Photovoltaic market trends 2010: Worldwide growth; uncertainty in the German market

After the German coalition government, made up of the Christian Democratic Union (CDU) and the liberal party (FDP), discussed future photovoltaic subsidies in Germany in their coalition committee that met during the last week of February 2010, it is now clear that feed-in tariffs for solar power will be further cut from July 1st onwards. In addition, large-scale photovoltaic plants on agricultural land will in future no longer be subsidised by the German government.  It remains to be seen what the effects of the changed parameters will be on the German photovoltaic market that has been extremely dynamic thus far and whether the growth rate of 15 to 20 % as projected in the Sarasin study in November 2009 can still be achieved.  The Federal Association of the Solar Industry (Bundesverband Solarwirtschaft – BSW-Solar) is expecting irreparable damages to the solar industry of Germany and considers thousands of the 60 000 newly created jobs to be under threat.  The managing director of Solarworld AG in Bonn, Frank H. Asbeck, however, expects no disadvantages to result from the reduction of feed-in tariffs for solar power, as he stated in a report of the general newspaper of Hessen/Lower Saxony. In fact Asbeck expects 5 000 MW of photovoltaic output to be newly installed this year, after 2009 with its 3 500 MW has thus far been the record year. 

Left: Solarpark Straßkirchen -  with 54 MWp this is the largest photovoltaic plant completed in 2009. Right: Photovoltaic plant in the USA. Sources: Q-CELLS International GmbH; Greentech Media Research.
Left: Solarpark Straßkirchen - with 54 MWp this is the largest photovoltaic plant completed in 2009. Right: Photovoltaic plant in the USA. Sources: Q-CELLS International GmbH; Greentech Media Research.

Global demand cannot compensate German market volume

The US market research company iSuppli also fears that the German market could stagnate next summer.  The peak position that Germany holds with a 50% share in new photovoltaic installations in 2009 is, according to market researchers, of such importance that the entire photovoltaic demand in other countries is insufficient to compensate for the possible consequences of a solar power feed-in tariff cut of 15% in Germany.

Photovoltaic world market:  Signs are pointing to growth

At the same time photovoltaic markets in the USA, China, India and Japan, but also in southern and Eastern Europe, show new growth potential.  The Solar Report March 2010 shows current market developments, the Solar Report April 2010 will focus on worldwide technological trends.

Rapid price deterioration ensures attractive framework conditions

After the stagnation of the worldwide PV market last year, the sustainability study of the Bank Sarasin entitled "Solar industry – green recovery in sight" expects a worldwide photovoltaic growth of up to 45% in 2010, since solar energy was increasingly liberating itself from state start-up subsidies and was rapidly developing towards grid parity of solar power.  In 2009 Germany experienced a true flood of new photovoltaic systems since the rapidly decreasing prices made the framework all the more favourable from the second quarter onwards. In particular, Chinese solar modules became more cost-efficient and the price difference in comparison to European modules grew.  While European PV producers are feeling the enormous cost and margin pressure, Asian solar cell and module producers benefit from their low production and financing costs.

Left: Photovoltaic production at Inventux in Berlin. Source: Inventux Technologies AG. Right:Photovoltaic production of Evergreen Solar in Devens (USA).Source: Evergreen Solar, Inc.
Left: Photovoltaic production at Inventux in Berlin. Source: Inventux Technologies AG. Right:Photovoltaic production of Evergreen Solar in Devens (USA).Source: Evergreen Solar, Inc.

Production capacities continue to grow, particularly in Asia

According to a study by the US consulting company IMS Research the world market for photovoltaic production plants will increase by approx. 80% from 2008 to 2013.  While the global market still had a scope of about five billion US dollars of photovoltaic production in 2008, its volume is to exceed the nine billion dollar value by 2013.  According to IMS Research, Asia, in particular China, will be the most important growth motor and will generate more than half the turnover of photovoltaic production plants by 2013.   Market researchers anticipate that in the near future suppliers of module manufacturers will see a clear shift of the market towards Asia, and their main target would be the minimisation of wage costs that could be easily achieved by transferring production to Asia.   Since more and more users of PV production plants are located in Asia, this would also contribute to a lowering of logistics costs.

iSuppli expects 8,3 Gigawatt additional capacity and 64% growth

For photovoltaic end consumers the minimisation of the cost of solar cells and photovoltaic modules per watt is of utmost importance.  PV manufacturers thus more and more focus on increased automation and efficiency which contribute significantly to lowering costs.  This enormous price deterioration in this sector also implies that providers have to continue decreasing their costs in order to remain competitive and to make up for reduced profit margins. "If the price reduction programmes eventually catch up with the price reduction rate a general improvement of profits can be expected", Henning Wicht, chief photovoltaic analyst of the global market research company iSuppli, explains. "The photovoltaic output installed worldwide will increase by 64% in 2010 to reach 8.3 GW.  This will bring us back into growth territory as we knew it before the crash in 2008, since now the worldwide recession is subsiding and new markets and new demand are developing", Wicht adds.

Left: Photovoltaic production at Solarfun's facility. Image: Solarfun Power Holdings Co. Right: The original head offices of Suntech in Wuxi, China. Source:  Suntech Power Holdings Co.
Left: Photovoltaic production at Solarfun's facility. Image: Solarfun Power Holdings Co. Right: The original head offices of Suntech in Wuxi, China. Source: Suntech Power Holdings Co.

“Some new growth markets are joining the game in 2010, including in the first place the USA, followed by Italy and the late starter China.  Together these three markets make up half the growth forecasted for 2010,” Wicht says.  The photovoltaic market would also be seeing more new role-players, headed by the South-Korean companies Samsung and LG Electronics, the world’s largest manufacturers of flat screens who have great experience in taking up new areas of business.  

Photovoltaic market in the USA is rapidly gaining momentum

Market research company Greentech Media Research expects the PV demand in the USA to record the fastest growth in the next four years in comparison to all other major markets.  According to a base scenario the demand for solar power plants will grow to 1 515 MW in 2012 with an annual average increase of 48% between 2008 and 2012. An optimistic scenario even anticipates a demand of up to 2 022 MW in 2012.  During this period the United States could even overtake Spain and become the world’s second largest PV market after Germany.

Investments in the US photovoltaic market will triple by 2012; secondary markets gain in importance

According to the base scenario, investment in US American PV projects will reach about six billion US dollars in 2012, starting at 2.35 billion dollars in 2009. The average annual growth lies at 37.6%.  Investments in photovoltaic projects on a power plant scale will show the strongest growth, approximately 56% per year, and will reach a volume of 1.48 billion US dollars in 2012.  SunEdison alone, a subsidiary of the photovoltaic group MEMC, reports full order books for solar power plants with an output exceeding 100 MW in 2010. According to the optimistic scenario total investments will reach 8.17 billion US dollars in 2012, with an annual increase of 41.1%.

Left: Computer simulation of the Tri-State Solar Power Plant in the northeast of New Mexico.Source: First Solar Inc. Right: Photovoltaic modules in Albuquerque. Source: SCHOTT Solar.
Left: Computer simulation of the Tri-State Solar Power Plant in the northeast of New Mexico.Source: First Solar Inc. Right: Photovoltaic modules in Albuquerque. Source: SCHOTT Solar.

Although the Californian market share of about 50% of the overall US output will remain relatively stable, new markets in other states will become increasingly important.  These include Arizona, New Jersey, New Mexico, New York, Nevada and Massachusetts.

Solar boom in Ontario

Photovoltaic boom in Ontario: Construction site of the 20 MW solar power plant that is being developed by Enbridge and First Solar near Sarnia (Ontario). Image:  First Solar Inc.
Photovoltaic boom in Ontario: Construction site of the 20 MW solar power plant that is being developed by Enbridge and First Solar near Sarnia (Ontario). Image: First Solar Inc.

Since Ontario passed the Green Energy Act on 14 May 2009 with feed-in tariffs for solar power, the Canadian province is fast becoming a new focus of the solar industry in North America.  Numerous international companies want to produce on site in order to be part of the solar boom taking place there.  The most ambitious project was presented by the Minister of Energy of Ontario, Brad Dugui, together with the Samsung C&T Corporation that plans to build photovoltaic power plants with a nominal output of 500 MW.  Q-Cells International Canada, a subsidiary of the German photovoltaic company Q-Cells SE (Bitterfeld-Wolfen), got the approval for the construction of two photovoltaic plants with a nominal output of 10 MW each in Sault Ste.  Marie of the Canadian province of Ontario.  Canadia Solar Inc., the vertically integrated provider of solar wafers, solar cells and solar modules, is planning a module factory with a production capacity of 200 MW in Ontario.

China on its way to becoming one of the largest solar markets worldwide

The solar power plant Xunzhou covers 400 000 m2 of undulating hills near the city of Xuzhou in the Chinese province of Jiangsu. The photovoltaic power plant with a nominal output of 20 MW is to produce about 26 000 000 kWh of solar power per annum. According to Satcon this is currently the largest solar power plant in China. Source: Satcon Technology Corporation
The solar power plant Xunzhou covers 400 000 m2 of undulating hills near the city of Xuzhou in the Chinese province of Jiangsu. The photovoltaic power plant with a nominal output of 20 MW is to produce about 26 000 000 kWh of solar power per annum. According to Satcon this is currently the largest solar power plant in China. Source: Satcon Technology Corporation

The fact that it is ecologically and economically worthwhile to move towards renewable energies was long discovered by Chinese politics, and thus strong subsidisation and guaranteed feed-in tariffs within the Golden Sunlight programme promote photovoltaics in China.  It is against this background that analysts expect China to rapidly achieve an installed photovoltaic output of a couple of hundred megawatt.  In 2008 merely 50 MW were installed.

In spring 2010 it was announced that the capital Beijing was symbolically to become one of the first solar cities of the country.  The responsible city commission already approved some projects.  But local production capacity will continue to significantly exceed demand in China. According to GTM Research about one gigawatt of photovoltaic output will have been installed in China by the year 2011, of which a large portion will be due to the introduction of the countrywide solar power feed-in tariff.

Photovoltaic demand in China (grid-coupled and grid-independent) in comparison to the development of local production capacity in MW (according to base scenario and/or PV expansion). Source: GTM
Photovoltaic demand in China (grid-coupled and grid-independent) in comparison to the development of local production capacity in MW (according to base scenario and/or PV expansion). Source: GTM

Japan accelerates photovoltaic expansion through incentive programmes

In April 2009 the Japanese government again introduced the subsidisation of photovoltaic installations in private households, announced fixed solar power feed-in tariffs from 2009-11-01 and thereby doubled the domestic photovoltaic turnover in comparison to 2008. According to statements by the Japanese Photovoltaic Energy Association JPEA solar power systems with an output of about 0.5 GW were installed in 2009.  According to official Japanese sources the average subsidies for photovoltaic systems amounted to approx. 2 200 EUR/kWp installed output in 2009, with overall costs amounting to between 5 000 and 5 700 EUR/kWp.  According to purchase agreements for electricity from PV systems, the ten regional energy suppliers purchase solar power from private home owners at a fixed price of 0.35 EUR/kWh.  Solar power of industrial establishments is purchased at 0.18 EUR/kWh.  Because of attractive subsidisation conditions Japan can expect to see a further PV expansion in the line of a couple of hundred megawatt in 2010.

Japanese PV producers Kyocera, Showa Shell and Mitsubishi Electric have announced a massive expansion of their production capacities in order to serve the domestic as well as the international market.

 

India’s Solar-Mission for 20 gigawatt by 2022

Technological group Moser Baer and solar company KSK Surya Photovoltaic are producing in India with SunFab production lines for thin-layer photovoltaic modules from Applied Materials. Image: Applied Materials
Technological group Moser Baer and solar company KSK Surya Photovoltaic are producing in India with SunFab production lines for thin-layer photovoltaic modules from Applied Materials. Image: Applied Materials

Within the framework of a far-reaching initiative as well as new laws on the development of solar energy utilisation, India is planning to install about 20 000 MW solar capacity by 2022.  For the first phase of the mission with a total volume of about 13 billion euro the government has approved grid-coupled projects with a nominal output of about 1 100 MW and island solutions with 200 MW.  In addition the mission will also be concentrating on research, development and training of workers in order to include the local economy in the implementation of the mission.  According to these plans the next two years will see a significant expansion of photovoltaic production in India.  The company KSK Surya Photovoltaic, for example, will purchase two SunFab production lines for thin-layer photovoltaic modules from Applied Materials which will allow for an annual production capacity of 150MW.

Solar Semiconductor has already started photovoltaic manufacturing after it entered into purchase agreements over a couple of years for mono- and multicrystalline solar cells with Q-Cells and Bosch Solar Energy.  Tata BP Solar and North Delhi Power Ltd (NDPL) have entered a partnership agreement for the manufacturing of solar power plants in Delhi.  Market research company Gartner expects that solar producers active around the world and their suppliers will invest in the rapidly growing Indian market and expects this trend to continue in 2010 when more and more global solar manufacturers will build factories in India.

 

Growth market southern Europe

Graphics: EER forecast of PV additions in southern Europe.
Graphics: EER forecast of PV additions in southern Europe.

Italy and France were able to establish themselves as motor of the European photovoltaic market by achieving strong growth rates, whereas Spain because of only limited solar subsidisation only showed moderate growth. Growth of photovoltaics in southern Europe with an installed output of 38 GW by 2020, as predicted, could show the global market the way out of the crisis according to the results of a new study of the market research company Emerging Energy Research.

After Germany that was the leading solar power market in Europe with 67% newly installed photovoltaic output in 2009, market researchers now expect a market share of 25% from the southern European market.  EER is expecting an installed PV nominal output of 47 GW by 2020, which implies significant growth in comparison to the currently installed 9 GW.  According to EER this requires reliability of solar power feed-in tariffs, long-term national photovoltaic targets and an unsteady development of electricity prices. 

 

 

Italy will be leading the southern European PV market, clear growth potential in France

With clear state initiatives and a reliable and transparent system of subsidisation programmes for photovoltaics, France has also created a good foundation to establish itself as a stable solar market.  After a rather sluggish market development that was reflected in only 128 MW of newly installed photovoltaic capacity by June 2009, EER is now expecting strong activity in France.  By 2012 an annual nominal output of new installations in excess of 800 MW would be possible in France.  In Spain, that controlled the global PV market in 2008 with an installed output of 2.8 GW, EER expects only 125 MW of newly installed PV capacity because of the amendment of state feed-in tariffs.

According to market studies Greece is fighting problems of authorisation procedures, but could now be on the verge of establishing itself as southern European growth market.  The Greek government was striving to develop strategies for promoting the PV market without repeating the mistakes Spain has made.  That is why strong growth is expected in Greece in 2010.  However, EER points out that this will depend on whether authorities will be able to process the photovoltaic projects with a total nominal output of 3.7 GW that have been submitted for approval.  “The Greek market is at a crossroad now.  Either it will explode in 2010 or it will fall at Greek bureaucracy.”

 

Left: 1 MW solar power plant in Acquaviva Delle Fonti (Apulia). Image: Isofoton S.A. Right:Solar park in Vaglio di Basilicata (Province of Potenza). Image: Martifer Solar

Enormous photovoltaic growth potential in the Czech Republic, first beginnings in Belgium and Turkey

The new, strongly growing markets in the EU include the Czech Republic and Belgium.  The Czech government is strongly promoting photovoltaics:  Photovoltaic systems are receiving  just under 0.50 EUR/kWh of solar power. This feed-in tariff is guaranteed for 20 years. 2009 a number of MW plants were connected to the grid.  In Belgium, where photovoltaic plants with a total output of 100 MW were in operation until 2009, megawatt projects are planned with a clear trend towards large-scale roof-mounted solar power systems becoming visible.

Left: Photovoltaic power plant in Stribro, Czech Republic. Image: ANTARIS-SOLAR GmbH & Co. KG. Right: Photovoltaic roof system in a plant in the Czech Poříčí nad Sázavou. Image: KEMPER GmbH
Left: Photovoltaic power plant in Stribro, Czech Republic. Image: ANTARIS-SOLAR GmbH & Co. KG. Right: Photovoltaic roof system in a plant in the Czech Poříčí nad Sázavou. Image: KEMPER GmbH

Turkey could also become a very attractive market for the solar industry because it is one of the countries boasting highest solar radiation values worldwide and with its population of 70 million it is one of the most densely populated countries in Europe.  The economy that is becoming increasingly industrialised leads to a continuous increase in welfare levels and thus increases energy requirements.  The Turkish electricity market alone is experiencing an annual growth of 7%.  In order to become less dependent on imported energy, the Turkish government already announced in 2009 that feed-in tariffs for electricity from renewable energies will be increased.  Right now it cannot be established what impulses this will provide for photovoltaics.