performance Name / type of criterion scheme Performance indicator Italy Mix of instruments

Subsidy terms

Total budget (public spend)

Japan

Netherlands

Portugal Slovenia

Mio. (number of projects / MWp subsidised) 10 000 solar roofs pro- < 75 % of investment; < 10,3 Mio (federal gramme from < 7.30 /kWp (0 budget) for part 1; 50 national grant prokWp) to < 7.750 /kWp Mio. (Federal + regional gramme (via regional (15 kWp) budgets) for part ; call-for-proposals) still 1,6 Mio. (federal budgrunning et) for part 3 Residential PV system ca. 450 per 1 kWp in ca. 5,5 Mio for 004 004 dissemination programme EPR programme < 3.500 /kWp (extend- Estimated at 4070 National grant scheme ed by 5 % in case of Mio. over 3 years (8,5 - suspended 003! special certification) Mio. for grid-connected PV) Mape refundable 40 % maximum refund- No special budget for grants able aid PV Subsidy for small PV 40 % of the investment 500 000 available in plants up to 1kW costs, max .080 per 005 for solar termal, system heat pumps and PV Investment subsidy in form of tax deduction for grid-connected PV on public buildings Financing line ICOIDAE combined national soft loan + grant programme PV Major Demonstration Programme national grant scheme 70 % of the total installation cost ca. 10 Mio.

Max. % of investment cost

Handling in practice (time required for applications) Qualitative estimation (months) Applications via regional authorities (> 1 months)

n.k.

Application via utilities

n.k. Ministry for Environment (public tender open up to the disbursement) 3 months

Sweden

Spain

UK

< 80 % of investments 189,6 Mio. (39,6 Mio. < 7.000 /kWp; for direct subsidies) (< 0,6 Mio per investor and year) for plants < 20 kWp 4055 % of total eligible ca. 46 Mio costs

Application via local house banks (812 months)

Application via agency EST 1 to 3 months

Nr. 1 (= Benchmark) Benchmark definition For this criterion it is rather difficult to identify one clear benchmark, but there are two systems that stand out: the German as well as the Spanish support schemes have both been fairly successful. Because the Spanish system is a bit more complex and has an interesting history of origins, it deserves closer examination. Spain: financing line ICO-IDAE The current Spanish support programme is a merger of two different instruments: soft loans of public promotion bank ICO and direct subsidies of IDAE. This support scheme is not exclusively applicable for PV, though solar energy is clearly the focus. It is based on the firm institutional boost for thermal and photovoltaic solar energy under 100 kWp. The support programmes that IDAE has been running for these two technologies have been integrated into one single financial tool. This integration responds to sector demands and the need to support users, both in procedural aspects such as deadlines, access to public grants and in solar energy. The finance line maintains public economic support for solar energy technologies, reinforcing it by providing preference funding. These funds are designated for the part amortisation of loans and interest rates discounts. The programme is in place since 1999. Generally it has no expiry date, but is annually re-defined as regards budget and conditions. The resources available for 004 amount to 189.600.000 euros. From this amount IDAE provides funds worth 39.600.000 euros to discount interest rates for all types of projects, as well as direct support for solar heating and photovoltaic solar energy projects. 431 PV installations were approved in 004. Each investor can apply for loans up to 6.310.500 per annum and a 7.000 /kWp maximum, respectively. The maximum investment to be financed is 90 % for PV systems. Solar projects have a unique amortization period since there is a payment holiday period of seven years. Private individuals as well as corporations can benefit from the support scheme. Differences between benchmark and other countries Spain is the only country with a combined soft loan and grant programme. This mix of instruments is beneficial for the target groups and heavily contributes to the promotion of PV. Pure soft loan programmes are not enough for a

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PV market to really take off. In the case of Germany, the 100 000 rooftops programme (HTDP) could not achieve this effect before the EEG started in 000. Only the combination of EEG and HTDP secured commercially oriented PV investors a full payback of their investment and the breakthrough of the market. Since the Spanish feed-in tariffs are not as high as the German ones, it makes sense to not only offer soft loans but to some extent grants. In Spain, the whole package of PV promotion measures is very promising. In Spain, a PV investor can apply for a maximum of 7.000 /kWp which is the biggest amount to be obtained in Europe. Together with the feed-in tariffs, PV has become a profitable investment. Also the budget of 189,6 Mio. allocated for the whole programme is notable. Only the budget of the German 100 000 roof programme was bigger. Another advantage of the Spanish scheme is its countrywide uniformity. It is not further complicated by different regional programmes or budgets, which makes it easier for the target groups to apply. In Greece a high subsidy is provided on the capital cost through the Operational Programme for Competitiveness (OPC) which is the major tool for obtaining a subsidy for an energy investment including PV. According to the last call, subsidies vary between 40 % and 50 %, depending on the geographical location of the application. OPC is financially supported by both national and EU funds under the Community Support Framework III. OPC became effective in 001, with virtually similar strategic scope and actions to the preceding Operational Energy Program (OEP) that ran between 1997 and 000. Investment Subsidy (ROT) for Energy Efficiency and Renewable Energy in Public Buildings in Sweden: Commenced in May 005, it will last until December 007; total funds allocated: 10 MEUR which are expected to be fully subscribed by Q3 006 mainly due to high interest shown by population dense city authorities (Stockholm, Gothenburg, Malm); Functions as a tax deduction of 70 % of the investment costs following a completed system installation with a maximum limit per project of 500.000 EUR, covers both material and external labour; thus effective in the development of professional know-how (installers, architects, project developers etc.); Specifically designed as a public demonstration programme for buildings that are tax registered as special buildings, i.e. public congregation places such as sports centres, conference halls, churches, schools, airports, railway stations etc.; Low administrative burden, simple application form with a minimum level of system parameters/requirements (the few parameters that do exist are intended mainly for statistical follow-up) and maximum level of flexibility in system configuration/design (though always gridconnected and building integrated/applied) coordinated by county councils (local proximity, relatively low level of red-tape); First market support mechanism ever in Sweden, will effectively double the total PV capacity and increase grid-connected systems x 10; has jump-started the domestic market for PV in Sweden (from previous 100 % focus on export). 76 PV Policy Group European Best Practice Report

2.2.2 Budget for support scheme The discussion of the economic cost of a support scheme, in contrast to its effectiveness in terms of installations, is certainly a very relevant assessment criterion. However, it is difficult to quantify and compare these costs from programme to programme and country to country. Official data from programme monitoring are often not available or not up to date. The cost arguments will be further discussed and developed in the working group within the PV Policy project. Performance criterion Budget for subsidy schemes in 2004 Installed Budget PV Power per Wp Gridconnected & off grid in 2004 MWp 1) /Wp 5, 1,03 4,7 272,4 3,16 0,85 , 8,11 n.a. 4,9 0,45 0,36 0,39 3,77

Performance indicator Austria France Greece Italy Japan Netherlands Portugal Slovenia Spain Sweden UK
)

M 1) 4, n.a. 3, 122,7 1,15 0,11 8,3

Germany

1) (Source: IEA-PVPS) ) mainly off-grid Nr. 1 (= Benchmark) In Europe, the Netherlands were quite successful with the Dutch programme and resulted in a reasonable PV installation capacity until the government stopped the programme. In Japan the support schemes results in high numbers of PV installations. PV is highly accepted by the public and seen as an innovative high tech product. In most cases it is already implemented into the houses when the owner buys the house. It is a prestige product. In Europe it is mainly a question of return on investment. 2.2.3 Implementation and administration of support schemes in practice This area evaluates the management of the support schemes in practice. Three performance criteria and indicators were defined for this assessment area: Assessment by programme managers (measured by qualitative estimations); Assessment by PV industry (qualitative estimations); General impact on PV market (qualitative estimations).

Performance measurement Performance criterion Assessment by programme managers Qualitative estimation based on interviews +++ ++ +++ + ++ +++ ++ + + ++ + ++ Nr. 1 (= Benchmark) Benchmark definition The administrative handling German of the 100.000 Rooftop (HTDP) programme is widely regarded as efficient by the PV industry: Administration, roles and responsibilities: Private banks: application process by KfW standard forms via house bank; the bank determines the nature of required securities (on application the KfW can grant a 50 % liability exemption); KfW: general evaluation of applications, approval and allocation of budgets; Regional promotion banks: some have their own soft loan programmes that grant additional reduction in KfW interest rates (application also via house bank). During the five years of the HTDP 76.000 credit applications with an overall volume of over ,3 Billion Euro were placed. Budgets and sources of funding: Federal budget: overall 1,7 Billion Euro, distributed over 66.000 approved soft loans; Regional budgets: only in case of additional regional credit lines. The KfW invoices the total budget on an annual basis to the Ministries of Economic Affairs (BMWA) and Environment (BMU) that transfer the amount (< 100 Mio. Euro p.a.) to the KfW from their ministerial budgets. The programme triggered a PV investment volume of approx. ,4 Billion Euro and the installation of 346 MWp. Assessment by PV industry Qualitative estimation based on interviews +++ ++ ++ + + +++ ++ + + + + + General impact on PV market

Performance indicator

Austria France Germany Greece Italy Japan Netherlands Portugal Slovenia Spain Sweden UK

Qualitative estimation based on interviews +++ + ++ + + +++ +++ ++ + ++ + ++

Differences between benchmark and other countries Typical shortcomings in the management of subsidy programmes in many countries can be summarised as follows: The authorities in charge of handling applications are technically unprepared for the requirements of an efficient programme administration; which may lead to implementation problems; Different authorities put common regulations into practice in a very different way, this leads to inefficiencies and confusion among market actors; The approval procedures are limited to a short period of the year or are characterised by long, bureaucratic procedures; Due to limited budgets the programme does not satisfy the existing demand; only a small percentage of applications is accepted overall; The programmes do not require effective monitoring systems for performance measurement of the plants, so it can not be avoided that a part of PV plants fall short of performance targets; Most programmes only promote small installations (< 0 kWp) and have a weak leverage effect amongst the public; Operators were not able to make profits with their installations, which could have been re-invested; Due to the capacity threshold of < 0 kWp per installation commercial investors are hardly attracted by the programmes; Larger-scale installations with a leverage effect for the PV sector were not promoted at all; Awareness or acceptance of PV in the public is often not raised effectively, so no critical mass in demand (pull effect) is triggered. In Germany smaller programmes were initiated at the beginning, e.g. 1.000 Roof Programme, regional and school programmes, awareness campaigns for clean and environmental friendly power production. National strategy and framework for PV promotion In the Netherlands the development and sequence of the different support schemes for PV and the strategy behind was well balanced and well chosen up to 003: 1978: start of the general solar research programme NOZ 1986: splitting off of the PV specific research programme NOZ-PV 1986 000: even growth of the NOZ-PV budget from 0 MEUR to 18 MEUR 1986 000: gradual shift of the NOZ-PV programme from R&D only to a balanced mix of R&D, product development, demonstration and implementation 001: merging of the RE option specific RTD programmes to one general RE RTD programme 001: introduction of the investment subsidy (EPR) This scheme led to a strong international position for the Dutch PV RTD centres as well as market growth of more than 45 % from 1995 till 003, which is more than 5 % above

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average world-wide market growth during those years. This carefully build up sequence however was suddenly terminated with the ending of the EPR subsidy at the end of 003. Due to unforeseen accumulation of subsidies, from which some were extended subsidies which should have closed earlier, the actual cost of a PV system could in some special cases fall below 0,00 EUR. This caused an explosion of the market with market growth of around 50 % in 003. The consequential excessive demand on the public budget forced the ministry to stop the scheme.

Benchmark definition In terms of effective market monitoring Spain as well as The Netherlands show innovative initiatives: BDFER database in Spain The ambitious objectives set by the Renewable Energy Plan (PFER) make it necessary to ensure adequate coordination between all the strategies that may be set up in Spain to promote renewable energy, whether these initiatives arise at the level of central, regional or local government. This fact, in conjunction with the need to record and evaluate all actions in the field adequately, led the IDAE and the various bodies at the Autonomous Region level responsible for renewable energy, to consider it appropriate to develop a shared, uniform computer tool that could be used by all those involved as a means of examining, recording and evaluating actions undertaken as part of the PFER. Thus, the IDAE, together with the bodies and agencies in the Autonomous Regions, developed a computer database to provide real-time information on renewable energy investment projects during the period in which the Plan is in force. By means of this system the information on RE installations in Spain can be updated rapidly and retrieved or processed by any BDFER user by means of his access code, depending on his user profile. The purpose of the access codes is to limit access to BDFER to users only. These users comprise the various project participants, namely authorities and institutions on national, regional and community level. The aim of the system is to protect the information in such a way as to ensure that it is not modified except by the user responsible, i.e. the user who is registered on BDFER as the originator of the data. The basic unit of information in BDFER is referred to as a Project. This is defined as any activity, whether an installation, a dissemination workshop or a management activity, that is carried out in the renewable energy sector. The various project contents are organized around this elementary unit in accordance with uniform information modules, of which a total of five have been developed: General Data, Project Description, Financial Data, Energy Data, and Technology Data. To help in project monitoring users have an additional folder for their own exclusive use for any observations they wish to make. Both the content and working methodology were arrived at by consensus between all the partners with a view to creating a uniform concurrent working environment in BDFER. This harmonization of quantitative and qualitative evaluation criteria ensures that inventories at regional, national and community level are fully comparable. This enables different users to evaluate the progress made in the renewable energy field satisfactorily. PV market monitoring in The Netherlands The Netherlands developed a very reliable market monitoring approach via industry surveys. Until 004 several monitoring schemes were in place in The Netherlands, measuring indicators concerning the Dutch PV market. None of these schemes resulted in a reliable and overall insight in the performance of the PV market. Therefore, Holland Solar, IEA PVPS (SenterNovem) and CBS (Statistical Agency by the Dutch State) agreed

2.3 Efficiency of PV monitoring systems This chapter covers the assessment area of PV monitoring systems. Monitoring is a very important but often neglected topic in the context of effective PV market promotion. There are two sub-areas assessed: National approach to market monitoring; National approach to PV policy performance measurement. 2.3.1 National approach to market monitoring Market data are very important for all actors in the PV sector. Nevertheless, it is very difficult to find reliable and accurate market figures, because the market players are not willing to disclose their internal data. Three performance criteria and indicators were defined for this assessment area: Quality of project monitoring (measured by qualitative estimations); Quality of market surveys (qualitative estimations); Quality of national plant register (qualitative estimations). Performance measurement Performance Quality Quality criterion of project of market monitoring surveys Performance indicator Austria France Germany Greece Italy Japan Netherlands Portugal Slovenia Spain Sweden UK Qualitative estimation ++ ++ ++ ++ + n.k. ++ + + +++ + ++ Nr. 1 (= Benchmark) Qualitative estimation ++ ++ ++ + + n.k. +++ ++ + ++ + + Quality of national plant register Qualitative estimation +++ + + + + n.k. + + ++ +++ + ++

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on a joint approach. They committed themselves to the following monitoring requirements: reliable, independent, confidential, applicable by all stakeholders, covering all required data and availability soon after the year ending. Together with representatives of the industry a two-page questionnaire was developed which investigates figures such as installed power, production capacities, turnover, import/export, domestic trade, employment, and RTD budget. The questionnaire was sent to more than 95 % of the supply chain in Holland and about 80 % of them (covering > 90 % of the Dutch market) filled in the information. The monitoring activities are conducted by CBS, which is a truly independent governmental organisation. Only they know which company provided which data. The participating companies merely see accumulated figures. Differences between benchmark and other countries Although no European country has a completely convincing market monitoring system, in certain aspects the Spanish and Dutch systems are outstanding. The Netherlands has a good system for covering the industry side: The Dutch Agency for Statistics collects performance data from the PV industry and processes the numbers. On the other hand, Spain has a good approach to measure the installation side of the PV market. There is the PFER monitoring project in collaboration with regional authorities centred upon a computer database in which all projects are entered. However, only the combination of the two systems would give a complete and real-time picture of the PV market. In Germany the national PV industry association BSi has installed an online system collecting production statistics. The participating companies enter their production figures themselves while protecting their anonymity. The production statistics numbers are updated on a monthly basis and every three months the results are published. This monitoring system is similar to the Dutch system, but has one important difference: the German companies stay completely anonymous, so nobody can check the figures that they enter into the online database and therefore the results are not completely reliable. Obviously a supervisory body is inevitable. But since the company statistics are very sensible, the supervision has to be done by a widely respected and trusted institution. In The Netherlands this is the Dutch Agency for Statistics, a governmental institution. They check the questionnaires and publish the accumulated numbers; the individual numbers stay anonymous to the public and the participants of the survey. This is essential, as no company wishes to disclose its statistics to competitors. In many European countries true monitoring of the PV industry is missing. Although the respective national industry associations are collecting figures from their members on an annual basis, the Dutch system offers more comprehensive and sound information. As far as the demand side of the PV market is concerned, countries with subsidy schemes all collect data in the framework of these programmes (France, Italy, UK and also Germany until the end of the 100.000 roof programme). Assuming that all investors that wish to install a PV system use subsidies, market figures are reflected quite well by these programmes. In countries with feed-in

tariffs the situation is more difficult because the utilities do not release fully reliable data. Another system can be observed in Austria, Spain and soon also in Germany and other countries: a national plant register in which every PV system that is connected to the grid, has to be covered (see next chapter). But still the Spanish system, as it was described above, has one major advantage. All institutions offering support for PV on national, regional or community level insert their data independently into the shared database. Therefore it is much easier to evaluate and monitor the impact of the single programmes and still have overall country figures. Until the end of 004, every grid-connected system which was realized by France was financed partially by ADEME. ADEMEs ERP enabled efficient monitoring both for public subsidies granted to the PV market and kWp installed. A national plant registration database is also kept updated by EDF and a questionnaire is sent annually to the PV industry. It allows for high precision in market figures. 2.3.2 National approach to PV policy performance measurement In order to review whether political targets of policy instruments are actually achieved, professional monitoring is essential. Therefore, on the following pages the approach to policy performance measurement will be assessed and compared. Three performance criteria and indicators were defined for this assessment area: Consistency of the performance measurement approach (measured by qualitative estimations); Data quality (qualitative estimations); Transparency of approach (qualitative estimations). Performance measurement Performance Consistcriterion ency of approach Performance Qualitative indicator estimation based on interviews Austria +++ France Germany Greece Italy Japan Netherlands Portugal Slovenia Spain Sweden UK + ++ + + +++ ++ + + +++ + ++ Nr. 1 (= Benchmark) Benchmark definition It seems as if Austria currently has the most elaborate approach to policy performance measurement. Austria 79 Data quality Transparency Qualitative estimation based on interviews +++ + ++ + ++ ++ ++ ++ + ++ + ++ Qualitative estimation based on interviews +++ ++ ++ + + + ++ + + + + ++

C. Benchmark Analysis comparison of 1 national PV policy frameworks

successfully monitors its feed-in law; while Germany had a good monitoring of its former soft loan programme HTDP (ended in 003). Austria: Monitoring of the Green Electricity Act The regulatory body, E-Control, is in charge of monitoring the effects of the Green Electricity Act and has to deliver an annual report to the Federal Ministry of the Economy. E-Control has three channels of data collection: 1.) PV systems have to be accredited as green power plant by provincial governments. This data, containing capacity of the plant and the energy source, are processed into the database of E-Control. This allows calculating the total capacity per energy source. .) GPBGR (Green power balance group representative) is obliged to buy RES-E and to pay the tariffs. GPBGR operates a database containing detailed information concerning installed capacity, fed-in electricity and paid tariffs. All this information is reported to E-Control. 3.) Own investigations by E-Control. The monitoring report of E-Control published annually in June contains: Statistics: Supported volumes, expenses, capacities of accredited plants Anticipated trends Compliance with targets (15 MW) Recommendations The Austrian monitoring system delivers interesting and reliable figures. But one has to bear in mind that gaps can emerge if accredited plants are not on-line or if gridconnected plants do not receive feed-in tariffs (because the 15 MW cap has already been reached). Germany: HTDP performance measurement The KfW performed the quantitative monitoring of the soft loan programme on its own. An advisory group (including the solar industry associations) was installed, in which practical problems in implementation and lessons learned in the market were discussed. Assessment reports by KfW can be downloaded at: www.bsi-solar. de/foerderprogramme/100.000daecherprogramm_daten. asp. In the assessment processes actual market development was measured against the key performance indicators defined by politics. These mainly industry political rather than energy political indicators for PV can be summarised as follows: Market development: installed capacities (in MWp) 100.000 Rooftops Industry development: investments (in Billion ), employment, revenues and export figures including European/international market share; Cost reduction: nominal system cost per performance unit (/kWp) Differences between benchmark and other countries For the monitoring of feed-in laws, Austria definitely has the best system amongst the countries analysed. All plants that receive feed-in tariffs have to be registered and the installed capacity, the feed-in electricity and the tariffs paid are incorporated into a central database at EControl. These figures are essential to monitoring impact and costs of the feed-in law. 80 PV Policy Group European Best Practice Report

Germany now plans to introduce a similar system. To improve the monitoring of the EEG in the future, plant and grid operators are obliged to deliver further data. This additional information shall lead to more transparency with regard to the calculation of appropriate feed-in-tariffs that ensure a profitable operation of RES plants, but also to enhanced knowledge of the environmental effects of the law. A key instrument for data collection is the new plant register in which all operators will be obliged to enter data online from 006 onwards. Information such as the number of kWh fed into the grid or the amount of tariffs paid can only be collected in collaboration with the utilities and the plant operators, as it is the case in Austria. In contrast, this information is not available for example in the Spanish database as described earlier. The Spanish system is more relevant for the monitoring of subsidy schemes than for feed-in laws. In general, support programmes such as the HTDP in Germany, are easier to monitor than feed-in tariff systems. As people have to apply for the subsidies, the PV capacity installed under the programme and the cost of the programme can easily be collected. This is also the case for France, Italy and the UK. Also the Spanish system with its online database offers this data. Additionally, since all Spanish institutions offering support for PV on national, regional or community level insert their data into the shared database, it is possible to evaluate and monitor the impact of the single programmes.

3. Effectiveness of national PV sector development In this chapter the external effectiveness of national policy frameworks are evaluated. Four sub-areas were defined for this overall assessment area: National PV market development; National PV industry development; National PV price development; National PV acceptance. Again it must be stressed, that political measures are not the only factors influencing the development of the national PV sector, but certainly the most important drivers or barriers.

3.1 National PV market development One of the indicators for the success of a national PV policy framework is the development of the national PV market. Four performance criteria and indicators were defined for the benchmark analysis in this area: Market size (measured by newly installed MWp/year in 003 and 004) Market growth (%/year in 003/004) Market penetration (kWp/1.000 inhabitants in 003/ 004) Market perspectives (newly installed MWp/year in 010, worst case / best case forecast) Performance measurement Performance criterion Performance indicator Reference year Austria France Germany Greece Italy Japan Netherlands Portugal Slovenia Spain Sweden UK Market size Newly installed MWp/year 003 004 6,5 3,7 153,0 0,4 4,0 3,0 19,6 0,401 0,005 6,5 0,84 1,767 Nr. 1 (= Benchmark) The following table shows the electricity produced by PV installations from 1998 to 004 in comparison to the realisable potential until 00. Luxemburg and Germany have capitalised most on their potential. The relevant policy schemes during this period are shown in different colour codes. ,3 5,9 450,0 1,0 6,0 7,0 3, 0,574 0,007 10,0 0,85 ,61 Market growth %/year 003 63 % 63 % 87 % -10 % 0 % 1 % 75 % 4 % 0 31 % 9% 7 % 004 14 % 60 % 194 % 186 % 50 %  % 7 %% 8 % 50 % 54 % 7% 8 % Market penetration kW /1.000 inhabitants 003 ,1 0, 5,3 0, 0,5 6,74 ,8 0,0 0,0005 0,63 0,40 0,1 004 ,4 0,3 11,5 0,3 0,6 8,87 3,1 0,5 0,003 0,86 0,4 0,14 Market perspectives Newly installed MWp/year 010 010 Worst Case Best Case 1, 14,8 8,7 n.k. 0,4 ,0 n.k. 1,1 36 0,3 30,0 n.k. 5 58,8 1.002 114,8 30,0 n.k. 7,7 10 5,5 300,0 n.k. 50

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Average effectiveness indicator Photovoltaics 3%

2%

1%

0%

AT BE DK FI FR DE GR IE Feed-in tariff Quota/TGC

IT LU NL PT ES SE UK EU15 Tender Tax incentives/Investment grants

Figure C2-1: Economic effectiveness in the period from 1998 to 2004. Source: Communication from the European Commission, The support of electricity from RES, 2005 Benchmark definition The benchmark for the assessment area national PV market development is the selected project partner country Germany. In spite of an average solar radiation approx. 30 % below the level of southern European countries Germany has evolved into Europes leading market for PV installations. This market development could only be accomplished due to an effective legal framework, built around the Renewable Energy Law (EEG), which guarantees sufficiently attractive and secure feed-in-tariffs for solar electricity (see detailed presentation later on!). With an installed capacity of more than 750 MWp by the end of 004 the German market has kept and even strengthened this leading position. After only a small growth in 00 (+ 3 %, due to an overall economic downward trend and changes in the national subsidy programme) and a clear upswing in 003 (+ 87 %) Germany experienced a boom year (+ 140 %) beyond all expectations in 004. With a newly installed capacity of 450 MWp in 004 the overall market volume increased more then 10 times in comparison to 1999. Apart from Luxemburg, Germany also shows the highest installation density (4, Wp/inhabitant in 004) in Europe.

Annual and accumulated PV capacities annually installed in MWp 325 300 275 250 225 200 175 150 125 100 75 50 25 0 New installations in 2004: approx. 450 MWp total installed in MWp 910 840 770 700 630 560 490 420 350 280 210 140 70 0 99 2000 01 02 03 04 total inst.

1990 91 92 93 94 95

96 97 98

annually inst.grid of German annually inst.off grid Figure C2-2: Development connected PV market

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The fast growth rate was leveraged by the start of the 100 000 Rooftop Programme (HTDP) in 1999, whose impact has to be evaluated in combination with the new Renewable Energies Act (EEG) in 000. The HTDP programme further developed the previous federal 1.000 Rooftop Programme that had been started already in 1991. After this former programme had run out in 1995, the German PV market at first stagnated at a very low level. Meanwhile 5 cities introduced the socalled cost-incentive based feed-in tariff with the support of municipal utilities. Some municipal utilities paid up to 1,00 /kWh for 0 years. The new HDTP in 1999 then defined the goal of installing 100.000 PV installations with an average capacity of 3 kWp (300 MWp overall) and thus triggered a mass market. Soft loans (with low interest rates) were granted to private and commercial investors in PV installations of > 1 kWp. Further strategic goals of the programme were 1) the increase of production capacities in Germany and ) the reduction of production cost for PV modules. In the first place, the HDTP alone did not have an enormous impact on the PV market since at the time it was still far from ensuring profitability of PV investments in combination with the old feed-in-tariff of merely 8,5 ct/ kWh (under the old Feed-in-Law). Full payback of investment costs was actually not achieved until the new EEG, launched in 000, introduced much higher tariffs. In addition, by means of an annual reduction rate of feed-in-tariffs from 00 onwards it offered PV suppliers effective incentives for cost reduction of modules, components and systems. The original limit of the EEG a maximum capacity of 350 MWp was increased to 1.000 MWp when the law was amended by the German parliament on 7 June 00. No cap is in place any longer. The year 003 was characterised by the end of the HTDP programme and a discussion on a new feed-intariff legislation that was supposed to be implemented by means of an amendment of the EEG. In 00 the HTDP had provided soft loans for 80 MWp of PV installations, in 003 budgets for further 149 MWp were granted. In fact, since the 1st of January 004 there a new feed-in tariff for PV electricity replaced the investment subsidies under the HTDP programme. The new EEG left the base tariff for PV electricity from plants installed in 004 at 45,7 cent/kWh. PV installations on buildings up to 30 kWp now received a higher tariff of 57,4 cent/kWh, installations between 30 kWp and 100 kWp 54,6 cent/ kWh and installations > 100 kWp 54,0 cent/kWh. An additional bonus of 5 cent/kWh was granted to buildingintegrated PV installations. The original maximum capacity limit for free-standing plants was abolished, and therefore effective incentives for investments in large solar parks were introduced. The tariff is guaranteed over 0 years. Plants installed in 005 receive a tariff that is reduced by 5 % annually, guaranteed over 0 years. Due to this regulation stable growth of the German PV market can be expected also for the future. Overall the key success factors of the national PV policy framework can be summarised as follows: grid operators are legally obliged to connect PV plants to the grid and to feed-in and remunerate the electricity produced according to the EEG regulations;

the feed-in-tariff has been fixed high enough to enable a profitable operation of PV plants; for PV installations on buildings usually no building permission is required; for large parks on open land clear legal framework conditions were defined. Differences between benchmark and other countries Although other countries use the same or similar policy instruments a combination of feed-in-tariffs and subsidy programmes none of them has experienced a comparable market growth to Germany. The following prerequisites were key success factors for the take-off of the German PV market: The policy instruments must enable a reasonable payback time for an investment in a PV system; The policy framework must ensure stability and longterm commitment for PV support (to gain the confidence of investors). The administrative effort to install and operate a PV system has to be very small in order not to deter potential customers These points were fulfilled in Germany. With relatively high feed-in tariffs guaranteed for 0 years, PV is an economically sound investment. Furthermore, the legislation has no expiry date. Under these conditions, the PV industry and investors can enjoy long-term stability, which is essential for market growth. In Austria for example, a feed-in-law was established together with provincial and national support schemes. But given a cap of 15 MW of installed PV under the feedin-law, market growth came to a sudden halt after only a short time (stop & go effect). In Germany, such a cap does not exist. In other countries such as the Netherlands, the feedin tariffs are too low. Especially for small investors the investment in a PV system is economically unattractive. Therefores Dutch market growth rate has remained fairly low (7 %). In Japan we can see that other policy instruments can also successfully accelerate market growth. Unlike Germany, there is no feed-in-tariff but only average electricity prices for grid-connected PV. Nevertheless, subsidy programmes and fiscal incentives have triggered a PV market, which was the largest one worldwide for several years. In Japan the above mentioned pre-requisites for a sustainable market take-off were met in a different way: a reasonable payback time and long-term commitment of the Japanese government. Yet another policy system for PV has been established in the UK in which a quota obligations system is combined with investment subsidies. PV in the UK grows with acceptable rates but the market is still very small compared to Germany. The main problem in the UK is the lack of a long-term commitment to PV which is reflected in its policy. The quota system clearly favours other renewable technologies such as wind energy. The UK system is technology-neutral and tends to encourage the development of lower-cost technologies that are closer to competitiveness in their development stage which up to now is not the case for PV. As a result, PV market development in the UK relies mainly on investment

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subsidy programmes that by definition are limited to a fairly short period of time. Public Private Partnership National RTD programme for PV applications and development projects in Sweden: Phase I: 00000; Phase II: 003005; Phase III: 005007 Financed with approximately 500.000 per phase through public funds that are administered by the Swedish Energy Agency and investments from various industrial partners (module manufacturers, construction industry, utilities etc.); Professional management and competent coordination of the programme through the jointly owned Research and Development Organisation of Swedish Utilities (Elforsk AB) Major contribution to PV market development to date: Initiation and funding of BIPV demonstration projects Investigation of system integration and grid connection issues Market analysis (IEA-PVPS, conferences etc.) Information and education of market actors (seminars & reports) Support of industry formation (Scandinavian PV Industry Association) Research of PV technology from social scientific perspective

3.2 National PV industry development By promoting PV, one of the objectives of the national governments is to establish a prosperous national industry with long-term perspectives. The potential to grow, yield profits and create jobs often justifies the large amount of subsidies. Four performance criteria and indicators were defined for this assessment area: National module (or cell) production capacities (measured in MWp in 003 and 004) Annual industry sales (Mio. /year in 003/004) Annual industry investments (Mio. /year in 003/ 004) Employment (numbers of employees in 003/004) there is a differentiation between employment PV industry and Employment total. The latter includes all jobs that are linked to PV but are not directly associated to the PV industry, such as jobs in distribution, installation and in the supply industry (e.g. glass industry, cables etc.)

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Performance measurement Performance criterion Performance indicator Reference year Austria France Germany Greece Italy Japan Netherlands Portugal Slovenia Spain Sweden UK Module (cell) production capacities MWp 003 3,6 14,6 83,0 0,0 4,3 511 0,0 n.k. 95,0 n.k. n.k. 004 > 9,0 30,6 200,0 0,0 8,4 n.k. 15,0 n.k. 150,0 49 49,5 Annual industry sales Mio /year 003 105,0 51,0 650,0 3,0 n.k. 1.268 350,0 n.k. n.k. 6,9 n.k. 004 145,0 96,6 1.150 3,3 n.k. n.k. 59,0 n.k. n.k. n.k. 115 Annual industry investments Mio. /year 003 n.k. 15,0 150,0 0,5 n.k. n.k. n.k. n.k. n.k. 1,81 n.k. 004 n.k. 15,0 200,0 1,5 n.k. n.k. n.k. n.k. 24,2 n.k. n.k. Employment PV Industry Number of employees 003 004 00 500 3.500 60 750 n.k. 430 n.k. 4.020 155 n.k. 340 570 4.400 70 750 n.k. 57 175 5.528 n.k. 38 Employment Total Number of employees 004 695 750 10.00012.000 n.k. n.k. 11.300 430 n.k. 10 n.k. n.k. 580

Nr. 1 (= Benchmark) Benchmark definition Benchmarks for a successful national PV industry development are Germany and Japan. Germany is used as benchmark because comprehensive background information is available and Germany is a country partner within the project. Germany has managed to develop a very strong and leading European PV industry: Indicators National module production (in MWp) + growth rate (in %) National cell production (in MWp) + growth rate (in %) National wafer production (in MWp) + growth rate (in %) National inverter production capacity (in MWp) + growth rate (in %) Annual sales of national PV industry (German module, cell, wafer, and inverter manufacturers) (in Mio ) + growth rate (in %) Annual investments of national PV industry (in Mio. ) + growth rate (in %) Number of employees in national PV industry + growth rate (in %) Quelle: BSi (2005); UVS (2004) Production structures: Due to the strong dominance of grid-connected systems the Germany PV industry consists of the following groups of manufacturers: Solar silicon producers Wafer producers Cell producers Module producers Solar inverter producers Solar charge controller producers Other solar component producers (mounting systems, cables etc.) With an average share of approx 70 % the cost of the solar module dominates in the cost distribution structure for grid-connected PV systems. This fact also explains the economic dominance of wafer, cell and module manufacturing along the overall value chain of the sector. The second important product group are solar inverters. In the global context, the solar cell industry is widely dominated by large, multinational groups. However, in Germany solar cells are also produced with great success by various medium-sized, independent players. In 003 there were about 30 German companies dedicated to the production of solar silicon, wafers, cells and modules. There are many cases of outsourcing or cross-selling relationships in the sector, so that a clear separation of manufacturers and wholesellers is often difficult. 85 650 150 3.500 2003 83 100 10 2004 00 187,4 150 705 1.150 00 4.400 1.500 00 5.000 2005 estimated 5 300 180

C. Benchmark Analysis comparison of 1 national PV policy frameworks

In the last years German PV industry has experienced an industrialisation phase towards more professionalism and mass production during which the innovation rate has been considerable. Due to high increases in market volumes more than 1 Billion Euro was invested in setting up or increasing solar silicon, wafer, cell and module production capacities. In the inverter and charge controller sector German manufacturers are market leaders also on a global scale. Also, most mounting systems and balanceof-system components across the world are Made in Germany, e.g. inverters. Due to this development a considerable cost reduction (over 0 % since 1999) and quality increase of PV systems could be achieved. In addition, German companies are following an aggressive international expansion path. A high degree of innovation, fostered by a boom in market demand (= higher prices and profit margins) and very good financial situation of companies (high cash flow from ongoing operations, good access to financing sources on the capital market etc.) on the one hand, a bottleneck in silicon procurement (= overcapacities, increasing purchase prices) on the other hand are the key driving forces for the industry. Annual cost reductions of 5 % p.a. as required by the EEG are thus enabled, but also high investments in upstream integration (solar silicon production!) and more efficient technologies (e.g. thin film, new production processes). Distribution structures: There are three typical distribution channels of PV system integrators in Germany: 1. Direct supply of a wholeseller network that sells to installers and end-users; . Direct supply of retailers, installers, craftsmen and endusers; 3. Direct acquisition from end-users/investors (e.g. via sales personnel). The first two channels are mainly used by large suppliers. Their distribution network covers the whole country, while a strong regional presence is ensured by geographic representatives and close ties to local installers and craftsmen. Smaller firms that cannot afford setting up and managing such nationwide distribution networks, focus on the direct acquisition of projects in their regional proximity. Differences between benchmark and other countries The basis for a sustainable national industry development is critical mass in terms of market growth and perspectives: Strong and viable PV market Long-term perspectives are needed to justify high investments in production facilities (< 4 years support programmes are clearly not sufficient); Qualified staff must be available for the installation of high-tech production facilities. With regard to national PV industry development, no other European country shows the same effectiveness as Germany. Of course, a strong industry capitalises on a strong home market. In this respect, Germany has the perfect conditions, also since it is a large country. In addition, the German PV industry has had a head start 86 PV Policy Group European Best Practice Report

in comparison to all other countries because of the early and massive support for the PV market as well as PV research & development. The German PV industry was given the chance to make important steps towards mass production and more professionalism. These efforts now result in a reduction of production costs and make the German PV industry highly competitive. Japan also had favourable preconditions that led to the development of a very strong PV industry, especially in the area of cell and module production. It is worth mentioning that several Japanese manufacturers are opening assembly lines in Europe however, not in Germany although they mainly produce for the German market. In 004, the PV cluster was established in Slovenia, joining together three faculties, four energy companies and twelve companies from industry and engineering. The main objective of the cluster is the support of a rapid development of the PV market and the collaboration between industry and research institutions. The main achievement of this collaboration is spread of information, start-up of deployment of the PV market and the ongoing investment of the company Blues, for a production line of PV modules with the annual capacity of 15 MW. Following the establishment of the European Technology Platform for Photovoltaics in 005 the Ministry for Education and Research decided to support a similar structure also in Slovenia. In late 005 the PV cluster was transformed in the PV platform with the aim to spread important information through the web-site and other means and support domestic and international collaboration of researchers, developers and industry.

3.3 National PV price development PV price development is a crucial topic. Instead of illustrating the National PV price trend, a European PV price trend is presented in this chapter. Performance measurement Capturing an overall national price level for PV modules or systems for each country is a complex undertaking. Prices differ considerably from project to project, as well as from supplier to supplier. In addition, the procurement market for PV modules and components is international, so that price differences for single countries are soon levelled out. Even if industry associations or the IEA-PVPS publish such average price data, it would be misleading to compare these data 1:1 in a benchmark analysis between countries. Nevertheless, it is important to consider the effects of national policy frameworks on price levels, though in a broader manner than with previous assessment criteria. In Europe, the prices for PV systems (up to 10 kW gridconnected) have been halved since 1991 and the same is valid for crystalline PV modules. The European PV sector is facing a global mechanism following international rules. We choose the most competitive market with a large number of market players for presenting cost trends. The price development is driven by a high demand and on the other hand since 004 by a shortage of silicon which has driven a price increase of more than 0 %.

The figure below illustrates the value chain of a PV application/system. Silicon material has a high share for producing the Ingots > Wafers > Cells > PV modules.

Solar Silicon

Ingots

Wafer

Cells

Modules

PV Systems

Figure C2-3: Value chain in PV system The most relevant component of a PV module is the feedstock material silicon, which has a high cost share in a PV module. Likewise, PV modules have a cost share of approx. 70 % of a PV system (see Figure below). Components for PV Systems
15%

7%
8%

Semiconductor materials and cell, laminate and module production BOS DC/AC BOS others 70% Installation

Figure C2-4: Cost share in a PV System (source: Dr. Winfried Hoffmann, RWE Schott Solar, 07/05)

Since 00, the average price for silicon has doubled. There are different silicon materials on the market and the price has developed differently. To provide a European price trend the following weighted average price is illustrated in the Figure below. US$/kg 45 40 35 30 25 20 15 10 5 0 20 20 20 20 20 20 22 24,2 26,62 30 40 year

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Figure C2-5: Weighted Average European Silicon Prices (Source: Dr. Hubert Aulich, PV Silicon, EPIA) C. Benchmark Analysis comparison of 1 national PV policy frameworks 87

The positive effects of a successful PV policy framework on national price levels for PV systems can be demonstrated by the example of Germany. Though the price of silicon has increased over the last five years, the PV industry could compensate the price trend for PV modules and PV systems until 004 (see Figures below). This was possible through the production learning curve (economies of scale) and the price decrease of other components (e.g. inverters). In addition, installation costs have been reduced by standardized rapid installation procedures. On the other hand, manufacturers are improving the production efficiency by reducing the use of materials and optimising the production processes. All the reductions are performed by maintaining a certain quality standard. Industry analysts have stated that within the next two years the prices of systems will increase slightly through the high demand and shortage of silicon followed by a market recovery and further price reductions. Most of the European PV manufacturers produce for the largest market in Europe, which is Germany. Therefore, the use of the German price trends for a European price development is adequate. The whole European PV sector (from equipment suppliers to installers) is committed to a 5 % reduction per year. Euro per Wp 7 6 5 4 3 2 1 6 0 5,9 5,4 4,9 4,5 4,1 3,7 3,6 3,6 3,5 3 2,8 3 year

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Figure C2-6: Weighted European Price Development for PV Modules (Source: EPIA, IEA)

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Euro per kW 12000 10000 8000 6000 4000 2000


10750 10250 9900 9250 8400 7700 7050 6550 6200 6600 6400 5600 5100 5300

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

year

Figure C2-7: Weighted European Price Development for Grid-connected PV systems (Source: EPIA, IEA) Figure C-8 shows the comparison of PV module prices in Japan, USA and Europe. Japan Europa USA

Euro per W 8 7 6 5 4 3 2 1 0

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

year

Figure C2-8: Price development of PV modules in Japan, USA and Europe (Source: IEA) The feed-in-tariff guaranteed by the EEG is reduced by 5 % p.a. for roof-top-installations (6,5 % for ground-based installations) to reflect cost reductions. In 00 small-scale installations with a capacity <  kWp were by a third more expensive than large-scale installations > 0 kWp. This effect is due to fixed cost elements and is predominant mainly in the installation cost block, but also relevant for specific hardware cost such as generator costs as those decrease considerably with the increase in size of a system. This decrease effect has to be considered when analysing the cost development over time. Only costs for systems of similar sizes should be compared. This leads to a nominal cost reduction of approx. 4 % in the lifetime of the programme. This number corresponds to an annual decrease of 6,6 % Conclusions Overall, the following key conclusions can be drawn with regard to the requirements for achieving effective price reductions in a national context as noticed in Germany: To achieve cost reduction via the learning curve ambitious targets of market deployment have to be set C. Benchmark Analysis comparison of 1 national PV policy frameworks 89 If there are not enough competitive retailers/installers on the market, no price reduction can be achieved as no competition exist Large number of market players required to cover all regional areas; leads to increased competition. High subsidies per kWp counteract cost reduction as the market works towards the limit of subsidies available The entire value chain of the PV sector must be involved, important: also suppliers, to achieve a price reduction, e.g. 5 % in Germany, but it has to be an adequate reduction, if it is too low it leads to less demand and if it is too high the market will not be able to handle the demand. The reduction rate is crucial!!

3.4 National PV image and acceptance In the following chapter, the overall national PV policy frameworks are assessed, which covers the image and acceptance of PV with various stakeholders (general public, politicians and the acceptance of relevant policy issues amongst the PV industry). Three performance criteria and indicators were defined for this assessment area: PV acceptance by the general public (measured by qualitative estimation) PV acceptance by politicians (measured by qualitative estimation) Policy acceptance by PV industry (measured by qualitative estimation) Performance measurement Performance PV accepcriterion tance by general public Performance Qualitative indicator estimation based on interviews Austria +++ France Germany Greece Italy Japan Netherlands Portugal Slovenia Spain Sweden UK ++ +++ +++ + +++ +++ + + ++ ++ ++ Nr. 1 (= Benchmark) Note: For the above Performance Measurement on qualitative estimations and several of the following assessments followed the categories between + and +++, because absolute values were not possible. This evaluation is a relative estimation and allows for a rough comparison of the situation in the countries considered. The assessment was conducted by the core group of experts based on available information about the situation in all countries. The comment n.k. means that too little information or no information at all was available. Benchmark definition In the following analysis we mainly consider the general public where to some extent also quantitative date is available. That is not the case for the acceptance of politics and the PV industry (only qualitative estimations). Again the European benchmark for a broad acceptance of PV by relevant target groups is Germany: In Germany image and acceptance of PV and of renewable energy in general has been excellent for several years. It is hardly 90 PV Policy Group European Best Practice Report PV acceptance by politics Qualitative estimation based on interviews ++ + +++ ++ ++ +++ + ++ + +++ + ++ Policy acceptance of PV industry Qualitative estimation based on interviews ++ + +++ + ++ +++ + ++ + +++ + +

affected by increasing polemics from political opponents against wind energy. The broad acceptance and wish for renewable energy supply is reflected in several publicopinion polls. The Institut fr Demoskopie in Allensbach asked in autumn 004: With which resources shall energy supply primarily be assured in 0 to 30 years 71 % of participants mentioned solar energy, followed by wind energy (57 %) and hydro power (44 %). 35 % believe in natural gas, 1 % want nuclear power, 14 % petroleum and only 6 % coal. Forsa an institute for social research and statistical analyses interviewed 1.000 individuals in April 005. They found that 5 % of the interviewees would like to maintain the level of support for Renewable Energy and 6 % demanded stronger support for Renewables. Only 4 % would reduce or abolish support schemes. For the vast majority subsidies for Renewable Energies are not a controversial issue. Differences between benchmark and other countries The good image/acceptance of PV and the strong politicallegal support for PV are positively influence each another in Germany. Photovoltaics were introduced by the 1.000 Roofs PV programme a long time ago. This demonstration programme raised the awareness of the general public concerning PV. Through the introduction of the feed-in law PV systems became economically profitable, which definitely enhanced the image and acceptance amongst the population. The broad acceptance also encouraged the government to further support PV. In general, the centre-left (red-green) government provided a very good climate for PV and other renewables in the last years with the planned phasing out of nuclear energy and the support for alternative energies. The nuclear industry attempted to solve its acceptance problem by mentioning nuclear energy in the same breath with solar, wind and hydropower. However, this attempt did not result in larger acceptance of nuclear power, but rather led to the mainstream acceptance of renewables as viable energy sources. Important to mention is also that the motivation of the German public for PV is not merely financial but also has an ecological background. In many other European countries PV also has a positive image. Despite this fact, that tendency is not reflected in actual PV market growth. The main reasons are either missing/insufficient support mechanisms or the fact that people are unaware of such incentives. In addition, many people have the prejudice that PV is too expensive. A positive image does not necessarily mean that people are willing to invest in PV. Awareness campaigns may be a good instrument for promoting PV support schemes and feed-in tariffs, in order to enhance the investment climate for PV.

d. EuRoPEAn BESt PRACtICE AnAlySIS tRAnSnAtIonAl ConCluSIonS

This chapter draws the key conclusions from the analysis and comparison of 1 national policy frameworks in the previous chapters. These conclusions are relevant independently from the national context and are summarised under the headings: Overall best practices for national PV policy frameworks Key success factors (drivers) for national PV policy frameworks Key risk factors (barriers) for national PV policy frameworks

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1. Overview National PV policy frameworks An overview of the different policy instruments in the countries observed is given in the table below. One can observe that it is usually a combination of several instruments that makes a successful PV promotion package. Nevertheless, in most countries one or two instruments dominate over others. As a performance indicator the installed PV capacity in 004 is listed for every country. The table also shows that the effectiveness of policies depend on how well they are designed and embedded. The use of a particular policy type does not automatically guarantee a growing market. The following figure shows the European potential for PV market growth until 010. The estimations are based on a business as usual model and also consider the shortage of silicon within the upcoming years. High market growth is needed to achieve a significant cost reduction through economies of scale and also reduce material by increasing efficiency of solar cells, decreased thickness of silicon wafers and further technology developments in production processes. Enhanced Feed-in tariffs Direct Soft capital Loans investment subsidies X X X X X X 3040 ct/kWh 35/5 ct/kWh 37/6,5 ct/kWh 41,44/21,99 ct/kWh8) X X X
5) 6)

Tax Reliefs

Green Quota ElecSystems tricity Schemes X X X

Newly installed in 2004 (MWp/year) ,30 5,90 450,00 1,00 6,00

Austria France Germany Greece Italy


6)

47/60 ct/kWh1) 14,17/8,34 ct/kWh3) 43,4254,53 ct/kWh

X)

X X X X

Japan Netherlands Portugal Slovenia Spain Sweden UK


1)

4)

X X X X X X X X

7,00 3,0 0,57 0,01 10,00

X X X

X X

0,9 ,6

Cap of 15 MW has been reached and the PV market practically stalled by mid 005 ) In some provinces 3) France Mainland and Overseas 4) interest reduced mortgages for homes with PV 5) Only for public buildings 6) 4,5 % interest rate via DBU 7) Feed-in tariff in place since August 005 Installations not before 006 8) Feed-in tariff in place since April 004

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Cumulative installed PV power in Europe [MWP] 9000 8000


7147

Europe

Europe (BPR)
8066

7000 6000
4882 5651 6331

5000 4000 3000 2000


1105 1163 1733 618 658 2525 2626 3388 3661 4416

1000 0

2003

2004

1656

2005

2006

2007

2008

2009

2010

Figure D1-1. Estimation of the cumulative installed PV power in Europe until 2010. (Source: EPIA, IEA) To achieve the goals the key success and risk factors are compiled in the following chapter.

2. Key success factors for national PV policy frameworks Overall PV strategy and framework Ambitious, long-term targets for PV market development (e.g. until 010, 00) provide orientation for the PV industry and investors; A consistent PV strategy based on ambitious targets, a clearly defined implementation programme and a well-conceived mix of instruments as a foundation for success; at the same time, politicians have to ensure the commitment of relevant authorities on federal, regional and local levels that are key actors in putting the strategy and programmes into practice; A feed-in-tariff system or other effective instruments combining attractiveness of conditions with longterm investor security leads to the creation of strong demand and sustainable market growth; A feed-in tariff intrinsically takes care of quality control of PV systems; Tax incentives with long-term perspectives have the charme of being far less bureaucratic and timeconsuming than direct subsidy programmes an advantage especially acknowledged by professional investors and promoters; A net metering system is easy to implement and may be effective in the segment for small-scale systems (< 0 kWp) installed on the rooftops; Solar building obligations are a powerful regulatory instrument as long as rooftop or faade-integrated PV systems are acknowledged to meet the respective energy standards; Demonstration by public authorities (e.g. municipalities) can be very effective shining examples for private investors; these projects should be aesthetical and visible to the public; A strong PV RTD programme supports further development and cost reduction of PV systems and thus indirectly also the PV market; Option to participate in the liberalised energy market can foster the integration with the conventional energy market; An attractive PV promotion scheme can have a very positive PR effect to wake up the demand side in an early stage of market development (e.g. in Japan); A reasonable combination of different promotions schemes is highly effective especially in the early stages of PV market growth; for example, limited subsidies by regional / provincial / local authorities are appropriate instruments to complement a national feed-in-tariff system over a limited period of time (e.g. 5 years).

PV legislation (feed-in laws) The tariff system must be attractive enough to enable profitability with a reasonable payback time; Essential success factor for an effective fixed feed-in tariff is the exact, country-specific calculation of the threshold for the profitable operation of a plant (breakeven point) + 56 % risk surplus. Market demand does not respond proportionally to the amount of the feed-in-tariff (as politicians tend to think), but very sensitively to the slightest investment barriers. The market mechanism may be visualised by the following chart referring to the German context:

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The tariffs should be differentiated according to type of installations and natural conditions (specific solar yields); Long-term security for investors is absolutely key to win the confidence of the industry; the tariffs must be legally guaranteed over a long-term period, e.g. a period between 155 years; There should not be too many limitations with regard to the type/number of installations admitted to the tariff system; for instance, there should be no total installation cap (or alternatively a sufficiently ambitious one); no maximum capacity of installations; no exclusion of free-standing or building integrated installations etc.; A decrease mechanism (e.g.  % p.a.) is an appropriate measure to reflect efficiency gains achieved by the PV PV Installation Capacity [MWp]

industry in the process of dynamic market development; it also acts as an insurance that these gains are actually passed on to the investors; an annual adaptation of the feed-in-tariffs to the inflation rate is also well-conceived by investors; Stringent, yet efficient administrative procedures (authorisation, grid connection, etc.), avoiding uncertainties and long lead times for promoters/investors are compulsory to complement a feed-in-tariff system in practice; The feed-in-tariff system should be made transparent by monitoring the solar electricity fed into the grid. Extra costs for renewable energies should appear on the electricity bill of consumers.

300

100

10 40 ct 45 ct 50 ct 55 ct Feed-in-tariff EEG

Figure D2-1: PV market mechanism in Germany PV support schemes To be an effective incentive for investors, a minimum of investment cost must be covered by grants (depends on the other incentives within the PV (or RE) support package; Soft loan schemes need the support of a sufficient number of commercial banks supporting the financing and application process; interest rates must be below commercial levels; Similarly, the combination of different instruments (e.g. grant, soft loan and/or liability exemption by the state) is usually highly motivating for investors that are generally considered risk-averse; Subsidy schemes remain the most effective instrument for the promotion of the off-grid market; this segment should not be neglected following the introduction of a feed-in-law that is specifically designed to promote the grid-connected market; Secured public budgets underlying the support scheme over its entire lifetime are crucial to avoid stop & go effects; this is also an important argument in favour of soft loan schemes;

The requirements to obtain subsidies should be linked to quality standards for installations and installers (accreditation, minimum warranty on the system), as well as effective monitoring / control mechanisms. PV monitoring systems An advanced approach to market monitoring and policy performance measurement, applying a consistent methodology and professional tools to collect, evaluate and disseminate data, is a pre-requisite for effective policy control and acceptance by target actors as well as to secure long term political support; A national plant register delivers the most accurate basis for monitoring the grid-connected PV market; the rest of the market (e.g. off-grid segment) may be covered by evaluation of support schemes and surveys.

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3. Key barriers / risk factors for national PV policy frameworks Overall PV strategy and framework In most EU countries PV is not top on the agenda; there is a lack of long-term political vision and strategy; political initiatives (e.g. a support scheme) are often not backed by strong political commitment, resulting in lack of stability over the medium and long term; following government changes, policies are questioned and even aborted, which may destroy a growing market from one day to the next; Permanent exposure to complex political decisionmaking and/or consultation processes (e.g. annual review of systems) reduces investment security; instead a long-term strategy should be implemented under involvement of a large number of political parties and key actors; Very often the policy framework and its instruments are inconsistent. This results in confusing bureaucratic regulations, time-consuming licensing processes, and difficult access to the grid, which finally leads to deterring potential investors; Often authorities in charge of permits are unprepared to handle procedures efficiently, so the lead time for promoters is very high; promoters often have to deal with more than 3 authorities independently which multiplies the administrative hassle; Political decision-makers are frequently overwhelmed by sudden market growth, then forced to retreat if limits (e.g. in terms of budgets) are reached; Decentralised processes managed by regional or local bodies are generally more efficient, but less predictable and homogeneous than centralised processes managed or controlled by a national authority (e.g. electricity sector regulator, transmission grid operator or energy agency); often single regions put common regulations into practice in a very different way; this leads to inefficiencies and confusion among market actors; Tax credit schemes generally offer no long-term security for investors; For small investors the delays in actually realising the financial incentives after the annual income tax declaration are disadvantageous; Competitive mechanisms (e.g. call-for-tenders) for larger-scale installations (> 50 kWp) usually favour utilities that are able to offer lower tariffs than commercially driven private investors; they often lead to high concentration of market shares; Non-technology specific quota systems have not proved effective for promoting PV they rather favour more developed RES technologies (e.g. wind), largerscale plants and are less suited for small investors. PV legislation (feed-in laws) A cap of maximum capacity (in MWp) is always an artificial market barrier that may block a promising early growth stage of market development; even if a cap may be lifted by political decision this process creates unnecessary stop & go effects and puts off investments. The same can happen when a review of the promotion system comes closer. To avoid stop

& go effects, changes should be announced well in advance; Very often feed-in-tariffs are simply too low / unattractive to ensure a reasonable payback time for investors; Non-differentiation of tariffs between different RES technologies often leads to unfavourable conditions for PV; large-scale projects (megawatt class) are frequently excluded by feed-in-tariff systems, which limits market growth; The lack of any differentiation of feed-in-tariffs for areas with different solar yields will lead to an unequal distribution of PV. Tariffs in regions with high irradiation levels do not need to be as high as in less favorable regions. That way efficiency can be increased and windfall profits reduced. Usually there is no specific feed-in-tariff for building-integrated PV installations (BIPV). Enhanced tariffs should be guaranteed for a period of at least 10 years; High administrative (or financial) requirements to capitalise on a feed-in-tariff system (e.g. complicated registration, advance payment of a deposit) may render participation economically unfeasible or too risky especially for small investors; these are market barriers favouring large actors (e.g. utilities); Investors (or promoters) should not have to deal with too many authorities and different regulatory contexts; especially local grid operators should be forced to submit to national regulatory standards for connecting PV plants to the grid;

PV support schemes A badly managed subsidy programme can actually paralyse an entire market, if all investors are completely driven by obtaining subsidies, but this demand cannot be met due to limited budgets or administrative barriers; Without an effective awareness campaign, subsidy schemes run the risk of being ignored by the target group; Subsidy schemes usually depending on governmental budgets are often of short-term nature, failing to create a sustainable market development and win investor confidence. Since public budgets are always tight and exposed to regular tensions, unnecessary delays and stop & go effects can arise; Due to the generally limited budgets the subsidy programmes cannot satisfy the existing demand; so only a small percentage of applications may be accepted overall; refused projects are discarded by investors more often than not; Complex administrative procedures both for general authorisation and subsidy applications block the effectiveness of subsidy programmes; a main reason for this common effect are technically unprepared authorities (or banks, agencies) on the regional or local level; Mostly programmes do not require effective monitoring systems for performance measurement of the plants; it carries the risk that part of the PV plants fall short of intended or claimed performance standards;

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Few application deadlines (e.g. only twice a year) often lead to a high amount of applications virtually blocking the entire programme for further applicants (first come, first serve); In some cases the exclusion of certain groups of applicants (e.g. private individuals), minimum thresholds for investments (e.g. 5.000) or insufficient levels of subsidies exclude small investors and avoid the development of a mass market (e.g. roof-top systems on private houses). PV monitoring systems Insufficient PV market and policy monitoring makes effective policy control impossible; Data bases used by different institutions are neither complete nor consistent (e.g. peak power vs. rated output of converter); the same applies to monitoring targets/performance indicators; Politicians are often afraid of losing control of developments if no budget limits or review dates are fixed; if there are no effective control mechanisms in place, it is hard to convince them of a long-term commitment; Sound market monitoring often stops as soon as national support schemes have expired or are reduced; Especially the off-grid market is generally not monitored in a professional way; Monitoring approaches usually do not consider import/ export movements across national frontiers, so that statistical data are inaccurate.

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PV Policy Group European Best Practice Report

E. outlook

This European Best Practice Report on national support schemes, PV regulatory frameworks and monitoring systems delivers a comprehensive and coherent basis for further steps within the PV Policy Group project: The Core Groups assessment, exchange and action planning processes. The European Core Group itself is split into two types of sub-groups: On the national level the respective energy agencies as National Contact Points moderate intense consultation processes with key actors in the PV sector whose outcomes feed back to the European Core Group level On the thematic level, transnational Working Groups collaborate to draw conclusions from the Best Practice study and prepare conclusions, recommendations and policy proposals of the European Core Group with regard to effective political action in the aforementioned fields During the first meeting of the thematic working groups on 7 October 005 in Catania, rapporteurs for the three groups were appointed. They are responsible for preparing the documents of the working groups and report to the leader of work package 5 (CRES). Thematic working group on regulatory frameworks: Franco Nemac (ApE), assisted by Pedro Paes (EDP/ GAB), Jochen Fischer (Ganer, Groth, Siederer & Coll) and Marc Jedliczka (Hespul) Thematic working group on support schemes: Job Swens (SenterNovem), assisted by Fabrice Juquois (ADEME) and Carlos Montoya (IDAE) Thematic working group on monitoring systems: Fabrice Juquois (ADEME) assisted by Andreas Veigl (AEA), Ingrid Weiss (WIP) and Christoph Urbschat (eclareon) The thematic working groups of regulatory frameworks and support schemes will work in close cooperation to include cross cutting issues of their outcomes. Further assessments of economic costs will be included in the discussions and output. The following topics will be further elaborated: Economic costs of support schemes and feed-in tariffs, including peak power demand and costs, macroeconomic issues How to support other applications, such as off-grid applications, BIPV and other interest groups (e.g schools) if only the feed-in tariff system is in place Transparent monitoring on National and European level for policy and market The outcomes from discussions on the European, National and thematic level are finally merged to a joint Action Plan and Position Paper directed to decisionmakers on both EU and national levels. Project results will be disseminated across Europe.

E. Outlook

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GloSSARy

Charge controller: Charge controllers are typically used in off-grid photovoltaic power systems. The primary function of a charge controller (or regulator) is to maintain the battery at the highest possible State Of Charge (SOC) and provide the user with the required quantity of electricity, while protecting the battery from deep discharge (by the loads) or extended overcharge (by the PV array). Additional features such as battery temperature or wire compensation, meters and alarms can enhance the ability of the charge controller to meet the load demand and extend battery lifetime. Electric Energy: The amount of work accomplished by electrical power, usually measured in kilowatt-hours (kWh). One kWh is 1.000 Watts and is equal to 3.413 Btu. Feed-in Law: A legal obligation on utilities to purchase electricity from renewable sources. Feed-in Tariff: The price per unit of electricity that a utility or supplier has to pay for renewable electricity from private generators. The government regulates the tariff rate. Grid-Connected PV system: A PV system in which the PV array acts as a central generating plant, supplying power to the grid. Ingot: A mass of metal or semi-conducting material, heated past the melting point, and then recast, typically into the form of a bar or block. Inverter: Device that converts direct current (d.c.) into alternating current (a.c.) either for stand-alone systems or to supply power to an electricity grid. Off-grid PV System: System installed in households and villages that are not connected to the utility grid. Usually, a means to store electricity is used (most commonly lead-acid battery). Also known as standalone photovoltaic power system. On-grid PV System: Systems connected to the utility grid. Payback Time: The length of time it takes for the savings received to cover the cost of implementing the technology. Photovoltaic (PV) Module or Panel: A solar photovoltaic product that generally consists of groups of PV cells electrically connected together to produce a specified power output under standard test conditions, mounted on a substrate, sealed with an encapsulate, and covered by protective glazing. Available as mounted on an aluminium frame. A junction box, on the back or underside of the module is used to allow for connecting the module circuit conductors to external conductors. Photovoltaic (PV) Peak Power (Wp): PV modules are rated by their total power output. The peak power is the amount of power output a PV module produces at standard test conditions (STC) of a module operating temperature of 5 degrees Celsius in full sunshine (irradiance) of 1.000 watts per square meter. This is a clear summer day with sun approximately overhead and the cells faced directly towards the sun.

Photovoltaic (PV) System: A complete set of components for converting sunlight into electricity by the photovoltaic process, including the array and balance of system components. Silicon (Si): A chemical element, atomic number 14, semimetallic in nature, dark grey, an excellent semiconductor material. A common constituent of sand and quartz (as the oxide). Crystallizes in face-centred cubic lattice like a diamond. The most common semiconductor material used in making photovoltaic devices. Solar Cell: A basic photovoltaic device, which generates electricity when exposed to a light source such as solar radiation. All photovoltaic cells produce direct current (d.c.). Solar Wafer: A thin sheet of semiconductor material made by mechanically sawing it from a single-crystal or multi-crystal ingot or casting.

Glossary

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