Is global solar headed for a boom or a bust?

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Predictions for the demise of solar PV in 2012 may be premature. The China market may quadruple, the US may double and even Germany looks set to make gains, despite tariff changes. Plus: the big predictions for clean-tech this year, and how the US military, post nuclear Japan and building refits will influence the market.

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Predictions for the growth of solar PV have always proved problematic – and mostly wrong – in recent years as analysts and economic forecasters wrestle with the implications of assumed and actual falls in technology costs.

2012 could be no exception. It has begun with a particularly subdued air, with most solar panel manufacturers posting signficant losses for 2011, and warning of static revenue outlook at best for the coming year, and in turn crimping margins as the industry tries to work through a major inventory backlog. Rationalisation and consolidation are the themes of the year.

The air of gloom has been fuelled mostly by the prospect of dramatic cuts in solar tariffs in Germany, and elsewhere in Europe, where demand has been predicted to fall by at least half, with increased demand from China, India, Japan and the US at best offsetting that fall.

New forecasts, however, suggest that solar PV may yet be in for another year of sharp growth. Germany, which was the second biggest market in 2011 with 7.5GW of installations, was seeking to cut installations to around 3-4GW in 2012, but market analysts suggest this is now futile.

DIHK, the German chamber of industry and trade, this week predicted Germany would likely increase installations in 2012 to 8GW, a prediction made even by more likely after the German parliament decided to delay the introduction of subsidy cuts. Bloomberg New Energy Finance supported this prediction, saying that up to 5GW of solar PV could be installed in the first half of the year, before a sharp fall takes total installations for the year to around 7GW.

GTM Research, a US-based analyst, says Germany will not be the only country to register growth in solar this year, with China and the US expected to double installations in 2012. China, which installed just over 2GW in 2011, is expected to double or even quadruple that in the coming 2012, thanks to the introduction of feed-in-tariffs last year. Suntech CEO Zhengrong Shi said last week that China could install up to 5GW, rival group Jinko Solar has predicted up to 6GW, while JA Solar said this week it could be as high as 8GW.

GTM Research says the US market is expected to grow to 3GW in 2012 from 1.8GW in 2011, while strong growth is expected to continue in Italy, which last year installed nearly 9GW – almost a third of all installations across the globe. The country’s largest utlity Enel said last week installations could top 5GW in 2012. Installations in Japan and India, and elsewhere in the world, are also expected to grow.

Here’s what GTM’s forecasts for 2016 look like: (note that Australia is not deemed worthy of an individual forecast).

 

 

 

Meanwhile, Clean Edge, another US consultancy group, has produced its annual Clean Energy Trends survey, which showed that the value of the solar PV industry (including modules, system components, and installation) increased from $US71.2 billion in 2010 to $US91.6 billion in 2011. It predicts that will expand to $US130 billion by 2021, which doesn’t sound like a lot of growth but is based on a forecast of solar PV costs falling to just one third of their current levels.

On this basis, the annual installation of solar PV by the end of the decade will be more than 120GW.

This graph below, tracking the recent and forecast changes to technology costs, offers an insight into why.

“Solar PV is on a steep price decline that is bringing it into cost parity at the retail level (for residential, commercial, and industrial applications), and increasingly competitive at utility scale, far sooner than many had projected,” Clean Edge notes in its report.

“Clean tech isn’t withering on the vine as some would proclaim, but instead is continuing its rapid expansion, witnessed by the growth of green buildings, smart meters, hybrid electric vehicles, distributed and centralized renewables, LED lighting, and a host of other clean-tech breakthroughs that are becoming increasingly ubiquitous.

“There have been growing pains for many firms, with low-cost manufacturing in China and elsewhere giving U.S. and European manufacturers a not-so- insignificant run for their money, but the industry as a whole has continued to expand throughout the economic downturn of recent years.”

It said combined global revenue for solar PV, wind power, and biofuels, surged by 31 percent over the prior year, growing from $US188.1 billion in 2010 to $US246.1 billion in 2011. The bulk of this expansion came from double-digit growth rates for both wind and solar deployment, along with an increase in pricing for biofuels (see graph below).

Clean Edge noted that there were five key trends to watch in the clean energy markets: This included the prominent role of the US military in cleantech development, the likelihood of Japan moving to a clean-energy, post-nuclear future, the move to deep commercial building retrofits, increased focus on waste to resource technologies, and new storage solutions that will assist grid balancing and rapid clean energy deployment.

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3 Comments
  1. chris 8 years ago

    How do analysts factor in Japan as an emerging market – with its huge shortfall of energy and a commitment to keep nuclear out of the energy mix?

  2. Tim Buckley 8 years ago

    G’day.
    This article is spot on. With retail grid parity rapidly approaching, and solar module prices down another 15% in 1Q2012 quarter on quarter, wholesale grid parity is only a matter of time. Then the debate becomes what do we do with all our unprofitable legacy fossil fuel assets? We cant afford for the Australian government to bail AGL out of its brown coal power generating acquisition in its entirity. Why should tax payers bail AGL out when it is voluntarily buying one of the most polluting power stations in the Western world for $3bn?
    We at Arkx think the Japanese and Indian solar markets will double in 2012, and potentially double again into 2013/4. Just like China and the US. Behind these four, the next wave of installs will be in Israel, Saudi Arabia, Algeria, South Korea and South Africa.
    Solar grid parity is rapidly approaching, and this will force an energy system revival based on renewable and clean power sources that are deflationary in nature, plus that also give greater energy diversity and security. There are a set of goals worth working towards!
    Cheers Tim

    • Jake 8 years ago

      If only you guys had an office in Melbourne…

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