IHS, a “global information company,” has reported that global solar PV installations totalled about 32 gigawatts (GW) in 2012, a new record that beats 2011’s 28 GW and 2010’s 20 GW.
As could be expected, 2013 is projected to best 2012, as is every year after that for many years to come. IHS projects that the annual installation capacity will reach 61 GW by 2017, triple 2010’s total and nearly double 2012’s. (See the chart on the right.)
Meanwhile, the price of solar modules is projected to keep falling. The net effect is that solar PV suppliers will see their annual revenues drop, according to IHS, resulting in a continued “solar shakeout” as weaker companies fall out of the market. This is a natural process in the maturation of nearly every industry.
“According to IHS, industry revenue—measured as the system price multiplied by total gigawatts installed is expected will decline to an estimated US$75 billion in 2013, down from US$77 billion in 2012,” PV-Tech writes. “PV industry revenue was said to have peaked in 2011 at US$94 billion.”
However, IHS calculates that solar PV revenue will rise above $100 billion between 2014 and 2016, and will reach as much as $115 by 2016.
With the market tightening, but still growing fast, suppliers are under pressure to reduce their own costs however they can — through technology innovation, manufacturing innovation, waste reduction, or other measures.
The bottom line: solar PV prices will continue to drop, installations will continue to increase, and solar PV suppliers will continue to go out of business as the industry consolidates.
The Changing Market
It’s no secret that Europe has led the solar installation race, with Germany clear at the head. But other regions have been getting into the game to a much greater degree in recent years, and that’s expected to continue.
“IHS noted that a major regional shift in PV demand was occurring and that the industry was becoming truly global. Europe was said to have accounted for more than 80 percent of solar demand in 2010, declining to 53% in 2012, and forecast to slide further this year to only 39% of the global market. Not surprisingly, Asia and in particular China is on track to replace Europe as the world’s largest source of solar installations in the coming years.” A Solarbuzz report recently found that 33% of global solar PV shipments ended up in China.
With China’s rapidly growing economy and astounding energy use growth, this is no surprise. However, these aren’t the only factors affecting its solar installation growth. 7 out of the top 10 leading solar PV suppliers are based in China, but they are being squeezed hard by anti-dumping legislation in the US, Europe, and India, as well as by the shrinking profits mentioned above. As a result, the Chinese government has started to shift its focus onto stimulating solar demand (rather than solar panel production).
“IHS expects Germany to fall to third place in 2013, behind China and the United States. Japan and Italy follow in fourth and fifth, respectively,” PV-Tech writes.
“Geographic fragmentation is also expected to escalate this year. The market research firm noted that the top 5 countries by installations accounted for nearly 75% of total solar demand in 2012, but is expected to decline to 65% in 2013.“
In a phrase: solar power is becoming global.
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