Article published on www.pv-magazine.com on February, 7th 2013
The sky is the limit for photovoltaic market growth, which is expected to more than triple by 2020, according to a report just released by London-based research firm GlobalData. It says growth is being stimulated by two major forces. Challenges are present, however, including issues over existing grid infrastructure.
By 2020, the company’s analysts predict that cumulative worldwide capacity of installed PV systems will spurt from around 97 GW in 2012 to 329.8 GW, thus capping an eight-year period (2012-2020) during which compound annual growth rate (CAGR) hits a hefty 16.5%.
The market has continued to grow, even during a severe economic crisis. Today, PV is the third-largest deployed renewable technology in terms of global installed capacity, after small hydro and wind.
Expansion on the PV side of the industry is being stimulated by two major forces, based on the findings of the study, "Solar Photovoltaic (PV), 2012 – Global Market Size, Average Installation Price, Market Share, Regulations, and Key Country Analysis to 2020."
First, on a macro level, the global goals of energy security, stability and independence are driving both developed and emerging governments to promote and develop renewable power sources, including islanded and community solar microgrids, grid-tied distributed PV, and utility-scale installations.
Thin film, which got off to a fast start when the price of the silicon component of PV modules was prohibitively high, is said to be losing its competitive edge. As silicon prices have plummeted and the costs of higher-efficiency crystalline silicon modules have been reduced, global demand has shifted back to crystalline technology.
However, the competitive scenarios in several parts of the global PV value chain are characterized by high barriers to entry; and concerns about cost, branding, quality, reliability and efficiency. Entering this market involves a major capital investment and advanced technological expertise, as well as extensive distribution and networking, among other things.
What’s more, the need to upgrade legacy electricity infrastructure to meet future transmission and distribution (T&D) demands represents a key challenge ahead for the global PV industry. The existing grid infrastructure in a few growing PV markets is deemed to be insufficient for continued expansion, and there is an urgent need to modify it along with grid regulations, in order to accommodate PV power.
The development of new grid infrastructures will require massive investments of money and time, which could also could dramatically decrease PV growth, according to GlobalData.
Changing places and paces
So, where is growth likely to continue apace, and what new markets will become the focus of solar activity?
Reduced PV module prices, combined with the feed-in tariff (FIT) subsidies in European countries, have supported the widespread growth of small-scale distributed capacity there. The EU, led by Italy, Germany, Spain, and France, accounted for 70% of the world’s new capacity additions in 2011. Down the road, however, GlobalData expects that lucrative tariffs are likely to lessen, and that growth will stall somewhat.
Germany is estimated to have accounted for around 32% of global PV installed capacity in 2012. The country has proved its commitment to solar energy through various policies in recent years and has maintained its position at the forefront of the market’s development and technological progress. As a result, Germany’s installed capacity of PV has soared from a relatively meager 2.7 GW in 2006 to 30.1 GW just six years later in 2012 – and is calculated to reach 48 GW by 2020.
In North America, the United States and Canada have introduced stimulus packages and various policy support measures, such as Investment Tax Credits (ITCs), Production Tax Credits (PTCs), and Ontario’s Green Power tariff system, to support PV deployment. The U.S. federal government, as part of its stimulus package, has provided funding of $3.1 billion to its states to encourage the PV industry and expand PV support programs. Both countries will continue to be major players, although perhaps not in the top strata of the industry.
Asian companies now dominate the global PV device supply scenario, with five Chinese companies among the top ten module manufacturers worldwide. Governments in the region, including Japan, India and Taiwan, are promoting PV through long-term policies and financial incentives; as well as research and development initiatives.
China is the behemoth in the burgeoning solar market. In the People’s Republic, aggressive capital subsidies are provided to PV projects that are categorized under the Solar PV Building program and the Golden Sun program, spanning a wide range of solar PV applications.
Today, China exports over 90% of its production capacity. However, the Asian leader is also expected to significantly increase domestic solar module installations in the near future, with a massive surge in installed capacity, from 7.6 GW in 2012 to 70 GW in 2020.
Finally, GlobalData forecasts that emerging nations in South and Central America and the Middle East and Africa will be key markets in the future. Look for states such as Ghana, Qatar, Saudi Arabia, and Chile to become competitive sooner rather than later.
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