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Lux predicts flat demand and revenue declines

Using at times impassioned language, Lux Research has published a report into the 2012 photovoltaic market, which could serve as a “great awakening” for the industry. Predicting installed capacity growth of only 400 megawatt (MW) and global revenue declines from US$110 billion in 2011, to US$92 million in 2012, the report investigates solar’s future, post-subsidies.

European markets are expected to decline in installed capacity from 19.5 GW in 2011 to 15.8 GW in 2017.

Conergy AG

Boston-based Lux Research published its report titled: Market Size Update 212: The Push to a Post-Subsidy Solar Industry today, in which it set out relatively dire short-term predictions for the industry. In contrast to yesterday’s figures from U.K.-based IMS Research, installed photovoltaic capacity is forecast to grow very slightly in 2012. Lux predicts installed capacity to reach only 26.9 gigawatt (GW) in 2012, an increase of less than one GW. The reports do concur however, that a shift to markets outside of Europe is likely to be the trend in coming years.

The extremely low global industry revenue forecast made by the Lux Researchers is due to a supply glut, which in turn has been caused by capacity expansion in China, incentive cuts in Europe and the expiring of the 1603 Cash Grant in the U.S. The report forecasts revenues shrinking from US$110 billion to US$92 billion.

Choosing not to mince words, report author Matthew Feinstein said in a release: "The solar industry’s storied history has created a massive misperception of technology maturity and commodity status."

Describing the shift away from feed in tariff and subsidized markets, Feinstein said: "Opportunities remain and extended success is possible for stakeholders, but the market’s shifting geographic profile – combined with a forced withdrawal from subsidy addiction – means strategic, surgical moves are needed."

Amongst the dire figures, the longer-term prognosis appears more positive. Lux predicts global installed capacity to reach 38.3 GW in 2017, after a period of gradual growth. Europe’s share of installed capacity in this time is set to fall from 19.5 GW in 2011, to 15.8 GW in 2017.

Emerging markets are set to be the star of the evolving photovoltaic market, according to Lux, with South Asia growing from one GW in 2011, to 4.5 GW in 2017. Subsequently, the ASEAN region, Africa and South America are set to “take the reigns” from 2017 to 2022.

In terms of industry segment, utility-scale installations are set to grow from 6.3 GW in 2011, to 13.8 GW in 2017. This is due largely to growth in China.

Financial innovation, in the emerging field of the securitization of smaller installations, is also an area of potential growth, predicts Lux. Instruments such as "renewable bonds", which are presently being tested, are set to become more common, with banks such as Citigroup expected to lead development in the field.

Unfortunately for module producers, oversupply remains a possibility well into the future. Capacity reached 50 GW in 2011 and demand is well short of that figure. Lux sites China’s 12th Five-Year plan, which calls for major expansions in solar capacity. Even without taking Chinese expansion into account, Lux predicts global oversupply capacity to increase from 23.5 GW in 2011, to 40 GW in 2017.