Despite concerns that reductions in government incentives will haltgrowth in installations of solar photovoltaic (PV) systems in 2011,iSuppli Corp. predicts the global PV market will continue to expand next year as falling prices make solar energy more attractive, according toiSuppli Corp.
Global PV system installations in 2011 will amountto 20.2 Gigawatts, up 42.7 percent from 14.2GW in 2010. While thisrepresents a significant slowdown from 97.9 percent growth in 2009, itremains an impressive performance in light of expected rollbacks insubsidy programs from various governments.
The figure presents iSuppli’s forecast of annual global PV installations.
Source: iSuppli, USA.
“Because of the cuts in Feed-in-Tariffs (FITS) in Germany and Italy next year,and the budget concerns in Greece, Italy and Spain, PV installations in2011 will slow somewhat compared to the blistering pace of 2010,” saidStefan de Haan, senior analyst for iSuppli.
“Furthermore, theweakening of the euro versus the Chinese yuan will artificially inflateprices for solar cells and other system components in Europe. Butcontrary to some observers’ fears, installations will continue to riseat a prodigious rate next year. Modestly falling pricing for solar cells and complete PV systems are expected to more than mitigate the negative impact of the falling FITs and rising yuan.”
Assuming the U.S. dollar/euro exchange rate remains above $1.20/€, iSupplipredicts crystalline silicon solar cell prices will not increase in 2010 and instead will decline by 5 percent compared to 2010.
Pricesfor installations in 2011 will fall slightly more, decreasing byapproximately 10 percent on average in Europe. Installation prices willdecline to compensate for reduced subsidies in the largest markets ofGermany, Italy and France.
Because of this decline, the averageReturn On Investment (ROI) for PV installation projects is expected toremain attractive and to continue to stimulate substantial demand. Evenwith Italy’s FIT cut of 10 to 27 percent split over the year, the ROIfor solar installations completed in the country during 2011 willaverage 10 percent for major market segments. In Germany, assuming a 13percent FIT cut, the projected ROI will be in the range of 8 to 10percent.
With the ROI still positive, leading solar countries will still experiencerobust growth in PV installations in 2011, although at a slower ratethan in 2010.
No. 1 solar energy country Germany will install 9.5GWworth of PV systems in 2011. This will represent a 43.9 percent increase from 6.6GW in 2010, down from 73.4 percent in 2010.
No. 2 solar generator Italy will install 2GW worth of PV systems in 2011, up 53.6 percent from 1.3GW in 2010.
The United States will install the third largest total of PV systems in2011, at 1.9GW, up 79.3 percent from 1.1GW in 2010. This is down from152.3 percent growth in 2010.
In fourth and fifth places,respectively, France and Japan will experience healthy expansion, withboth countries crossing the 1GW threshold for new installations for thefirst time.
A notable drop-out during 2011 will be the CzechRepublic as its installations plunge to 150MW to 250MW for the year,down from 1GW in 2010. The country’s precipitous decline will be drivenby new FIT legislation reducing the current tariffs. Foreign investorsdrove the market in 2009 and 2010, creating a solar boom comparable tothat in Spain in 2008. iSuppli expects that the Czech Republic’sgovernment will take measures to drastically reduce the amount of newsolar installations.
Solar event in 2012
Global PV installation growth is set to undergo a major deceleration in 2012,with a rise of only 2.8 percent to 20.8GW for the year.
“iSupplibelieves 2012 will be the year when the PV industry weans itself fromthe generosity of German subsidies,” de Haan said. “The German marketwill cool off and expand by only 4 to 5GW per year for the next severalyears. We believe the government aims to keep an orderly progression inorder to achieve an ultimate goal of around 80GW of installed PVcapacity.”
PV Module Inventory Dynamics, Q1 2009 – Q4 2010 (in Days)
Source: iSuppli, USA.