Due to the effects of several solar subsidies, the demand in the European market has picked up.According to EnergyTrend’s estimation,because of the unchanged subsidy amount and the decreasing cost, the installation volume in Germany is expected toincreasein 2H11. EnergyTrend expects the installation volume in the Germany PV market to advance to 3.5 to 4GWin 2H11, while the annual installation volume to reach 5 to 6GW. Moreover, large scale solar system (>1MW) installation is capped in the latest Italian subsidy policy, but mid and small solar systems account for the majority of installation in Italy. Therefore, EnergyTrend believes that the market demand will reboundafter the Italian government officially announces the subsidy, and expects the Italian market demand to reach 1GW in 2H11.

In addition, the new subsidy policies specify that the investment and manufacture of solar systems from member countries of European Union should account for 60%, including solar module, inverter, and components. For example, if the battery welding and package test of silicon solar modules and the deposition treatment of thin film solar modules are conducted in member countries of European Union, then the modules will be counted as a manufacture of EU. However, if the solar module is produced in places other than member countries of EU, then its polysilicon, wafer or battery needs to be manufactured in member countries of EU in order to be counted as a manufacture of EU. It is obvious that the policy is enforced to ensure a continuous growth of the European solar industry.

With respect to current changes in the European policies, solar rooftop system will be the focus of subsidy policies, while installation demand from large solar systems will gradually drop. In order to generatemore power output out of limited space, demand for high conversion efficiency product will continue to rise,keepingthe mono-Si product price high. EnergyTrend indicates that the demand for solar rooftop systems will continue to increase. As a result, it is crucial for manufacturers to be able to develop high conversion efficiency products while remaining cost competitive.