Solar Business Focus

Volume 1 - 2012

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MARKETPLACE The global PV market – predictions for 2012 Ash Sharma, Sam Wilkinson & Frank Xie, PV Research Group, IMS Research, Wellingborough, UK and Shanghai, China Abstract Predicting what will happen to the global PV market is very nearly an impossible task. Its underlying principles are very similar to the dozens of other electronics mar- kets that IMS Research studies, but the key difference in the PV industry is the very close link to, and ultimate dependence on, government policy. In a few years' time, the introduction, halting or change (or rumoured change) of a single government's PV policy will have little effect on the global industry, and the huge swings in demand will be less common and less severe. The reasons for this are clear. First, because of geographic diversification in the industry, a single country will account for a smaller portion of the global total (unlike in 2011, when Germany and Italy accounted for more than half of global demand) and thus individual governments' policy changes will have a smaller impact. Second, if system prices continue to drop rapidly (and IMS Research believes they will), a growing number of regions will achieve the 'holy grail' of grid parity and will thus no longer depend solely on government policy to drive their markets. Installation demand to grow but fragment in 2012 Although in 2011 IMS Research predicted a 30% growth in installation demand (this forecast was perhaps the highest of all industry analysts'), we still under-called the market. Despite the incredibly challenging conditions throughout 2011, installations still soared by some 40% – exceeding the expectations of everyone in the industry. At the time of writing this paper (early February 2012), the task of producing our annual forecast of 2012's global PV installations has not got any easier. In recent weeks major incentive cuts have been mooted by some of the industry's biggest markets, including Germany, Italy, Spain, Greece, the UK and China. These markets alone accounted for nearly 70% of global demand in 2011 and so these cuts will undoubtedly have a major effect on the outlook for global demand. IMS Research's latest forecasts predict that 26–29GW of new PV capacity will be added in 2012. This would imply an increase of up to 10% over 2011. This may now seem unlikely given the harsh cuts being introduced; however, these cuts will lead to more rapid system price reductions throughout the supply chain and will allow respectable returns on investment to be achieved as well as industry growth. Despite the growing number of countries that now have incentives in place, and despite the fact that more than 20 countries will install at least 100MW of new capacity this year, the fate of the industry will still remain closely tied to just a handful of markets. Germany and Italy are the two largest factors in the equation, and, unsurprisingly, both markets are predicted to fall consid- erably in 2012 following their record year in 2011. Given that these two countries have been the European PV industry's growth engine, it is also not surprising that the European market is predicted to shed around 4GW of demand this year. In view of this, the industry will need the Americas and Asia to come to its rescue, and IMS Research predicts that these regions can more than make up for Europe's shortfall. The US market The US market is again projected to grow considerably in 2012, with large commercial and utility-scale plants driv- ing the market. Its growth would, however, have been even more spectacular had lobby groups successfully achieved an extension of the 1603 policy for renewable energy projects. Ironically, the expiration of the 1603 pro- gramme will still drive huge PV deployment in 2012 as IMS Research identified massive stockpiling of modules and inverters towards the end of 2011, since systems can still qualify for the scheme in 2012, provided some of the components were purchased in 2011. These com- ponents will of course need to be installed in 2012, and installers and integrators will most likely not want to be sitting on large inventories if prices start falling rapidly again. The biggest uncertainty facing the US market is of course the ongoing trade dispute, initiated by SolarWorld and others, with Chinese module manu- facturers. At the time of writing, no decision had been made, but the introduction of steep tariffs on imports to the USA looks increasingly likely and could have a seri- ous negative effect on its market's development. Asia's role Asia will play an increasingly significant role in the global 4 www.solarbusinessfocus.com

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