The European Photovoltaic Industry Association (EPIA) recently presented its latest outlook on the state of the solar industry. The report paints a rosy picture for the future of global PV industry. As the world's largest photovoltaic association, EPIA represents 240 members from across the PV supply chain, including silicon, solar cells, modules, and system development, sales and marketing.
According to EPIA figures, the amount of connected PV installations grew by 16.6 GW last year, compared to 7.2 GW installed in 2009. This brings total PV global installation capacity to 40 GW at the end 2010. Most of the new capacity came as a direct result of unprecedented growth in the Italian and German markets.
Germany ranked as the runaway leader with 7.2 GW of new capacity - mostly as small residential projects. Italy came in a distant second, with 2.3 GW of new PV installations. Other nations that have experienced large growth in PV capacity include the Czech Republic (1.5 GW), Japan (990 MW), United States (900 MW), France (719 MW), and Belgium (420 MW.) The figures include off-grid installations.
The EU Leads the World
As a region, the European Union (EU) stands far above other areas when it comes to worldwide installed PV capacity. In 2003, Europe has less than one GW of PV capacity; by 2009, the EU's PV capacity increased to just over 13 GW. In 2010, the EU augmented total PV power generation output to 30 GW global installed. EU member states installed 13.3 GW - a 70% increase over 2009, and a robust 75% of total global PV installations. In comparison, wind ranks second among clean energy solutions; the EU gained 9.3 GW of additional wind capacity.
Even in a challenging economic and financial environment, installation capacity accelerated in 2010, with a compounded annual growth rate (CAGR) of 130%. According to the EPA's report, if Europe maintains its current level of investment in photovoltaic installations, the EU can add one percentage point each year to the proportion of its electricity produced from photovoltaic power systems. Japan's PV capacity rose to 3.6 GW; the United States increased its PV power generation by 2.5 GW. China surpassed one GW of capacity in 2010, which places it in the top ten.
EU Growth Opportunities
The European continent has been the global leader in PV installations for years. EPIA reports: “Part of the wealth of the European PV market is due to its unique market segmentation: from small residential systems to large ground-mounted installations, PV technologies allow variants for all geographies.” EPIA expects the EU to maintain that dominance - with Germany continuing to lead the way. The German's national policy, the Renewable Action Plan, supports the implementation of three GW annually for the next decade.
Despite the EU lead in PV installation capacity, the EPIA identified unbalance “market segmentation and inconsistency in developments from nation to nation. It points to the proliferation of large-scale ground-mounted installations in Spain and the Czech Republic. As pointed out earlier, Germany built its capacity on small and medium-size installations. EPIA believes this occurs due to policy makers selecting one market over another based on the country's circumstances and polices on agricultural land use. Furthermore, the report found countries like Spain and the Czech Republic could stimulate growth by focusing on residential installations. Although the government placed a freeze on PV installations, the moratorium does not affect building-integrated photovoltaic (BIPV). This bodes well for the BIPV market segment.
Italy faces a new regime for PV installations connected to the grid after May 31, 2011; this has contributed to market uncertainty in the country. Britain has a strong residential PV market, which accounts for 95% of current installation. However, the government's decision to review its feed-in-tariffs (FiT) policies for installation over 50 kW will affect growth in this segment.
Other Regions
Most of the other regions of the world also offer tremendous promise for expanding capacity for PV power generation. The supply and demand dynamics of local and global energy markets make China and India major markets for rapid PV growth. Southeast Asia, Latin America, and Middle East and North Africa (MENA) should also experience faster growth. Sunbelt nations -- countries within a +/- 35° latitude around the equator, already have PV cost parity with diesel-powered plants, without the support of policies and incentives.
MENA has 75 percent of the world's population and 40 percent of the global electricity demand. This region has the potential to install 60 GW to 250 GW by 2020. Between 2020 and 2030, the capacity could expand from 260 GW to 1100 GW. By 2030, the Sunbelt countries could have as much as 58% of the worldwide capacity for photovoltaic installations.
As it now stands, Japan and the U.S. represent the only countries, outside the EU, with a PV generation capacity that exceeds one gigawatt. At the end of 2010, China had 893 MW of installed capacity; the country could move pass the one GW benchmark this sometimes this year. Nations with medium- sized markets will need a few years to reach the1GW threshold of PV development.
The EPIA study identifies three regions, Asia-Pacific (APEC), EU and North America. Each region takes different strategic approaches to developing its photovoltaic market.
Asia-Pacific
The Asia-Pacific (APEC) region, which has the second highest growth rate behind the EU, consists of Japan, China, South Korea, Australia, Taiwan, and Thailand. Australia installed over 310 MW in 2010. Although China dropped its FiT policy, the country's “Golden Sun” plan calls for at least five GW of installed PV capacity by 2015 and 20 to 30 GW by 2020. Taiwan and Thailand may install as much as 2.5 GW over the next few years.
North America
The North American region - primarily Canada and the United States, has experienced consistent growth over the last few years, but the untapped potential of this market remains enormous. The State of California accounts for 60% of the U.S. photovoltaic industry. California leads the nation in solar-friendly polices and has move quickly toward grid parity than most other states. The country has about 15 GW of project at various stages of approval. The report expresses concern that national tax credits, and other incentives at the federal level, may disappear as the result of ongoing budget battles between the two political parties.
Canada, which has far less solar resources than the U.S., continued the track started in 2009, by increasing PV installation from 95 MW to 105 MW. Ontario serves as the nation's model for FiT; it also requires developers to secure 60% percent of project supplies and labor from the Ontario market. Canada expects to add 2011 of PV capacity in 2011.
The PV Market Through 2015
The EU may experience little or no growth over the next few years. Nonetheless, other countries should make up for the slowdown to ensure the PV market continues its expansion through 2015 and on into the next decade. The major stimulus for PV growth over the past several years have been innovative policies put in place to fuel expansion.
The PV market depends on incentives and will need those incentives until photovoltaic attains grid parity with other energy sources. EPIA believes the market could see a slowdown and that it is possible 2011 will yield less installed capacity than 2010. However, the global PV capacity should reach the 100 GW target by 2013 and, depending on circumstances, could reach between 131 and 196 GW by 2015.
PV Manufacturing Outlook
PV manufacturing has expanded at a more rapid pace in Asia. In the past few years, China has taken the lead. Since Asia's current output exceeds demand, most solar modules are shipped to Europe. The EPIA report says about 50% of the value of photovoltaic power systems occurred down line in the installation process -- near the location of end-users. The expansion of the PV market outside Europe should change these dynamics between supply and demand. In addition, over “overcapacity” experienced by PV manufacturers should continue to exert downward pressure on the price of solar panels; thereby, prompting more demand.
Between 2000 and 2003, local manufacturers supplied modules for local markets. These market installed one gigawatt or less during this period. Starting in 2004, Japan manufacturers began shipping PV panels to the EU to meet an unprecedented demand for products. Global growth of PV installation also fuels the appetite for China modules. According to EPIA, the Chinese PV market share grew from less than 15% in 2006, to more than 50% by the end of last year.
Summary
EPIA concludes PV has grown from a mere “curiosity” to recognition as a dependable and safe energy source for the entire world. Driving the cost of PV systems closer to grid parity, in some countries, have attracted investors. EPIA acknowledges that solar-friendly policies, such as FiT and other incentives have supported the global solar industry - reducing costs and elevating investors' awareness.
The current global economic environment and bringing PV systems closer in cost to other power generation systems have policy makers around the world revisiting PV incentive policies. However, despite the recent rash of government reviews of many of the successful strategies and incentives that helped fuel PV explosion, the global photovoltaic market will continue to experience significant growth as demand sensible polices that complement PV’s steady price progression will enhance photovoltaic's growth into a seasoned technology and moving closer to grid parity.
