Asia Pacific poised to contribute significantly to global photovoltaic market growth in 2010

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Photovoltaic is a key technology option to accomplish the shift to a decarbonised energy supply.

he solar resources in Europe and world wide are abundant and cannot be monopolized by one country. Regardless for what reasons and how fast the oil price and energy prices increase in the future, Photovoltaics and other renewable energies are the only ones to offer a reduction of prices rather than an increase in the future.

Asia Pacific photovoltaic markets are poised to make a significant contribution to global photovoltaic (PV) market growth in 2010 following improvements in the policy environment in most of the key countries in this region. According to the Solarbuzz® Asia and Pacific Major PV Markets 2010 report, the key emerging country markets of China, India, South Korea and Australia, together with the long established Japanese market, contributed 0.9 GW of installations in 2009, or 12% of world demand. After a policy-led reduction in demand in South Korea last year, all five of these country markets are now expected to return to growth in 2010.

According to data, demand across the three countries will be up 85% this year in the mid-case Green World scenario. Japan is set for very strong growth in 2010 with clearly set out new incentives for photovoltaic. The expectations for China and India remain high. However, their challenge will be to translate their long pipeline of projects, now just on paper, into reality through government incentive policies that are certain and at a level high enough to attract financing. For the first time in three years, the Japanese market showed a significant increase in 2009. The domestic market more than doubled in 2009 to 477 MW as a result of the re-launch of a nationwide residential incentive program and the introduction of a Japanese version of a Feed-In Tariff (FIT) during the year. The FIT was originally planned to launch from April 2010, but to further accelerate the deployment of the domestic PV market, the government pushed it forward and started the program in November 2009. In addition, as of December 2009, over 400 regional governments (prefecture, city, town or village) offered residential PV support programs, including subsidies and loans as well as utility buy-back schemes and further assistance through utility Green Power Funds.

With the help of Solar Rooftops and Golden Sun programs in mid-2009, the PV market in China experienced strong growth, achieving 228 MW in 2009, an impressive 552% y-o-y growth. Growth was driven by the emergence of a significant on-grid segment, building-mounted and ground-mounted systems supported by specific government programs, with the largest provincial markets being Ningxia and Jiangsu. Specifically, on-grid building-mounted segments rose from a 33% market share in 2008 to 88% in 2009. As of June 2010, a total of 95 listed projects that are under development with National Energy Administration approval totaled 18.6 GW with more tender bids pending.

The India PV market grew 22% y-o-y, reaching 44 MW in 2009. Despite this, the growth was lower than expected, with incentive programs lacking success. The Ministry of New and Renewable Energy (MNRE) released its National Solar Mission, outlining planned growth of the PV market to 20-22 GW by 2022. While the global financial crisis had a moderate affect upon government funds allocation, national elections during 2010 slowed several government bureaus to a halt, delaying procurement and distribution activities until later in the year. Nonetheless, the project pipeline stands at 4.9 GW at June 2010.

South Korea’s PV market decreased in size by 65% falling from 276 MW in 2008 to just 98 MW in 2009. With over half of the aggregate 500 MW program cap reserved in just the first few months of launch for a program initially designed to ramp up steadily through 2011, the Ministry of Knowledge Economy (MKE) was forced to establish an annual installation cap. This caused the collapse in installations. Additionally, in September 2009 the FIT rates were adjusted downward for the 2010-2011 period to reflect falling module prices and encourage greater numbers of smaller, building-mounted systems.

Consumer demand in the residential sector drove Australia’s PV market in 2009, growing 222% y-o-y to 74 MW. Specifically 80% of all capacity installed was for on-grid residential use. As the majority of Australia’s electricity is produced with cheap coal, PV market growth in recent years was steady, rather than explosive. The Australia government revised its Solar Flagships program,aiming to commission 150 MW of PV power by 2015. In addition, every region has, or will have, a PV-specific FIT or net-metering policy in 2010.

9 countries are forecast to exceed 250 MW in 2010, up from 6 countries in 2009. The high growth in these regions can be attributed to strong supportive government policy and consumer demand, as per Solarbuzz®, an international solar energy market research and consulting company. PV demand growth in each major market region is being shaped by economic uncertainty, complex and frequently changing government policies. Despite political and economic woes, PV supply is barely able to keep up with demand.

Set against the weak European economic environment, the risk of future moderation of PV incentive policy around Europe will necessitate flexibility in corporate sales and marketing initiatives to handle changes in market mix. Germany continues to lead the global solar market in 2010. Despite this, impending policy changes, including two successive incentive tariff reductions in the next seven months, will place growing emphasis on seeking out growth opportunities in other country markets over the next year. German policy makers are wrestling with how to bring the market under some level of effective control. Despite the economic downturn, PV markets in Europe, such as Italy, the Czech Republic, Belgium and France, are forecast to grow strongly this year. Key to this, Italy, Czech Republic and France are forecast to generate some 3 Gigawatt (GW) of demand in 2010. Meanwhile, Spain is still reverberating from catastrophic PV policy adjustments over the last two years that continue to deteriorate.

Italy, Czech Republic, United States, and potentially even Japan are all capable of becoming just the third country to ever install 1 GW of PV in a single year. Recent key policy enhancements in Japan and the US have set the ground work for significant growth in these already substantial markets. The complex policy environment in the United States is driven by federal and state rebates, feed-in tariffs, tax incentives, net metering, grants and other short-term funding through the American Recovery and Reinvestment Act. These are combining to deliver a potential doubling in that market in 2010. In addition, utility-driven projects in California and other states with Renewable Portfolio Standards are creating the largest market segment.

PV project order books in China and India indicate that those two regions are well positioned to make a material contribution to global market growth over the next two years. Nearly 100 planned installations in China add up to an unrisked order book of 18.6 GW, while the Indian pipeline contributes a further 4.8 GW. Solar companies are operating more vertical integration models in the strategic markets, either through equity interest or via partnering. The ability to access sources of project financing remains key to success in most of the major markets. On the supply side, Japanese module manufacturers are increasingly focused on their domestic market, able to access the utility net feed-in tariff and new residential incentives. Distribution channels in that country are becoming more diversified, with new entrants like Yamada Denki and Toshiba starting to make their presence felt.

The global market for photovoltaic is expected to be worth US$12.9 bln in 2007, expected to increase to over US$32.3 bln by 2012, a compound average annual growth rate of 14.9%, according to a new report from BCC Research. Global shipments of PV cells/modules reached 2,875.1 megawatts (MW) in 2007. They are projected to grow by 28.6% to reach 3,697.3 MW by 2007, and by a CAGR of 30% to reach 13,724.4 MW by 2013. The rapid growth of PV will be driven by the global demand for energy of all kinds, the potential problems of climate change, the renewable features of solar energy and improvements

in PV technology and materials. PV will increasingly be made part of industrial and living structures. Silicon technology, which accounted for about 89% of the market in 2007, will continue to dominate through the end of our forecast period. Multicrystalline silicon will grow at a 285% rate through 2013. Recent improvements in this traditional technology and its reliability will keep it in the forefront, but silicon will represent only 79% of the market by 2013. Thin films, while only 10% of the market, will grow at a 45% rate through 2013.

Improvements in efficiencies and the use of these materials on flexible substrates will account for their rapid growth. Thin films will account for almost 19% of the PV market by the end of our forecast period. New technologies, such as nanostructured thin films and silicon and dye-sensitized solar cells, accounted for just under 0.5% of the market in 2007 but will grow at a 34% rate to reach 19.2 MW in 2008 and then exhibit 50% annual growth to achieve 145.7 MW by 2013. Research and development efforts on these new materials have been constant and results are just now starting to appear.

Solar photovoltaic (SPV) market in India is at nascent stage but has huge potential to grow. The SPV capacity in India is 100 MW. The market comprises of 20 companies engaged in the business of solar PV modules and 15 companies engaged in the business of solar PV cells while there are 50 companies that are engaged in the assembly and supply of PV systems as per Netscribes (India) Pvt. Ltd. An analysis of drivers reveals that abundant solar radiation, rise in foreign trade, fall in prices of raw materials, availability of funds, demand for off-grid PV applications, demand – supply gap and rise in polysilicon plants is driving growth in this sector. The key challenges identified are high costs for setting up large scale grid connected solar PV projects, lack of supply of silicon wafers, lack of standards, land acquisition problems, lack of consumer awareness. Various initiatives have been undertaken by the Government of India with the major initiative being the Jawaharlal Nehru National Solar Mission. Other initiatives include generation based incentives, focus on R&D, fiscal incentives, special incentive package, Akshay Urja shops, remote village lighting program and various State funded initiatives. The report also discusses the current market trends including tie-ups between domestic and foreign firms, introduction of EMI schemes, telecom towers adopting solar PV applications, thermal power companies diversifying into solar photovoltaic segment. The competitive landscape includes the profile, expansion plans of the players in the market. The report also covers key developments in the sector.

A market report from IMS Research indicates that despite installing over 220MW of photovoltaic modules in China in 2009 and a four-fold increase from 2008 due to two government incentives, several hurdles still need to be overcome for the China PV market to reach its full potential. The following major issues which remain unresolved and need to be overcome before mass adoption takes place: poor grid connection capability, no national industry standards for PV components and grid-connected PV systems and the lack of a clear feed-in-tariff (FIT) for all future PV systems. Regions suitable for large-scale PV systems are generally far from the regions consuming the electricity. It is uneconomical to transmit the power to distant population centres due to the financial burden of installing new transmission infrastructure and the efficiency losses associated with this. As the size and number of PV systems increase, the impact on power grid becomes more significant. National industry standard become more important as they can help maintain the quality of electricity from PV systems and help the grid operators manage the grid more effectively Chinese grid companies are currently quite unwilling to purchase the electricity generated by PV as there is uncertainty about the quality of the electricity and the impacts on the grid. Although it had been widely anticipated that a national FIT would be announced by the end of 2009 after the FIT of Dunhuang’s 10MW PV project was set at CNY 1.09/kWh in July, this did not occur. In a recent industry forum, one government official said that it was impractical to set a unique national FIT for all PV projects in the near future as the cost of PV projects is still too high compared with hydroelectricity and coal.

Photovoltaic status report published by the European Commission’s Joint Research Centre in September 2009 concludes that photovoltaic business has a huge potential for the next decade or even more. The most conservative growth is that it would triple by 2020 from 2008 which indicates an average growth of 5.6%. Next 10 years will see an exponential growth. Despite 2009 being a difficult year on economic growth could not arrest growth of photovoltaic business. The major chemical companies all around the World are gearing up for this massive growth of photovoltaic market. Some of the leading global players of either ionic liquids or PVDF films are:
• Merck – Ionic liquids
• Linde – Gases
• Arkema- PVDF film
• DuPont – PVDF film
• Dow – Solar shingle
They are investing in this business with the expectations of its tremendous growth. G20’s economic recovery plan foresees that in China, US$44 bln will be invested into new energy, including solar, over the next decade. Solar energy is bound to succeed as greater emphasis on renewable energy resources is seen all over the World.

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