PWC Final Report

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Auftrag: 0.0681522.001

eport

Dober Partners SPRL

Review of Prognos' Study published in the course of the EU anti-

dumping and anti-subsidy investigations on imports of photovoltaicproducts from China


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Content PageA. Summary ............................................................................................................................... 7B. Background ......................................................................................................................... 10C. Implausibility of Prognos' results ......................................................................................... 12

I. Higher job losses than total number of jobs ................................................................. 12II. The unexplained increase of the number of allegedly lost jobs .................................... 13III. The US experience: Anti-dumping tariffs and job growth ............................................ 14

1.

The US proceedings ........................................................................................... 142. The forecasted effects by the Brattle Group ........................................................ 153. The actual developments ................................................................................... 15

D. Major flaws with regard to methodology and content .......................................................... 17I. Demand estimation .................................................................................................... 17II. Inadequate assessment of future development for technology markets along the

value chain ................................................................................................................. 20

1. Future development of market for machinery of production equipment ............. 202. Future development of polysilcon market .......................................................... 21

III. Professional standards for economic evidence ............................................................ 221. Reporting ........................................................................................................... 232. Robustness ......................................................................................................... 243. Data sources ...................................................................................................... 24

E. Relevant aspects for a holistic assessment of the impact of tariffs on photovoltaicproducts .............................................................................................................................. 25

F. Literature ............................................................................................................................ 28Annex .......................................................................................................................................... 31


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Tables Page

Table 1 - Estimated net job losses in Germany according to the Prognos study 12Table 2 - Estimated installations and employment according to Prognos scenarios 13Table 3 - Capacities in the polysilicon market 21Table 4 - Capacity and actual production of the European PV manufacturers in 2012 26Table 5 - Estimated job losses in Germany in 2013 for the baseline scenario (without tariffs) 32


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List of AbbreviationsAD anti-dumping

AFASE Alliance for Affordable Solar Energy, Brussels

BMU Bundesministerium fr Umwelt, Naturschutz und Reaktorsi-

cherheit

(German Federal Ministry for the Environment, Nature Conser-

vation and Nuclear Safety)

BMU study BMU (2013)

BOS balance of system

Brattle Group study The Brattle Group (2012)

CASE Coalition for Affordable Solar Energy

CSPV crystalline silicon photovoltaic

CVD countervailing duty

DG Competition Directorate General for Competition, European Commission

DG Trade Directorate General for Trade, European Commission

EC European Commission

EEG 2012 Renewable Energy Sources Act 2012

(Gesetz zur Neuregelung des Rechtsrahmens fr die Frderung

der Stromerzeugung aus erneuerbaren Energien)

EPIA European Photovoltaic Industry Association, Brussels

EU European Union

FiT feed-in tariffs

GTM Greentech Media, Boston

GW gigawatt

IRR internal rate of return

LCOE levelized cost of energy


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MW megawatt

Prognos Prognos AG, Basel

Prognos Study Prognos (2013)

PV photovoltaic

ROI return on investment

SEIA Solar Energy Industries Association, Washington D.C.

SP solar panel

TFEU Treaty on the Functioning of the European Union

VDMA Verbund Deutscher Maschinen- und Anlagenbau e.V.

(German Engineering Federation), Frankfurt am Main

Wacker Chemie Wacker Chemie AG, Munich


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A. Summary1. On 6th September 2012, the European Commission initiated an investigation of imports from China

to determine whether prices of Chinese manufactured crystalline photovoltaic wafers, cells and

modules are being sold at dumped prices. On 8th November 2012, the EC initiated a parallel anti-

subsidy proceeding. Before deciding on the imposition of any measures, the European Union (EU)

will make a number of findings, including an assessment as to whether the imposition of measures

would be overall more costly to the EU economy than the benefit provided to the EU by these

measures.

2. In the course of the proceedings Prognos prepared a study which aimed to quantify the effects ofpotential measures. The Prognos study was presented to the European Commission on 18th Febru-

ary 2013 at a hearing in Brussels. PwC was engaged on 18th April 2013 by Dober Partners, a con-

sultant to EU Pro Sun, to report on the EU solar photovoltaic market and in particular on the claims

made in the Prognos study with regard to the consequences of tariffs as a result of the current in-

vestigation.

3. In the beginning of our report, we highlight several implausibilities. For instance, Prognos reportsthat the imposition of tariffs would result in significant negative employment effects. The magni-

tude of these effects, however, seems highly questionable, for example when compared with fig-

ures in a recent study commissioned by the German Federal Ministry for the Environment Nature

Conservation and Nuclear Safety, which calculates the number of direct and indirect jobs related to

the photovoltaic sector. In the Prognos study, the job losses in the scenarios of 35% and 60% actu-

ally exceed the total number of jobs, without tariffs, that we derived from the study commissioned

by the Ministry. This sheds serious doubt on the plausibility and reliability of the results of the

Prognos study.

4. Furthermore, it is surprising that Prognos announced considerably fewer job losses in November2012, when the first results of the Prognos study were presented to the public. It was also an-

nounced that further details on the results of the study would be published a couple of days later.

Instead, the study was only made available to the public in February 2013. By then, the number of

estimated job losses was suddenly several times higher than in November 2012.

5. In order to understand the possible effects of anti-dumping measures and the plausibility of antici-pated job losses, we discuss the recent experiences in the US. The US imposed tariffs on photovolta-

ic products in 2012. As in Europe, a study commissioned on the possible effects of tariffs forecasted

an alarming crash of demand and job losses in the US. However, after the introduction of tariffs

demand increased and more jobs were created. We consider this a useful example to illustrate that


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there are good reasons not to believe alarming studies which are based on vague data and ques-

tionable assumptions.

6.After analysing several implausible facts, we then focus on major flaws of the Prognos' report withregard to methodology and content. A central element of the results of the Prognos study is the

expected drop in demand for photovoltaic systems in Europe, which leads to the calculated job

losses. However, it remains completely unclear how this crucial element of the analysis was de-

rived, what methodology was applied and what underlying assumptions were made. In addition to

an unclear derivation of the elasticity of demand, Prognos overestimates the demand effects be-

cause it performed a purely static analysis without taking into account any offsetting factors - like

for example price reductions of complementary products, the endogenous character of feed-in tar-

iffs or the reaction of Chinese competitors - which may reduce the impact on demand. Finally, we

reveal that the study even seems to contain contradictory evidence.

7. The Prognos study states that European companies have a strong market position along the valuechain for photovoltaic systems in addition to the production of wafers, cells and modules. Accord-

ing to Prognos, employment and value added would also be affected by a decrease in exports of

silicon and machinery for production equipment from EU Member States to China as a conse-

quence of lower demand in Europe. The government of the People's Republic of China, in its 12 th

Five-Year Plan for the Solar Photovoltaic Industry, which covers the period from 2011 to 2015,

expressed its main tasks as promoting domestically manufactured equipment and integration tech-

nology and also enlarging production of polysilicon in China. Therefore, the assumption that ex-

port volumes of production inputs from Europe to China will remain constant in a non-tariff sce-

nario is highly questionable. If exports to China drop anyway, this reduces the negative impact of

the imposition of tariffs on employment significantly.

8. In order to assess the intrinsic quality and reliability of the Prognos study as evidence in the ongo-ing EU anti-dumping and anti-subsidy proceedings, we evaluate it according to the guidelines of

the European Commission for the submission of economic evidence in competition proceedings.

After a thorough investigation of the study, we conclude that the Prognos study (i) has not been

generated and presented in a way that meets adequate technical requirements prevalent in the

profession and (ii) is not consistent with other pieces of quantitative and qualitative evidence.

Therefore, this study should be dismissed and not taken into consideration by the European Com-

mission, European Courts or Member States.

9.All in all, there are many factors to consider when estimating demand and employment effects oftariffs in the solar industry, and the Prognos study does not provide a transparent and objective

evaluation of those factors. A recovery of the European photovoltaic manufacturers combined with

cluster effects along the photovoltaic value chain and other related sectors, as well as medium- and

long-term effects on innovation, have the potential to generate a substantial amount of European


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value added and employment, and depend to a large extent on the introduction of tariffs. We are

optimistic that these beneficial effects of tariffs more than outweigh limited negative effects on

demand, i.e. that the introduction of tariffs has a net positive effect on employment in Europe.


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B. Background10. On 6th September 2012, the European Commission (EC) initiated an investigation of imports from

China to determine whether prices of Chinese manufactured crystalline photovoltaic (PV) wafers,

cells and modules are being sold at dumped prices. On 8th November 2012, the EC initiated a paral-

lel anti-subsidy proceeding.

11. The proceedings were initiated when a complaint was filed by EU ProSun, an initiative represent-ing more than 20 European companies producing solar panels and their key components, which

calls for anti-dumping and/or countervailing duties1 to be imposed on Chinese imports in order to

prevent continued injury to European producers.

12. The Commission has up to nine months (i.e. June 2013 for the anti-dumping proceeding and Au-gust 2013 for the anti-subsidy proceeding) to issue provisional findings. The decision about defini-

tive measures in both proceedings is due before 5th December 2013.

13. Before deciding on the imposition of any measures, the European Union (EU) will make a numberof findings, including an assessment as to whether the imposition of measures would be overall

more costly to the EU economy than the benefit provided to the EU by these measures.

14. In the course of the proceedings the Alliance for Affordable Solar Energy, Brussels, (AFASE)launched a study conducted by Prognos AG, Basel, (Prognos) which aimed to quantify the effects of

potential tariffs (hereafter referred to as "the Prognos study").2 The study was presented to the Eu-

ropean Commission on 18th February 2013 at a hearing in Brussels.3

15. PwC was engaged on 18th April 2013 by Dober Partners SPRL, Brussels, a consultant to EU Pro Sun,to report on the EU solar PV market and in particular on the claims made in the Prognos study with

regard to the consequences of tariffs as a result of the current investigation. We performed our

work between 18th April 2013 and 4th May 2013. This report is subject to the General Engagement

Terms for German Public Auditors and Public Audit Firms as of 1st January 2002 also with respect

to third parties.

16. The report is structured as follows: The beginning of our report highlights some implausibilities ofthe Prognos' study: first of all, we examine the number of job losses and how Prognos derived its

results in this respect. This concerns on the one hand the magnitude of alleged job losses and on

1 For the sake of simplicity, we will refer to anti-dumping and/or countervailing duties on imports of Chinese crystalline

photovoltaic wafers, cells and modules in the following simply as "tariffs".

2 Prognos (2013).

3 Prognos Press Release (2013).


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the other hand the way in which Prognos' results changed over time. We then look at experiences

in the US and at the economic consequences of the introduction of tariffs in 2012. In a next step,

we focus on the major flaws of the Prognos report with regard to methodology and content. We

analyse how the impact of tariffs on demand was estimated and reveal an inadequate assessment

of future development for technology markets along the value chain. We furthermore criticise the

professional standards for economic evidence applied by Prognos. Finally, we give some qualitative

observations as to the development of future photovoltaic markets with and without tariffs.


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C. Implausibility of Prognos' resultsI. Higher job losses than total number of jobs

17. Prognos reports significant negative employment effects in the event of tariffs are imposed on EUimports of Chinese PV products. E.g. for Germany it quantifies negative net employment (direct &

indirect) effects between 45,500 and 81,100 jobs in 2013 up to employment losses of 67,400 to

84,700 jobs in 2015. Gross employment effects even reach up to 98,800 lost jobs.4 The estimated

net effects are displayed in Table 1.

Table 1 - Estimated net job losses in Germany according to the Prognos study2013 2014 2015

Prognos Scenario 20% tariff -45,500 -51,300 -67,400



Source: Prognos (2013), pp. 65-66. Rounding differences may occur.

18. The magnitude of the effects seems to be highly questionable, especially when compared with arecent study (hereinafter referred to as BMU study) commissioned by the German Federal Ministry

for the Environment, Nature Conservation and Nuclear Safety (Bundesministerium fr Umwelt,

Naturschutz und Reaktorsicherheit, or BMU).5 These calculations estimate that the total of direct

and indirect jobs related to the PV sector was 87,800 in 2012.6 In the following we will perform a

simple calculation based on existing employment in the solar industry and Prognos' estimates of

job losses which clearly demonstrates that Prognos' estimates are untenable.

19. Prognos defines the policy-driven scenario proposed by European Photovoltaic Industry Associa-tion, Brussels, (EPIA) as its baseline scenario to calculate the impact of duties foreseeing installa-

tions of 5 gigawatts (GW) for 2013 through 2015 in Germany.7 However, Prognos reports only job

losses; it does not report on the employment level in the baseline scenario, i.e. how many jobs exist

in 2013 -2015 assuming installations amount to 5 GW per year without the imposition of duties

(policy-driven EPIA scenario). It neither reports on job losses for the baseline scenario, i.e. reduced

employment due to the decreased level of installations in 2013 - 2015 compared to 2012. We de-

rive an estimated baseline employment of 65,200 jobs for 2013 - 2015 based on available public

4Prognos (2013), p. 61.

5BMU (2013)

6BMU (2013), p.7.7 Prognos (2013), pp. 19, 53.


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data.8 From this baseline employment we subtract the job losses that were estimated by Prognos in

the different scenarios. The results are displayed in Table 2.

Table 2 - Estimated installations and employment according to Prognos scenarios2012 2013 2014 2015

GW Jobs GW Jobs GW Jobs GW Jobs

Baseline Scenario without tariffs 7.6 87,800 5.0 65,200 5.0 65,200 5.0 65,200

Prognos Senario 20% tariff 7.6 87,800 3.6 19,700 3.6 13,900 3.1 -2,201

Prognos Senario 35% tariff 7.6 87,800 2.5 -15,101 2.7 -11,901 2.4 -17,001

Prognos Senario 60% tariff 7.6 87,800 2.3 -15,901 2.5 -13,001 2.2 -19,501

Source: PwC based on data from BNetzA (2013), Prognos (2013), BMU (2013). Rounding differences may occur.

20. It is straightforward to see that Prognos' estimations are inconsistent with the data from the BMUstudy. The job losses in the scenarios with tariffs of 35% and 60% would lead to an overall negative

number of direct and indirect jobs although more than 2 GW would be installed per year.

21. One could argue that the figure for total employment we used for 2012 (87,800) was too low andthat Prognos based its estimation on different data. However, this data stems from an official study

commissioned by the BMU. We consider the data reliable due to the fact that the Ministry has no

interest in underestimating the employment effect of the solar industry. Surprisingly, one of the co-

authors of the study for the BMU also co-authored the Prognos study, so Prognos was certainly

aware of the BMU study and the overall size of employment.9 But even though the studies were co-

authored by the same person, the Prognos study makes no reference to the official BMU study and

its results cannot be reconciled with the official data.10

22.Another example of implausible results are Prognos' estimated job losses for UK. Prognos predictsnet labor force reductions of up to 38,600 in 2015. However, according to published data there are

only 10.000 people directly or indirectly employed in the PV industry in UK in 2011.

23. The above-mentioned inconsistencies seriously affect the plausibility and reliability of the Prognosconclusions.

II. The unexplained increase of the number of allegedly lost jobs24. The first results of the Prognos study were presented as early as November 2012.11 On 23rd Novem-

ber 2012 an AFASE spokeswoman reportedly said that further details on the results of the Prognos

8The figure is based on existing direct and indirect jobs reported by BMU (2013) and adjusted for the reduction of instal-

lations (drop from 7.6 GW in 2012 to 5.0 GW in 2013). See the Annex for a detailed explanation how this figure was

calculated.

9 Mr. Frank Peter is co-author of BMU (2013) and Prognos (2013).

10ObservER (2012) p. 126.


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study would be released in the next couple of days.12 In the same document, it is said that AFASE

warned that up to 30,000 jobs could be lost due to the imposition of anti-dumping and/or counter-

vailing measures. Additionally,photovoltaik, a German B2B magazine, reported on 21st November

2012 that, according to the Prognos study, 30,000 employment opportunities in Europe could be

lost. In addition, one of the co-authors of the Prognos study, Oliver Ehrentraut, is cited as saying

that in Germany alone 8,000 jobs could be lost by 2015.13

25. Contrary to information provided by the AFASE in November 2012, the study was only madeavailable to the public in February 2013 after having been presented at a hearing before the Euro-

pean Commission. By then, figures substantially differed from what was originally released: e.g. in

2013 alone, 115,600 jobs could be lost in the EU, 45,500 thereof in Germany.14

26. This substantial deviation from the previously announced preliminary results, given without fur-ther explanation, is a remarkable development which casts further doubt on the robustness and

reliability of Prognos' results.

III. The US experience: Anti-dumping tariffs and job growth27. The US imposed tariffs on PV products in 2012. There was also a study commissioned in the US on

the possible effects of tariffs that forecasted alarming job losses. However, after the introduction of

tariffs demand increased and more jobs were created. We are aware that there are significant dif-

ferences between the US and the European PV markets and therefore one has to be cautious re-

garding direct comparison. However, we think that this is a useful example to illustrate that there

are good reasons not to believe alarming studies which are based on vague data and questionable

assumptions.

1. The US proceedings28. In October 2011, the Coalition for American Solar Manufacturing, led by SolarWorld Industries

America, Inc., Hillsboro, filed an anti-dumping (AD) and countervailing duty (CVD) petition re-

questing that the United States imposes tariffs on imports of crystalline silicon photovoltaic cells

from the People's Republic of China. The petition included crystalline silicon photovoltaic cells,

whether or not assembled into modules, and excluded thin film PV products.

11 Photon.Info (2012).


13 Photovoltaik (2012).

14 Photovoltaik (2013a).


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29. In March 2012, the U.S. Department of Commerce announced tariffs of 3% to 5% in its CVD-investigation. On 17th May 2012, it published preliminary investigation results in the AD-matter

and calculated preliminary AD-tariffs of approximately 31%.15 In October 2012, the US Depart-

ment of Commerce introduced final AD duties ranging from 18% to 250% on solar energy cells

imported from China. The US Department of Commerce also imposed definitive anti-subsidy du-

ties for Chinese imports to the US.16

2. The forecasted effects by the Brattle Group30. Similarly to Europe's AFASE commissioning the Prognos study, the Coalition for Affordable Solar

Energy (CASE) in the U.S. commissioned the Brattle Group, Cambridge, to conduct a study esti-

mating the employment impact of the proposed trade restrictions on Chinese crystalline photovol-

taic cells and modules.17 According to the study there is an overall employment of slightly over

100,000 direct and indirect jobs in the US solar PV industry.18 The study conducted for the U.S.

predicted "substantial price increases for crystalline photovoltaic cells and modules"19 and a corre-

sponding decline in demand by residential, commercial and utility customers. Analysing scenarios

with two different tariff levels and two different elasticity levels, the study forecasted substantial

job losses of between approximately 9,000 and 33,000 jobs in 2012 and between 15,000 and

50,000 jobs in 2014.20

3. The actual developments31. The alarming forecast made by the Brattle Group which was criticised for its questionable assump-

tions and lack of data, did not become reality.21 Instead, the PV market grew beyond expectations

in 2012. Whereas the Brattle Group assumed installations of 2.5 GW without imposition of tariffs,

actual installations with tariffs in place grew to 3.3 GW.22 According to the Solar Foundation's So-

lar Job Census 2012, there were more than 119,000 solar workers in the U.S., a 13.2% increase

compared to 2011. Furthermore, 86% of the nearly 14,000 new solar employees represented new

15Akin Gump Strauss Hauer & Feld LLP (2012).

16 Federal Register (2012), p. 63791ff.

17 The Brattle Group (2012).

18The Brattle Group (2012), p. 5.

19 The Brattle Group (2012), p. ES-2.

20The Brattle Group (2012), p. 16. These job losses are to a small extent compensated by job increases, however the

overall net effect remains largely negative, e.g. over 40,000 jobs lost (net effect) in 2014 in the scenario with a 50%

tariff and high elasticity. These estimates include direct, indirect and induced jobs and are therefore based on a differ-

ent definition than the figures of employment level (only direct and indirect effects).

21 AURIGA (2012).

22 GTM Research & SEIA (2013).


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jobs, rather than existing positions that had added solar responsibilities.23 That means that in 2012

alone, more new direct jobs were created than expected by the Brattle Group through 2014.24

32. The Solar Foundation, Washington D.C., also provides that "over the next 12 months, nearly 45%of solar firms expect to add jobs, while fewer than 4% expect to cut workers, yielding a 17%

growth in employment."25 It is added that this would mean "the addition of approximately 20,000

new solar workers."26 In addition, "employers from all of the solar industry subsectors [i.e. indirect

employment opportunities] examined in this study expect significant employment growth over the

next 12 months, with nearly all of them projecting percentage job growth in the double-digits." 27

The installation forecast for the United States from GTM Research, Boston, and SEIA, Washington

D.C., foresees the continuous growth of the US solar market with respect to installations until

2016.28

33. As a result of the tariffs imposed, Chinese shipments to the US decreased significantly compared tothe situation without tariffs. In November 2012, imports of Chinese crystalline silicon solar cells

and panels fell to their lowest level in at least two years. According to the US Census Bureau's in-

formation29, total Chinese imports amounted to USD 50.5m in November 2012, down from USD

75m in October 2012, and less than a fifth of the USD 278m of imports recorded in October 2011.

One might expect that this decline would have caused the PV market in the US to shrink substan-

tially. But even though Chinese imports dropped considerably, local production and imports from

other countries were able to compensate this effect and lead to the above-mentioned increase in

demand and jobs.

34. In sum, evidence from actual market developments in the U.S. shows that the imposition of tariffsthere did not lead to a drop in demand or job losses as forecasted by the Brattle Group study. Alt-

hough the European and US markets are not identical, we see parallels between the Brattle Group

study and the Prognos study regarding the unreliable overestimation of negative employment ef-

fects which in the case of the US has already been rebutted by reality.

23 Reference dates are as of August 2011 and September 2012.

24Cf. The Brattle Group (2012), p. 17.

25 The Solar Foundation (2012), p.5.

26The Solar Foundation (2012), p.5.

27 The Solar Foundation (2012), p.5.

28 GTM Research & SEIA (2013).

29 United States Census Bureau, U.S. Department of Commerce.


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D. Major flaws with regard to methodology and contentI. Demand estimation

35.A central element of the results of the Prognos study is the expected drop in demand for PV systemsin Europe, which is expected to lead to job losses. However, it remains completely unclear how this

crucial element of the analysis was derived, what methodology was applied and what underlying

assumptions were made. The study even seems to contain contradictory evidence.

36. Demand estimation generally is a complex exercise and even more so in the market for PV systems.Demand in this market depends to a large extent on government feed-in tariffs, which are them-

selves endogenous, i.e. adopted by governments according to the development of market demand

on a planned or ad hoc basis. In the case at hand, demand for PV modules depends on the profita-

bility of an investment in PV systems which is mainly driven by electricity production costs, the

regulated feed-in-tariffs for electricity and partly by the demand for own consumption. Proper de-

mand estimation requires a thorough market analysis of the demand and supply side and an under-

standing of the interrelationship among them. Prognos' analysis clearly falls short of this, as will be

explained in the following paragraphs.

37. Both the price elasticity applied by Prognos and how it was derived remain unknown. Demand formodules, cells and wafers is derived from the investment decision of end consumers or investors

who invest and install complete PV systems. Purchase decisions made by consumers and investors

are based on the expected profitability (e.g. return on investment, or ROI) of the PV system taking

into account the investment cost and expected revenues. The elasticity to consider is therefore the

drop in investment by consumers and investors if the ROI decreases. The price of the modules,

determines a substantial part of the investment costs of a PV system, considerably influences the

ROI. Prognos does not present any sensitivity analysis on the basis of a financial model to depict

the relation between the amount of investment costs and the ROI. In addition, Prognos does not

provide any information as to what elasticity is applied. A proper assessment would have empirical-

ly established a relationship between profitability and demand.

38. There is a relationship between higher profits and higher demand, however investors do not stop toinvest completely when ROI decreases. Empirical evidence shows that even with a rather low prof-

itability (e.g. internal rate of return (IRR) of 4%) investments still take place at a reduced scale.30 In

this regard it must be taken into account that the extraordinary low interest rate level in recent

years has made investment opportunities less attractive, particularly for fixed-income securities. If

possible alternative investments generate narrower margins, investors might also accept a lower

30EuPD Research (2013), slide 85.


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profit margin for a PV investment, which has an impact on elasticity. Prognos does not disclose its

assumptions or methodology regarding the elasticity, a fact which makes the resulting demand

effects incomprehensible and arbitrary.

39. In addition to the opaque application of elasticity, Prognos overestimates the demand effects be-cause it performed a purely static analysis of the effects of possible tariffs on demand. However,

markets are dynamic, and market participants and governments adjust to changes in tariffs, costs,

prices and quantity. Several offsetting factors that reduce the impact on demand but which were

not taken into account by Prognos are explained in the following.

40. First, the price of complementary products and services would decrease. As mentioned above, theoverall demand of investors and consumers is for complete PV systems, whereof solar modules are

only one part(and diminishing).31 Demand for other products and services for PV systems like in-

verters, mounting systems, cables and installation services, is an almost perfect complement.32 An

increase in the price of solar modules would translate ceteris paribus to an increase in the price of

PV systems, leading to lower demand for PV systems and consequently also for the complementary

products and services. The suppliers of these complementary products and services would react to

the imminent reduced demand and lower their prices to compensate, at least partly. The size of this

compensatory effect depends on the price elasticity of the complementary products. Reduced de-

mand will also increase pressure for cost-saving measures for the complementary products and

services.

41. Second, the Prognos study does not properly include in its analysis the fact that feed-in tariffs (FiT)are not exogenous but are dependent on actual demand and installations and adapt dynamically.

This is explicitly foreseen in the German FiTs, for which a monthly reduction of tariffs automatical-

ly takes place. The size of the reduction explicitly depends on the amount of overall installed capac-

ity of previous periods.33 In other countries, governments also reacted in an ad hoc manner to mar-

31 In a dynamic photovoltaic market the distribution of system costs is constantly changing. It is plausible to assume that

during 2013 the portion of module costs might be reduced to half of total system costs.

32 The degree of complementarity can be expressed by the cross-price elasticity. Complementary products have a nega-

tive cross-price elasticity, i.e. if the price of good A increases(for example due to a tariff), demand for good B decreas-

es.

33 The German government's Renewable Energy Sources Act (Erneuerbare Energien Gesetz, or EEG) 2012 ( 1, 20a,

20b) defined a target corridor of between 2.5 and 3.5 GW of annual photovoltaic installations. As long as installations

remain within this corridor, FiTs in Germany will decline by 1% per month. If this corridor is exceeded, the base rate

of 1% may increase up to 2.8% per month depending on the amount of installations in a previous period of 3 months.

At the end of 2012, a cumulative photovoltaic capacity of 32.4 GW had been installed in Germany. According to new

regulation, a FiT will only be granted up to 52 GW of cumulated capacity.


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ket developments, e.g. Italy.34 Consequently, after an overheating of several European markets in

2010/2011, we saw a reduction of the annual installed capacities in Europe in 2012 (in particular

reflected in a steep decline in the market in Italy) from approximately 22 GW in 2011 to 17 GW in

2012.35 This decline in 2012 took place in spite of a continuous reduction of both module and sys-

tem prices, which illustrates that interdependencies exist between price level, demand and level of

FiT's. In other words, there is no simple correlation between movements in module prices and the

level of demand. The European Photovoltaic Industry Association expects a continuation of this

negative trend without tariffs for 2013.36

42. The Prognos study presents decreasing FiTs per year in different tables and figures: however, thesame figures are apparently applied to all scenarios alike. If we assume, as Prognos does, that tar-

iffs will result in a certain decrease in demand in 2013, then we can expect, based on past experi-

ence, to see a slower decrease in the FiT compared to the base case. In 2014 the higher FiTs (due to

the lower demand induced by the tariffs in 2013) would compensate at least partly for the lower

demand due to the tariffs in 2014 and so on. However, Prognos seems to have applied a uniform

FiT for all scenarios and ignored this offsetting effect completely.

43. Finally, another offsetting factor is that some Chinese manufacturers of solar modules might adjustto imposed tariffs and absorb them at least partly. The imposed tariffs in the US provide evidence

that Chinese manufactures have to some extent adapted their prices and absorbed the tariffs.37

44.As stated before, it remains unclear how the data provided by Prognos is used to derive the result-ing demand. We will provide an example of contradictory data to illustrate this point. The data

used for Prognos' analysis of the ground mounted installations in Germany suggests that neither

own consumption nor FiTs allow for a profitable investment in any scenario.38 However, the base

case scenario without tariff which is applied by Prognos still includes between 0.3 and 0.5 GW in-

stallations per year, whereas no installations at all are expected for the tariff scenarios. So Prognos

34 In Italy, the so-called Salva Alcoa Degree, issued at the end of 2010 boosted installations until mid of 2011, which led

to total new installations in Italy of 9,3 GW in 2011. The introduction of Conto Energia IV dated 12th May 2011 (intro-

duction of caps, obstacle for bigger photovoltaic plants and promotion of European photovoltaic products, see TIS in-novation park (2011)) and of Conto Energia V (further strain on maximum installations, see pv magazine (2012))

dated 6th July 2012 led to a decrease of the Italian market to new installations of only 3,3 GW in 2012 (cf. photovoltaik

(2013b)).

35EPIA (2005c), slide 7. By contrast, the total world market remained more or less stable (around 30 GW), which means

that the European portion of the world market has declined.

36Cf: Photovoltaic (2013b).

37Chinas JinkoSolar even stated it had fully adjusted to the tariffs imposed last year in the US, and expected the US

market to account for a considerable portion of its sales growth in 2013. Cf. RECHARGE (2013).

38Figure 5 of the Prognos study shows that revenues with own consumptions are at between 10.4 and 10,7 Cent/kWh

and FiTs are even lower, whereas LCOE China (without tariffs) is between 12.2 and 12.8 Cent/kWh.


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suggests that tariffs prevent investment in ground mounted installations although the data used by

Prognos clearly indicates that investments are not profitable, even without a tariff. There are more

examples throughout the Prognos study.

II. Inadequate assessment of future development for technology markets alongthe value chain45. The Prognos study states that European companies have a strong market position along the value

chain for photovoltaic systems in addition to the production of wafers, cells and modules. Accord-

ing to Prognos, employment and value added would also be affected by the decrease of exports of

silicon and machinery for production equipment from EU Member States to China as a conse-

quence of a lower demand.39 To date European companies - and German companies, in particular -

so far have leading positions in both areas and have recorded considerable volumes of exports to

China.40 Prognos based its calculation on the ceteris paribus assumption that these companies will

maintain their strong position for exports to China in the future. In the following we will examine

this assumption for both markets.

1. Future development of market for machinery of production equipment46. On page 52 of its report, Prognos states that "currently Chinese manufacturers import the majority

of the equipment technologies necessary for their production of modules. It is expected that this

situation will not change in the future."41 The Prognos study seems to be based on data from 2010.

To assess Prognos' hypothesis, we look at the current market and economic situation of equipment

providers today and the perspectives in the near future. We will then look at the strategy of the

Chinese government regarding this part of the market and the photovoltaic value chain.

47. Sales in the German photovoltaic equipment industry rose from an amount of EUR 300m in 2005to EUR 2.8bn. in 2011. At the end of 2011, a worldwide module production capacity of around 70

GW served a worldwide demand of approximately 30 GW, which resulted in huge over-capacities

in production facilities. In 2012 this led to a crash of the market. According to the German Engi-

neering Federation (Verband Deutscher Maschinen- und Anlagenbau e.V., Frankfurt am Main, or

VDMA) German companies saw a 46% decline in sales compared with 2011.42 As a consequence

39 Prognos (2013), pp. 51-53, 56.

40 Germany had been the main exporter of photovoltaic machinery to China with a trade value amounting to EUR 955m

in 2010. Exports of European silicon to China in 2010 amounts to EUR 445.3m (Prognos (2013),pp. 52-53).

41Prognos (2013), p. 52.



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even industry leaders found themselves in serious trouble and had to undergo fundamental re-

structuring programs, and even insolvency plans, to survive.

48. Increasing pressure from Chinese companies can be expected in this sector in the future, as well.The government of the People's Republic of China, in its 12th Five-Year Plan for the Solar Photovol-

taic Industry for 2011-2015, listed as its main tasks:

To promote technological progress and achieve transformation and upgrading To enhance R&D and the application of domestically manufactured equipment and integra-

tion technology

49. If Chinese government's expressed strategy became reality - as it obviously did for the manufactur-ing of crystalline PV wafers, cells and modules -, Chinese companies would expand their market

share dramatically, particularly in China, whereas European companies would lose business to a

significant extent. With decreasing exports of production equipment to Chinese companies in a

non-tariff-scenario, employment effects from reduced Chinese demand due to tariffs would be

lower.

2. Future development of polysilcon market50.As for silicon production, which is the basis for the production of photovoltaic modules based on

mono- and polycrystalline modules, this market is dominated by several large players from differ-

ent countries, in particular the US, South Korea, China and Germany.

Table 3 - Capacities in the polysilicon marketCompany Capacity (t) 2011 Capacity (t) 2012

GCL-Poly Energy Holdings Limited, Shang-hai/Hong Kong, China 65,000 65,000

Hemlock Semiconductor Group, Hemlock, U.S. 44,000 50,000

OCI Company, Seoul, South Korea 42,000 62,000

Wacker Chemie AG, Munich, Germany 32,000 52,000

LDK Solar Co., Ltd, Xinyu City, China 25,000 25,000

Source: Sonne Wind & Wrme (2012a), p. 65.


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"Economic analysis needs to be framed in such a way that the Commission and the EU Courts can

understand and evaluate its relevance and significance.()

In order to determine the relevance and significance of an economic analysis for a particular case, it

is first necessary to assess its intrinsic quality from a technical perspective, i.e. whether it has been

generated and presented in a way that meets adequate technical requirements prevalent in the

profession. ()

Second, one must assess the congruence and consistency of the economic analysis with other piec-

es of quantitative and qualitative evidence (such as customer responses, or documentary evi-

dence)."47

"Economic or econometric analysis that does not strictly meet the standards set out in these BestPractices will normally be attached less probative value than otherwise and may not be taken into

consideration."48

56. The most fundamental shortcomings of the Prognos study relate to reporting, robustness and datasources and are explained in the following.

1. Reporting"The results of economic and econometric analysis must be presented clearly, taking the reader

through each step of the reasoning. All empirical analysis, even descriptive statistics of relevant

variables (e.g. price series) should be accompanied by all the documentation needed to allow time-

ly replication, as well as a deep understanding of the methodology of any prior data management

efforts. Reports which do not allow for replication and in particular econometric analysis not in-

cluding the code and data in electronic form will receive less consideration and are consequently

unlikely to be given much weight."49

57. The Prognos study fails to adequately document and report the relevant steps of the analysis. Theanalysis of the impact on demand - as discussed in chapter D.I - is the core of the study, but how the

result is derived is completely opaque and unclear. Another example is the calculation of LCOE

which is not documented in the study.

47European Commission (2011), para. 2-4.48 European Commission (2011), para. 15.

49European Commission (2011), para. 33.


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in the profession and (ii) is not consistent with other pieces of quantitative and qualitative evi-

dence. Therefore, this study should be dismissed and not taken into consideration by the European

Commission, EC Courts or Member States.

E. Relevant aspects for a holistic assessment of the impact of tariffs onphotovoltaic products62. The Prognos study focuses on the direct impact of tariffs on demand and - as explained in the pre-

vious sections - overestimates this effect dramatically by ignoring professional standards for eco-

nomic evidence, the fact that demand is driven significantly by the politically-determined level of

the FiTs, and other offsetting effects. On the one hand, it is plausible that tariffs on Chinese im-

ports of photovoltaic products could have a limited impact on demand. On the other hand, thefocus of the Prognos study is too narrow and distorts the overall picture. It is outside of the scope of

this report to come up with an alternative quantitative assessment taking into account additional

factors. However, following is a discussion of some aspects which are essential for a holistic as-

sessment of the impact of EU tariffs on imports of Chinese photovoltaic products on employment

and welfare in Europe.

63. To begin with, there is a high probability that the European wafer, cells and modules industrywould disappear almost completely within a relatively short period of time if no tariffs are intro-

duced. In recent times, even strong European players which showed profits until 2011 are nowexperiencing serious financial difficulties. Moreover, in Germany a strong international industrial

player, after a long period of business development, announced its withdrawal from its photovolta-

ic activities due to the current market conditions which caused the company tremendous losses.

Currently, the financing of new production facilities can be regarded as almost impossible.

64. Having said this, the European PV industry nevertheless is still alive. Table 4 depicts the availablecapacity and actual production in 2012. The low capacity utilization rate shows that production

could be increased easily. That means that in case of tariffs European manufacturers could reason-

ably be expected to be able to increase their market share quickly and substantially.53

53Prognos assumed in its study that European production increases would be limited to 15% to 30% p.a. Cf. Prognos

(2013), p. 55.


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Table 4 - Capacity and actual production of the European PV manufacturers in 2012Production capacity (GW) Production (GW) Capacity utilisation rate

Modules 9.6 3.5 - 3.8 36% - 40%Cells 2.9 1.2 - 1.4 41% - 48%

Wafers 3.1 1.1 - 1.3 35% - 42%

Source: Europressedienst (2013). Note: Figures are based on a survey by Europressedienst. Europressedienst included

capacities of companies that became insolvent as long as these capacities were still existent. Production figures are still

preliminary.

65. Even though we regard it as difficult and outside the scope of this report to predict the possiblefuture development of production and sales figures for European manufacturers, we consider it

reasonable that European manufacturers have a chance for a real recovery if the price level and the

pace of price declines becomes more sustainable (i.e. with tariffs in place). This in turn could lead

to increases of sales above the figures mentioned by Prognos.

66.Another important factor to consider is that the existence of a European wafer, cells and modulesindustry has also substantial medium and long-term impacts on other sectors and the PV value

chain due to cluster effects. Examples in other sectors show that R&D, engineering and equipment

development usually need a well-functioning manufacturing industry in the region which plays a

catalytic role. Without tariffs in place and as a consequence no relevant manufacturers of wafer,

cells and modules remaining in Europe, it is likely that this will have negative repercussions on the

PV equipment industry with corresponding negative employment effects. Additionally, as men-

tioned above, firms in the polysilicon and the machinery of production equipment market are likely

to lose market share in China, they would thus also benefit from increased demand from European

and other non-Chinese PV manufacturers.

67. Another aspect is the increasingly dominant market share of Chinese manufacturers which couldhave detrimental effects on innovation in the EU. At the end of 2011, world-wide production of

cells amounted roughly to 33 GW and modules to 31 GW, of which 21 GW (64%) respectively 23

GW (74%) originated from Chinese manufacturers, whereas 4,8 GW (16%) respectively 2,1 GW

(7%) originated from European manufacturers.54 If European manufacturers disappear almost

completely from the market, the dominance of Chinese manufacturers on the European market

could even be expected to increase. One possible negative effect of highly concentrated markets is

reduced innovation. It is unlikely that Chinese manufacturers would boost innovation in a more

concentrated and dominated market where there is less pressure to innovate from competing Eu-

ropean manufacturers. A recovery of the European solar manufacturers by contrast could promote

innovation also in other sectors, for example storage systems or demand side management for the

54Sonne Wind & Wrme (2012b), p. 74.


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supply of electricity (so that power might be used in times of high solar radiation). European pro-

ducers could try to start strategic partnerships in this area55 and add value to their photovoltaic

products which may not only help to create new jobs in different areas but also contribute to the

solution of problems of the German energy transition. Reduced innovation would create substan-

tial negative welfare effects.

68. All in all, there are many factors to consider when estimating demand and employment effects oftariffs in the solar industry, and the Prognos study does not provide a transparent and objective

evaluation of those factors. A recovery of the European PV manufacturers combined with cluster

effects along the PV value chain and other related sectors, as well as medium- and long-term effects

on innovation, have the potential to generate a substantial amount of EU value added and em-

ployment, and depend to a large extent on the introduction of tariffs. We are optimistic that these

beneficial effects of tariffs more than outweigh limited negative effects on demand, i.e. that the

introduction of tariffs has a net positive effect on employment in Europe.

Berlin, 04th May 2013

PricewaterhouseCoopers

AktiengesellschaftWirtschaftsprfungsgesellschaft

RA Andreas Klasen ppa. Dr. Wolfgang Nothhelfer

55The Bosch group, for example, would have been able to combine different products in its portfolio (e.g. refrigerator)

with a photovoltaic plant. Furthermore, at the end of 2011, Bosch acquired Voltwerk (manufacturer of inverters) from

Conergy, which gave the company the strategic opportunity to combine different parts of the photovoltaic system and

thus to create technological synergies. Bosch has now announced to abandon its crystalline photovoltaic activities.


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F. LiteratureAkin Gump Strauss, Hauer & Feld LLP (2012):U.S. Department of Commerce Imposes

Preliminary Tariffs on Chinese Solar Cells, http://www.akingump.com/en/news-publications/u-s-department-of-commerce-imposes-preliminary-tariffs-on-chinese-solar-cells.html, [03.05.2013].

AURIGA(2012):Solar Photovoltaics: 60,000 Job Losses from Solar Import Tariff is a Man-ufactured Myth., http://www.americansolarmanufacturing.org/news-coverage/IR_SolarPow_02012012.pdf, [29.04.2013].

Bloomberg (2013): Steams, Jonathan: EU to Register Chinese Solar Panels, Highlighting-Tariff Threat,http://www.bloomberg.com/news/2013-03-05/eu-to-register-chinese-solar-panels-highlighting-tariff-threat.html, [29.04.2013].

BMU (2012): O'Sullivan/Edler/Nieder/Rther/Lehr/Peter (Ed.): Bruttobeschftigung durcherneuerbare Energien in Deutschland im Jahr 2011 - eine erste Abschtzung -,http://www.erneuerbare-energien.de/fileadmin/ee-import/files/pdfs/allgemein/application/pdf/ee_bruttobeschaeftigung_bf.pdf[29.04.2013].

BMU (2013): O'Sullivan/Edler/Bickel/Lehr/Peter/Sakowski (Ed.): Bruttobeschftigungdurch erneuerbare Energien in Deutschland im Jahr 2012 - eine erste Abschtzung -,http://www.erneuerbare-ener-gien.de/fileadmin/Daten_EE/Dokumente__PDFs_/bruttobeschaeftigung_ee_2012_bf.pdf,[17.04.2013].

BNetzA(2013): Data on PV installations is available at:http://www.bundesnetzagentur.de/cln_1931/DE/Sachgebiete/ElektrizitaetGas/ErneuerbareEnergienG-esetz/VerguetungssaetzePVAnlagen/Archiv_VerguetungssaetzePhotovoltaik_Basepage.html;jsessionid=37FD716C250F81A61084825497A67724?nn=198602 [02.05.2013]

EEG (2012): Gesetz zur nderung des Rechtsrahmens fr Strom aus solarer Strahlungsener-gie und zu weiteren nderungen im Recht der Energien, Vom 17. August 2012,http://www.clearingstelle-eeg.de/files/BGBl_1754_120823.pdf,[03.05.2013].

EPIA(2012a):Economic Benefits of Solar Photovoltaics, The PV Value Chain, EPIA factsheet 24th September 2012,http://www.epia.org/index.php?eID=tx_nawsecuredl&u=0&file=/uploads/tx_epiafactsheets/Fact_Sheet_on_the_PV_Value_Chain.pdf&t=1367574261&hash=56d7622cb4b3e5830977ed2b27d5433743702bfd, [29.04.2013].

EPIA(2012b):Sustainability of Photovoltaic Systems, Job Creation, EPIA fact sheet 24 thSeptember 2012,http://www.epia.org/uploads/tx_epiafactsheets/Fact_Sheet_on_Job_Creation.pdf,[29.04.2013].

EPIA(2012c): Global Market Outlook For PV, 13 March 2013.

EuPD Research (2013): German PV Market Briefing 2013, Session I: Rckblick und Status

Quo.


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EurActiv(2012): Europe must stand up to China over solar panels,http://www.euractiv.com/climate-environment/europe-stand-china-analysis-515547[29.04.2013].

EurObservER(2012): Baromtre Photovoltaique, http://www.eurobserv-er.org/pdf/photovoltaic_2012.pdf[29.04.2013].

Europressedienst (2013):PwC received written information of Europressedienst dated 2ndMay 2013.

European Commission (2011): Best practices for the submission of economic evidenceand data collection in cases concerning the application of articles 101 and 102 TFEU and inmerger caseshttp://ec.europa.eu/competition/antitrust/legislation/best_practices_submission_en.pdf,[29.04.2013].

Federal Register (2012): Volume 77, No. 201 / Wednesday, October 17, 2012/Notices,p.63791 ff.,http://usitc.gov/trade_remedy/731_ad_701_cvd/investigations/2012/cspv_cells_and_modules/final/PDF/Solar%20panels%20AD%20Final%20determination.pdf, [29.04.2013].

GTM Research & SEIA(2013): U.S. Solar Market Insight 2012 Year in Review,http://www.seia.org/research-resources/us-solar-market-insight-2012-year-review,[21.04.2013].

Observ'ER(2012): The State of Renewable Energies in Europe, http://www.energies-renouvelables.org/observ-er/stat_baro/barobilan/barobilan12.pdf, [03.05.2013]

Photon (2013): Aus der Traum, January 2013.Photon.Info (2012):EuPD Research: European installers divided on anti-dumping case,

http://www.photon.info/photon_news_detail_en.photon?id=71998, [26.04.2013].

Photon.Info (2013): Photovoltaik-Produktionsanlagenbauer rechnen mit weiteren magerenJahren,http://www.photon.info/photon_news_detail_de.photon?id=75626, [03.05.2013].

photovoltaik(2012): AFASE: 30.000 Arbeitspltze in Europa bei Strafzllen gefhrdet,http://www.photovoltaik.eu/nachrichten/details/beitrag/afase--30000-arbeitspltze-in-europa-bei-strafzllen-gefhrdet_100009447/, [28.04.2013].

photovoltaik(2013a): Anhrung in Brssel zu Photovoltaik-Strafzllen,

http://www.photovoltaik.eu/nachrichten/details/beitrag/anhrung-in-brssel-zu-photovoltaik-strafzllen_100010314/, [28.04.2013].

photovoltaik(2013b):Weltweit mehr als 100 Gigawatt Photovoltaik installiert,http://www.photovoltaik.eu/nachrichten/details/beitrag/weltweit-mehr-als-100-gigawatt-photovoltaik-installiert_100010259/, [30.04.2013].

pv magazine (2012): Italys ministers sign Conto Energia V, http://www.pv-magazine.com/news/details/beitrag/italys-ministers-sign-conto-energia-v-_100007664/#axzz2S9RlX47A, [03.05.2013].


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Prognos (2013): Ehrentraut/Peter/Schmutz/Krampe (Ed). The Impact of Anti-Dumpingand/or Countervailing Measures on Imports of Solar Modules, Cells and Wafers from Chi-na on EU Employment and Value Added,

http://www.photon.de/newsletter/document/74183.pdf, [29.04.2013].

Prognos Press Release (2013): Studie zu Arbeitspltzen in der Photovoltaik-Wertschpfungskette verffentlicht,http://www.prognos.com/Singleview.306+M5b54cca71f1.0.html, [18.04.2013].

RECHARGE (2013): Jinko eyes US solar boom in 2013,http://www.rechargenews.com/solar/asia_australia/article1322839.ece [25.04.2013].

Sonne Wind & Wrme (2012a): Ausgabe 14/2012.

Sonne Wind & Wrme (2012b): Ausgabe 16/2012.

The Brattle Group (2012): Berkman/Cameron/Chang (Ed.) The Employment Impacts ofProposed Tariffs on Chinese Manufactured Photovoltaic Cells and Modules,http://coalition4affordablesolar.org/wp-content/uploads/2012/01/TBG_Solar-Trade-Impact-Report.pdf, [29.04.2013].

The Solar Foundation (2012): National Solar Job Census 2012,http://thesolarfoundation.org/sites/thesolarfoundation.org/files/TSF%20Solar%20Jobs%20Census%202012%20Final.pdf, [19.04.2013].

TIS innovation park(2012): Informationsschreiben 01/2011, Der vierte Conto Energia,http://www.tis.bz.it/doc-bereiche/ren_doc/pdf/4.-conto-energia-de.pdf,[03.05.2013].

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AnnexCalculation of employment effects based on PV installationsWe perform a rough estimation of the direct and indirect employment effects for 1 GW of newlyinstalled PV capacity. An estimated job number per installed GW allows us to update the employ-ment figures of the year 2012 to the new market realities in 2013, i.e. reduced installations of 2.6GW between 2012 and 2013 (7.6 GW - 5.0 GW). Like the Prognos study we base our calculationson EPIA data. Our calculation has the following steps and assumptions:

1. EPIA states that one 1 MW of installed volume triggers 3 - 7 direct and 12 - 20 indirectjobs.56

2. The overall structure of these jobs is summarized by EPIA. The overall jobs are differentiat-ed by type of input for installation.

57

Module 45%

Inverter 10%

Other system costs 18%

Installation 17%

Admin/Eng/Sales 10%

3. The share of value added remaining in Europe has been estimated by EPIA(58% in total).The data reflects the value added for the European economy for the installation of PV sys-tems:58

Module 25%

Inverter 53%

Other System Costs 80%

Installation 100%

Admin/Eng/Sales 100%

We consider it reasonable to apply these European figures as a proxy for the value chain in Germa-ny.

To reflect the high productivity in Germany we applied the lower end of EPIA's estimation for di-rect and indirect job creation, i.e. 3 + 12 = 15 jobs per MW which equals 15,000 jobs within theentire global supply chain per 1 GW.

If we apply this to the reduction of 2.6 GW, this equals a loss of 39,000 jobs within the global sup-ply chain.59 The following table shows how we estimated the ballpark figure for the related em-ployment effect in Germany.

56EPIA (2012b).

57 EPIA (2012b).

58 EPIA (2012a).


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Table 5 - Estimated job losses in Germany in 2013 for the baseline scenario (without tariffs)Global Thereof in Germany

Share AbsoluteNumber of jobs eliminated for baselinescenario (without tariffs) for a 2.6 GW re-duction -39,000 58% -22,601

Differentiation along the value chain

Module 45% -17,550 25% -4,388

Inverter 19% -3,900 53% -2,067

Other System Costs 18% -7,020 80% -5,616

Installation 17% -6,630 100% -6,630

Admin/Eng/Sales 10% -3,900 100% -3,900

Source: PwC calculation based on EPIA data. Rounding differences may occur.

If we subtract 22,601 jobs from 87,800 (employment level 2012) we get the employment level of

the baseline scenario of 65,200 jobs for 2013 - 2015 (based on the EPIA forecast of 5 GW installa-

tion).60

59 2.6 * 15,000 = 39,000.

60Rounding differences may occur.


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Documents

PWC Final Report