With a total of 13 (previous year: 12) sites worldwide (including two production units, Joint Ventures operations and the holding company), SOLARWORLD AG is today present on the relevant markets. We operate with production facilities in Germany, the USA, and South Korea at the heart of the core markets of Europe, North America, and Asia. Sales teams in Germany, Spain, the USA, Singapore, and South Africa are pushing ahead strategic distribution in the solar growth regions. World map

Good site factors strengthen expansion. One example of target-oriented location policy is our new manufacturing facility in the US town of Hillsboro. The region known as “Oregon Silicon Forest” offers optimum site conditions for solar production with its local electronics and semiconductor industry, a large pool of competent skilled workers and a reliable infrastructure. The crystallization sub-segment was located in neighboring Vancouver, Washington, in the year under review.

In Oregon, universities such as the Portland Community Center increasingly offer courses in solar manufacturing technologies to qualify and further train the »high-tech workforce« from the chip industry. Human resources In addition, Oregon fights tenaciously for the expansion of »green technologies «. Thus, by adopting the “Renewable Portfolio Standard”, the federal state has committed itself to obtaining a fixed per centage of its power offer from renewable energies. Furthermore, companies that produce equipment for renewable energies can claim 50 per cent of the investment costs of their manufacturing facilities against tax (Business Energy Tax Credit).

As a member of Silicon Saxony e.V., the Saxony industrial association of the semiconductor industry, we in Germany also benefit from a number of advantageous site factors: Freiberg has a more than 50-year-old tradition of silicon processing and a broad spectrum of supplier industries; in addition, Freiberg is today one of the five largest centers of the semiconductor and silicon industry worldwide. As a result and thanks to the proximity to the Technical University and Mining Academy (TUBA), we can tap into synergies in research right on the spot as well as benefit from the availability of highly qualified, skilled workers.

SOLARWORLD is one of the leading, fully integrated solar power technology groups. The share of our groupwide foreign sales (wafers, cells, modules/systems) was increased in 2008 to 54 (previous year: 49) per cent – an indication of the expansion of our competitive position on international markets. In the USA we are the largest solar power technology provider with local production ranging from wafers to modules.

In the trade segment, we also succeeded in increasing our foreign sales on markets outside Germany to 53 (previous year: 46) per cent. This is proof of our increased international sales and distribution power with modules and solar kits. The main sales markets were, in addition to Germany, also Spain, the USA, South Korea, and Italy. In Germany we were able to consolidate our good market position thanks to the excellent reputation acquired by the SOLARWORLD brand over many years. In 2008, we again proved to be a reliable trading partner for our customers.

The Spanish market is heavily influenced by local providers. Yet, thanks to our good local sales and distribution work, we succeeded in strengthening our position in the stable, roof-mounted systems market.

Young solar markets such as Italy, France, Belgium, and Greece have developed very dynamically for SOLARWORLD in spite of their moderate market sizes. In those markets we created an excellent starting position for ourselves, and in Italy we were able to generate sales that were clearly in the double digit megawatt range for the first time. In Greece, France, and Belgium we realized successful sales over the one megawatt threshold. Due to our presence on these markets we can actively participate in shaping the emerging distribution structures with increasing market maturity. The objective here must be to establish the company as a quality brand and to form cooperation ventures with other partners.

In the Asia-Pacific region we succeeded in strengthening the quality of our competitive position through our production facility in South Korea.

In 2008 we were again one of the top three wafer manufacturers worldwide: We consolidated this position by way of expansion of our production capacities by more than 50 per cent to 600 megawatt (MW). We sell about 50 per cent of our wafers to external customers in Europe, Asia, and America. Our competitive advantage is based on our long years of experience, our sound capital base in the group for the implementation of additional expansion plans as well as our SOLSIX® wafer brand.

Funding programs in Germany. Germany currently holds a leading position in the world market in the segment of renewable energies. An important driver for the development of this highly efficient industry was the German law on renewable energies (EEG). The proportion of renewable energies in total power generation in 2008 amounted to 15 (previous year: 14) per cent in this market.

Today the country has a high performance solar power industry with a worldwide technology edge and some 48,000 people employed directly and indirectly in the industry. The EEG constitutes an important investment incentive for the solar industry while, at the same time, pushing ahead technological development by way of annual reductions in funding of five per cent until 2008 and eight per cent as from 2009.

This leads to efficiency improvements in production and to price cuts for customers. Thus, it was possible to reduce production costs for solar power technologies by more than 50 per cent since 1996. In the course of further cost reductions, electricity from solar energy will soon be able to compete with the gross electricity prices for private households (i.e. it will reach what is called “grid parity”). Opportunities

Funding programs in other countries. With a share of less than one per cent, solar power technology has so far played a somewhat small role in the energy mix. The world electricity market  Incentive systems are still a decisive investment factor for the solar power industry. Numerous countries have either announced or initiated similar programs for the promotion of renewable energies that are in some cases fashioned on the German EEG. These programs will favor comparable market developments worldwide.

The increasing energy demand, the scarcity of fossil raw materials as well as climate change are creating a great worldwide interest in promoting alternative energy sources such as solar power. Four major funding tools are being used to this end either at regional level (e.g. California, USA) or at national level (e.g. Germany, Spain, Italy or France).

Funding instruments. The most successful instrument is the minimum price system as applied in Germany, for example, in which guaranteed minimum feed-in compensation is paid for the electricity generated. It offers the necessary investment security to operators of solar power systems whether on the roof of one’s own home or in a large-scale project.

In many countries investment grants and tax relief are additionally granted in order to bring down the very high initial investments for solar plants. As these funding mechanisms are, however, detached from the real efficiency of solar plants, they offer very little incentive to improve product quality. In France, Greece, and the USA, these two mechanisms are therefore only applied as additional bonuses at regional level.

Quota systems are another widely used funding tool: They establish a certain per centage quota of solar power in the energy mix for the utility. Through the certificate trading system, the solar power price is formed from the interaction between supply and demand. However, practical experience has shown that such systems tend to lead to investment uncertainty, especially among private investors, due to high price volatility triggering considerable risk premiums. Numerous countries in which such systems were employed have meanwhile replaced these systems with minimum price systems.

Attainment of grid parity. Today, solar power producers still depend on these funding measures. However, probably within the next decade a constellation will be reached where, in the retail business, the price of conventionally generated electricity will exceed the costs of solar power generated by retail customers themselves. From that point onwards there will be grid parity; i.e. parity between solar power and power from the grid. This means: For the retail customer, the installation of a solar generating plant on the roof will pay for itself even without financial funding. Opportunities

Success with high performance products. As an integrated group of companies, SOLARWORLD AG possesses a deeply integrated value chain and a broad-based product range. We concentrate on mono- and polycrystalline solar power applications.

These products combine numerous advantages: a high degree of efficiency, reliable long-term stability, good environmental compatibility and compact design. In addition, the costs of the entire system (systems technology, e.g. sub-frame, DC and/or AC cabling, inverter) are lower because, in comparison with other technologies, it requires less space with the same level of yield.

In our group of companies we consistently rely on the use of standardized components such as plug connections that can be used worldwide on our global modules. In this way we can optimize our automation processes, cut unit costs, and increase availability and on-time delivery for the benefit of our customers. We develop, produce and distribute almost all systems components ourselves, as a result of which we achieve distinct cost advantages.