Despite the positive progress, the company says that there are some countries and technologies, which are being affected by the challenging economic conditions, consequently "leaving the renewable energy market in an overall state of flux".
For instance, merger and acquisition (M&A) activity was said to be "limited" at the end of last year, due to the fact many industry stakeholders are being cautious about the instability of the global financial market.
However, in terms of solar M&A activity, UK-based Terra Firma Investments acquired Italian PV company ReteRennovabile from the grid operator, Terna, for an estimated 670 million. With ReteRennovabile, Terra Firma hopes to grow its solar portfolio in Italy.
Furthermore, Intevac has bought California-based solar module design firm, Solar Implant Technologies, for an undisclosed sum. It is reportedly looking to commercialize Solar Implants methods for cell manufacturing. Its methods are said to improve conversion efficiency and reduce manufacturing costs.
According to Ernst & Young, there are concerns that both Chinas wind and solar supply chains may be "unevenly balanced and unable to support the rapid growth experienced ( ) in the past year."
Citing CCID Consultings October report, the company says that polysilicon production is below the required capacity and is "over-reliant" on imports. It adds that 95 percent of solar batteries produced in the middle stage of the supply chain are exported. Meanwhile, it states: "Production of PV components at the lower end of the supply chain is challenged by over-capacity and lower profit margins, due to insufficient investment and low technical content."
However, it goes on to say that shares in Chinese solar power companies temporarily soared in December after the government announced that it will introduce subsidies, which will reportedly account for half of the bidding contract prices for key solar equipment.
Overall, China is expected to have an installed capacity of 20 gigawatts of solar power by 2020, compared with 600 megawatts at the end of 2010. The government has also said it will create 13 industry zones for demonstrations of solar energy application, in a bid to facilitate deployment of solar energy at the scale required to meet this target.
Ernst & Young additionally makes reference to Suntech's joint venture with two state-owned companies to develop a 1.2 GW solar farm in Jiangsu province. It says that Suntech will invest USD$60 million for a 40 percent stake in the project. The first 600 MW is expected to be completed by mid-2011.
The company praised the decision made by the U.S. Government to extend the 1603 Treasury Grant Program through to the end of 2011. It says this is a "sign that the U.S. Administration is prepared to take necessary steps to boost renewable energy development, even if it does come at the eleventh hour." However, it says there is lingering long-term uncertainty.
Citing Germanys recent feed-in tariff reductions, Ernst & Young says that the cuts come as a result of exponential growth in the PV industry in the past year, "with component costs having fallen disproportionately to the tariff levels". It adds that solar power currently contributes nine percent of the electricity which falls under the German Renewable Energy Act (EEG), although it accounts for 40 percent of the costs of the EEG. As a result, it believes that further reductions are expected to be implemented in the new EEG in 2012.
Ernst & Young believes the UK PV sector is continuing to gather pace. It adds that the announcement by the Department of Energy and Climate Change over the early FIT review should help to provide more certainty to the investment community, after its original announcement last November, which stated it was considering a tariff reduction for large-scale PV projects.
It goes on to say that the high number of renewable projects with a signed connection agreement with the transmission network operator is a positive sign that the country will meet its EU 2020 renewable energy target. However, it states that a complex planning system appears to have led to the UK missing its 2010 target of 10 percent: it produced just 6.7 percent of electricity from renewable energy sources.
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