opportunity:energy

As more reliable data are released over last year’s photovoltaics installations figures, the picture of solar market’s growth is getting clearer. The latest information gathered from the World’s top markets have been summarised by EPIA (the European Photovoltaic Industry Association) in their recent publication, “Global Market Outlook for Photovoltaics Until 2015“. By all means, 2010 will be remembered as a triumphal period for the progress of solar power in the energy sector. Which countries led to such results, and is this exponential growth set to continue?

Official figures put Germany, so far the world’s largest PV market, at around 7.4GW of newly installed PV capacity in 2010. Italy stands second at 2.3GW of “connected” capacity, while last year’s other major players were the Czech Republic at 1.5GW, Japan (1GW), US (0.9GW) and France (0.7GW). These countries, along with several minor but growing markets, added up, the EPIA says, to reach a world figure of 17.7GW installed in 2010, 13.3 GW of which was in Europe alone. Such numbers mean that the world’s cumulative capacity now stands at over 39GW, up from 22GW just a year before. Impressive numbers, for sure – reading the fine print though, certain clues suggest last year’s installations are still underestimated.

While overall national figures are correct, data coming from Italy have been subject to great uncertainty. Official statistics released by Italy’s Energy Agency, GSE, provide a better insight into what has been an unforeseen boom in the PV industry last year. GSE confirmed indeed that 2300MW were installed and connected during 2010 (totalling 3470MW of cumulutated capacity, up from 1144MW just a year before). But this is not the end of the news. Due to a decree allowing late installations to receive 2010′s incentives – even if connected at a later stage (by first half of 2011) – nearly 4,000MW  more were actually built last year, awaiting connection. This confirms (as I wrote in an earlier article) that around 6GW of new capacity were installed in Italy alone in 2010, a staggering eight-fold increase to 2009′s installations figure of 718 MWs. As a matter of fact, Italy’s PV connected capacity stands now at around 6,000MW (from GSE’s website), a number that's growing by the day and poised to soon top 7GW, despite a current standstill in real 2011 installations triggered by recent legislative uncertainty (as I explained in a previous post).

What does this mean in global terms? With the latest numbers confirmed by GSE we can now estimate that the PV World market actually topped 21GW in 2010, three times as much as 2009 figures (7.2GW). It is worth noting that Germany and Italy accounted for two thirds of that, making the industry heavily dependent on energy policies by these two countries. Sleeping giants like the US and China, with 900MW and 500MW respectively, still account for less than 10 per cent of the global market.

In a surge that would have been deemed impossible just two years ago, cumulative PV capacity worldwide has doubled in just one year, from 22GW at the end of 2009 to about 43GW 12 months later. It is worth noting that, as a consequence, while solar power still contributes with a very low share to worldwide electricity consumption, it is now quickly making a dent in the energy sector and eroding market share to the detriment of traditional energy sources, particularly in its top markets.

In Europe, gas plants lead the way with 28GW of installed capacity in 2010, followed by PV with a (revised) estimate of over 17GW, and wind with 10GW (this sector experienced a short phase of decline after several years of unstopped boom).

What’s in the pipeline then for 2011? The PV market is now in a tricky situation. Not only have generous incentives inflated last year’s world market to unforeseeable levels, requiring an exponential growth in production capacity from the industry of solar panels and inverters. The legislative over-reaction by most European governments which led to deep incentive cuts and severe limitations to large scale PV projects now means that key countries like Germany, Italy and Czech Republic are unlikely to see the same level of installations this year: the first two could fall back to around 5GW and 2GW respectively, while Czech Republic is expected to fall to an almost complete standstill. This means a potential gap of 8GW from three countries alone.

Will other growing markets be able to fill that gap? Hardly. US, Japan and China are now in the spotlight, ready to quickly increase their share of the solar market. But even if each of those national markets doubled this year, they would “merely” contribute with some 2.5GW in total. More countries are in line, but their market share or projected growth are such that nothing can help the fall of this year’s market, with stabilisation and growth to be seen not before 2012.

Most market research firms won’t amend their 2010 stats, and will probably add Italy’s late 2010 installations on to 2011 figures, therefore showing a distorted, stable or even slightly growing PV global market this year compared to 2010 (as an example, refer to IMS PV forecasts). But this won’t change the fact that the solar industry (selling modules, inverters, etc.) will in reality suffer a recession in 2011, whose consequences are easy to predict: inventories piling up, prices falling, and a global PV industry consolidation. In fact, it’s already happening.

2012 and the following years will offer a much better scenario, with solid worldwide growth finally not reliant on single nations’ policies, but on a growing surge of mature markets favoured by stable, low-incentive policies and ever cheaper solar energy.

Carlo Ombello writes about sustainability and renewable energy technology. This article first appeared on his blog opportunity:energy, and was reproduced with permission.