Global solar demand up 40%, but rough road ahead for industry

Worldwide solar PV installations hit a record high of 27.4 gigawatts in 2011, a 40 per cent year-on-year increase that was spurred by a late surge in uptake ahead of further incentive cuts, according to the annual PV market report released by NPD SolarBuzz on Monday.

According to the report, the global PV industry generated $US93 billion in revenues in 2011, up 12 per cent Y/Y, while the industry successfully raised more than $US8 billion in corporate equity and debt.

The report says that the sharp rise in demand in the second half of the year followed a period of over-production in the first half, that triggered “the sustained price decline through the PV chain that came to characterise 2011.”

The year was also noted for the rising dominance of Chinese manufacturers in crystalline silicon wafers, cells and modules, a decline in the share of thin film, and rapid growth in demand in Asian markets.

The report named the top five PV markets as Germany, Italy, China, the US and France – which together contributed 74 per cent of global demand in 2011. China gets special mention for its market soaring 470 per cent year-on-year, and leaping to third place from seventh in 2010.

Europe went in the opposite direction, however, with EU countries accounting for 18.7 GW, or 68 per cent of world demand in 2011, down from 82 per cent in 2010. This was despite strong growth in France and Italy, says the report, as well as a a year-end surge in German demand that meant that the three countries collectively accounted for 82 per cent of the European market.

Australia, meanwhile, is at number seven on the SolarBuzz list. According to local analysts Sunwiz Consulting and Solar Business Services, Australia installed around 830MW of solar PV in 2011, up from 360MW in 2010.

As for the next 12 months and beyond, SolarBuzz predicts that things could get rough, for some. The consultancy estimates that the Rest of World markets will increase to 32 per cent of global demand, from just 20 per cent last year, while Europe loses share, dropping to 53 per cent. By 2016, European market share is projected to fall below 42 per cent as North America and several Asian markets grow rapidly. China is forecast to reach 17 per cent of the world market by 2016.

“Aggressive cuts in incentives in Germany and other European countries have set up the potential for a global market decline in 2012, but ahead of these the rush to install is on, especially in Germany,” said Craig Stevens, President of NPD Solarbuzz. “These cuts in tariffs will force companies to embrace self-sustaining marketing models earlier than they expected. Meanwhile, Chinese policy makers will face a decision whether to stimulate their domestic market even more than planned to support their globally dominant manufacturing base.”

“Cutbacks in polysilicon, wafer, and cell production plans before mid-year will be required to avoid further damaging margin declines,” Stevens added. “Meanwhile, it is significant that polysilicon manufacturing capacity‑long the most constrained and profitable part of the PV chain‑now has the highest capacity in the PV chain.”