TODAY’S STUDY: ROOFTOP SUN IN THE WORLD TO 2015

By the most recent calculations, solar energy is the fastest growing industry in the world. In 2010, it added 16.6 gigawatts globally to reach a cumulative figure of 40+ gigawatts. That’s over 40% growth in one year.

At Windpower 2011, the subject of solar energy was raised with a group of high-powered CEOs whose careers have been spent advocating for utility-scale wind projects. They readily assented to 3 points: (1) The logic of distributed rooftop PV is undeniable, especially in parts of the world where there is otherwise no access to electricity; (2) the co-location of large-scale solar and wind projects is likely to soon make both forms of energy more economically viable because their limits, uses of land and peak production phases are so complimentary; and (3) the relationship between the industries is not competitive but cooperative.

There is an irresistible inevitability to the powers of the sun, wind, flowing waters and deep heat of this good earth leaving only 2 viable options to those with vested interests in the Old Energies: Get out of the way or pitch in with the building. “…For he that gets hurt will be he who has stalled…” Bob Dylan, The Times They Are A-Changing

Global Market Outlook for Photovoltaics Until 2015
May 2011 (European Photovoltaic Association)

Introduction

Over the past decade, the photovoltaic (PV) market has experienced unprecedented growth. In particular in the last year, the photovoltaic market has reached a cumulative installed capacity of roughly 40 GW world-wide, with an annual added capacity of 16.6 GW. The photovoltaic power is well on the way to becoming a fully competitive part of the electricity system in the European Union (EU) and an increasingly important part of the energy mix around the Globe. But much of the progress in recent years has been very heterogeneous, varying from country to country, due to several factors, the most important being different national regulations and incentive schemes as well as varying availability of financing facilities.

These are just some of the findings in EPIA’s Global Market Outlook for Photovoltaics until 2015, a key publication for the PV industry. Based on an internal analysis of market data from industry members, national associations, government agencies and electric utilities, the figures presented in this edition were discussed among the world’s principal actors in the photovoltaic industry during the 6th EPIA Market Workshop, held in Paris in March 2011. For years, EPIA has put a great deal of effort into observing and analysing PV markets.

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Thanks to its intimate contact with key players in the industry, national PV associations and its deep knowledge of PV policies and support schemes, EPIA market figures are a credible and authoritative source of short-term market forecasts as well as long-term scenarios. With the massive growth of the PV market, data reliability is becoming a crucial issue: industry players, electric utilities and policy makers must count on reliable data to orientate their decisions, launch investments or plan updates on legislation. EPIA advocates the availability of quick, transparent and reliable market information and, therefore, encourages the adoption of effective monitoring systems.

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A doubling of the market in 2010

The PV industry experienced significant growth in 2010. Capacity additions grew from 7.2 gigawatts (GW) installed in 2009 to 16.6 GW in 2010. The total installed capacity in the world now amounts to around 40 GW, producing some 50 terawatt-hours (TWh) of electrical power every year.

This major increase was linked to the rapid growth of the German and Italian markets. With 7.4 GW installed in Germany in just one year, the country continues to dominate the PV market world-wide. Italy installed 2.3 GW, starting to exploit some of the potential of its huge solar resources. Other countries also saw significant growth. The Czech Republic experienced a burst to 1.5 GW in 2010 that is, however, unlikely to be sustained in 2011. Japan and the USA almost reached the gigawatt mark with 990 and 900 megawatts (MW) respectively, installed last year. France reached over 700 MW, while Spain regained some ground by installing 370 MW after two years of strongly adverse conditions. Belgium connected more than 420 MW of PV capacity to the grid in 2010. The entire European Union installed slightly more than 13 GW of PV capacity in 2010 while the rest of the world accounted for over 3 GW.

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For a couple of years, the PV market growth has been driven by rapid decrease in prices accelerated by support schemes. The most mature market today, Germany, where the lowest prices for PV systems can be observed, will continue to decrease its Feed-in Tariffs (FiTs) to follow the declining PV prices. However, the official targets for PV in the National Renewable Action Plan in Germany leave room for additional installations, with an annual market of more than 3 GW over the next 10 years.

In Italy, the past year has seen a lot of inaccurate information and speculation about the country’s market volume. This clearly pushed authorities into reacting with emergency measures that risked the development of PV in the country. The situation in 2011 may have been clarified by the time of publication, but the prospects for 2012 and beyond remain unclear and depend mainly on the policy decisions of these days.

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A desirable solution to a sustainable future

The crisis in Japan has re-opened the debate on the world’s future energy mix and security of energy supply. In this context, PV is more than ever part of a global renewable solution. Some scenarios have demonstrated that renewables could meet up to 100% of the EU energy demand by 2050. Switching to PV is not just a realistic option for tomorrow’s energy mix; it is also a desirable solution for society as a whole.

PV markets are stronger than ever, and PV now appears on the energy map of several countries as a real alternative to conventional electricity sources. For example in Spain, up to 4% of the electricity demand was provided by PV during the summer. In several countries, grid parity for residential systems will be reached in the coming years. In some specific cases, in countries or regions with very high electricity prices, PV could soon become competitive with net-metering only.

Adequate support policies that have been driving the markets so far, such as the FiTs, must continue and be adapted to the cost curve of PV. The PV industry also supports well-designed support schemes that simplify the authorization processes and moreover limit the cost for electricity consumers, while ensuring the development of the market and industry.

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A Paradigm Shift in progress

The evolution of the PV market in recent years has been heavily linked to the confidence and vision of smart policy makers in supporting the development of the technology. In only one year, the installed capacity in Europe almost doubled and, at the current pace, Europe could increase the proportion of its electricity generated from PV by one percent every two years.

…Scenarios

With strong price decreases of PV technology in recent years and increased electricity prices across Europe, PV markets are approaching this key measure of competitiveness known as grid parity.

Grid parity refers to the moment in time when the savings in electricity cost and/or the revenues generated by selling electricity on the market are equal to or higher than the long-term cost of installing and financing a PV system. While this situation will appear at different points in time in every EU country, for now the market is still driven by incentives.

This means PV market deployment still depends on the political framework of each country. Although support mechanisms for renewables are encouraged by the European Commission, they are defined in national laws. The introduction, modification or phasing out of such schemes constitutes a significant element of our forecasts and scenarios as they have profound consequences on national PV markets and industries.

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In March 2011, EPIA completed an extensive data collection exercise among a highly representative sample of the PV industry, electric utilities, national associations and energy agencies. Based on the cross-checking of data and the consolidation of complementary market projection methods, EPIA has derived two scenarios for the future development of the PV industry:

The Moderate scenario: This scenario assumes a “business-as-usual” market behavior with no major reinforcement of existing support mechanisms, but takes into account a reasonable continuation of current FiTs aligned with PV systems prices.

The Policy-Driven scenario: This scenario assumes the continuation or introduction of support mechanisms, namely FiTs, accompanied by a strong political will to consider PV as a major power source in the coming years. This must be complemented by a removal of non-necessary administrative barriers and the streamlining of grid connection procedures. Under these two scenarios, this report analyses, on a country-by-country basis: the historical development of the PV market; existing support policies, their attractiveness and expected developments; administrative procedures in place; national renewable energy objectives; and the potential for PV.

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Installations and connections

EPIA’s methodology includes only the systems connected to the grid and not those that have been installed but not yet connected. Therefore, the cumulative installed capacity refers to installations that can make a real contribution to meeting the energy demand. This also reflects the regulatory point of view as FiTs are paid only to systems that are connected and produce electricity.

The difference between installations and systems connected to the grid can be quite significant in some cases. With many projects being installed in November and December 2010 due to expected FiT changes, choosing one methodology over the other can modify the year-to-year PV market figures considerably. Consider the case of Belgium: from a connection point of view, almost 200 MW of systems installed in 2009 were connected only in 2010. In our methodology, therefore, the market progressed from 285 MW connected in 2009 to 424 MW in 2010. From an installation point of view, however, the market decreased from 480 MW to just 223 MW, due to a sharp decrease in Flanders.

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Including off-grid installations

Long before PV became a reliable source of power connected to the grid, it was largely used to provide electricity in remote areas that lay out of the reach of electricity grids. While off-grid systems in the EU only account for around 1% of the installed PV capacity (with slightly more than 130 MW), they represent a significant power source in many other countries. For this reason, off-grid systems are also taken into account in the total installed capacity. In the USA, off-grid systems represented 10% of the overall market in 2009. In Australia and South Korea, dozens of megawatts of off-grid capacity are installed every year and are accordingly taken into account in the total installed capacity in those countries…

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Conclusion

Three main factors have driven the spectacular growth enjoyed by PV in recent years:

• Firstly, renewable energy is no longer considered a curiosity. PV has proven itself to be a reliable and safe energy source in all regions of the world.

• Secondly, the price decreases that have brought PV close to grid parity in several countries have encouraged new investors.

• And finally, smart policy makers in key countries have set adequate FiTs and other incentives that have helped develop markets, reduce prices and raise investors’ awareness of the technology.

Over the last 10 years, progress has been impressive. The total installed PV capacity in the world has multiplied by a factor of 27, from 1.5 GW in 2000 to 39.5 GW in 2010 - a yearly growth rate of 40%. That growth has proved to be sustainable, allowing the industry to develop at a stable rate.

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The EU, having overtaken Japan, is now the clear leader in terms of market and total installed capacity - thanks largely to German initiatives that have in turn helped create global momentum. In the rest of the world, the leading countries continue to be those that started installing PV even before the EU. The market is expanding every year, with new countries joining progressively. In the so-called Sunbelt countries, decreasing prices are bringing PV closer to grid parity and helping spread awareness of its potential.

But what about the future of PV market development? With between 131 and 196 GW of PV systems likely to be installed in 2015, the forecasts are promising. But the financial crisis and competition with other energy sources have put pressure on policy makers to streamline the incentives for PV. PV is now a mature technology that is rapidly approaching grid parity. The time has come for reasonable support schemes in line with price evolution. In the coming months and years EPIA will support the adaptation of support schemes to prices. But until grid parity is reached, the PV industry is committed to ensuring the best possible use of support schemes.

The future of the PV market remains bright in the EU and the rest of the world. Uncertain times are causing governments everywhere to rethink the future of their energy mix, creating new opportunities for a competitive, safe and reliable electricity source such as PV.