EPIA: Bright future for PV, but global rebalancing of growth expected

The European Photovoltaic Industry Association (EPIA) report found that the recent financial crisis and the up and down nature of the competition with other energy sources mean that the pressure is on policy makers to streamline the incentives for photovoltaics in order to maintain growth.

The association completed an extensive data collection exercise among members of the photovoltaics industry, electric utilities, national associations and energy agencies, which helped them to come to their conclusions.

"The future of the PV market remains bright in the EU and the rest of the world," the report said. "Uncertain times are causing governments everywhere to rethink the future of their energy mix, creating new opportunities for a competitive, safe and reliable electricity source such as PV."

New countries using photovoltaics have helped the expansion of the market each year, with the report making special mention of the equatorial ‘Sunbelt’ countries. It also said that photovoltaics was now considered a "mature technology" and that this perception may lead to a paradigm shift as the technology approaches grid parity.

Predictions

EPIA suggests that between 131 and 196 GW of photovoltaic systems are likely to be installed in 2015 worldwide, with the 100 GW mark possibly being reached in 2013. Overall, this provides a promising outlook and huge growth from the 40 GW that have been installed until now.

All of the Eurozone countries examined in the report are expected to exceed national targets even under moderate market conditions in coming years. The report expects the market to at best stabilize in the EU in 2011 and 2012 before recovering in 2013.

Baseline European growth sees four percent of energy in the EU provided by photovoltaics in 2020, whereas more positive outlooks might see in excess of 12 percent, which would indicate a paradigm shift scenario, where the assumption is that all barriers are lifted and specific boundary conditions are met.

In 2010, the installed capacity in Europe almost doubled and if this pace continues, Europe could increase the proportion of its electricity generated from photovoltaics by one percent every two years moving forward.

However, growth in other regions and a halt in major growth in Europe could see a global rebalancing in the coming years, the report suggests, with the EU accounting for less than 40 percent of the world market by 2015 in the Moderate scenario, and remaining at around 45 percent in the Policy-Driven scenario. It currently sits at about 70 percent.

The shift in the market is expected to see Asia emerge as the most fertile market, despite Europe maintaining its installed capacity lead for at least another decade.

Driven by local and global energy demand, the fastest photovoltaics growth is expected to continue in China and India, followed by South-East Asia, Latin America and the MENA countries. The photovoltaics potential of the Sunbelt countries could range from 60 to 250 GW by 2020, and from 260 to 1,100 GW in 2030, representing 27 percent to 58 percent of the forecast global installed photovoltaics capacity by then.

The boom that has occurred in the EU over the past few years is expected to be tempered by changes in policy that will definitely lead to lower growth, and possibly negative growth. Overall, despite the drop from the EU, non-EU countries should more than pick up the slack from 2011 and 2012 onwards, ensuring continuous global photovoltaics market growth until 2015 and beyond.

The report stresses the importance of policy in the development of the market and, at this stage, says that photovoltaics remains an incentive driven market: these incentives will remain vital for continued growth until the market achieves grid parity. This means photovoltaics deployment still depends on the political framework of each country. However, with strong price decreases of technology and increased electricity prices across Europe, photovoltaics markets are quickly approaching this key measure of competitiveness.

"Until grid parity is reached, the PV industry is committed to ensuring the best possible use of support schemes," stated the report.

It also suggested that the overcapacity which characterized 2010 would not temper production, as several companies had already made bold goals for production in coming years.

Achievements to date

"Over the last 10 years, progress has been impressive," the report said. "The total installed PV capacity in the world has multiplied by a factor of 27, from 1.5 GW in 2000 to 39.5 GW in 2010 – a yearly growth rate of 40 percent. That growth has proved to be sustainable, allowing the industry to develop at a stable rate."

The evolution of the photovoltaics market in recent years has been heavily linked to the confidence and vision of "smart policy makers" in supporting the development of the technology.

The industry experienced significant growth in 2010. Capacity additions grew from 7.2 GW installed in 2009 to 16.6 GW in 2010. The total installed capacity in the world now produces some 50 terawatt-hours of electrical power every year.

With 7.4 GW installed in Germany in just one year, the country continues to dominate the photovoltaics market worldwide. Italy installed 2.3 GW, starting to exploit some of the potential of its huge solar resources. Other countries also saw significant growth. The Czech Republic experienced a burst to 1.5 GW in 2010 that is, however, unlikely to be sustained in 2011.

Japan and the U.S. almost reached the gigawatt mark with 990 and 900 megawatts (MW) respectively, installed last year. France reached over 700 MW, while Spain regained some ground by installing 370 MW after two years of strongly adverse conditions. Belgium connected more than 420 MW of photovoltaic capacity to the grid in 2010. The entire European Union installed slightly more than 13 GW of photovoltaics in 2010, while the rest of the world accounted for over three GW.

The EU, having overtaken Japan, is now the clear leader in terms of market and total installed capacity – thanks largely to German initiatives that have in turn helped create global momentum. In the rest of the world, the leading countries continue to be those that started installing photovoltaics even before the EU.

Three main factors have driven the spectacular growth enjoyed by photovoltaics in recent years, according to the report.

"Firstly, renewable energy is no longer considered a curiosity. PV has proven itself to be a reliable and safe energy source in all regions of the world. Secondly, the price decreases have encouraged new investors. And finally, smart policy makers in key countries have set adequate FITs and other incentives that have helped develop markets, reduce prices and raise investors’ awareness of the technology."