Global installed PV capacity to hit 230 GW; consolidation will continue

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According to the International Energy Agency’s (IEA’s) latest renewable energy market trends and projections to 2017, the photovoltaics industry is expected to enjoy strong growth. It forecasts that cumulative, grid-connected capacity will grow from 70 GW in 2011, to 91 GW in 2012, 115 GW in 2013, 140 GW in 2014, 167 GW in 2015, 197 GW in 2016 and 230 GW in 2017. It adds that as capacity increases, photovoltaic generation should reach an average of 35 terawatt-hours (TWh) per year.

Of all the available solar technologies, photovoltaics is expected to scale up the fastest. Overall, the agency says that solar, including concentrating solar power (CSP), will contribute a total of 4.9 percent to renewable energy generation in 2017.

The IEA says growth will be driven primarily from China, which is expected to add 32 GW until 2017. The U.S. is predicted to rank in second place, with 21 GW, followed by Germany and Japan, with 20 GW, respectively, and Italy with 11 GW. However, it says, "Given past boom-and-bust cycles in several countries, the degree of dynamic approach to policy support will remain a key forecast variable."

In addition to improved competitiveness with electricity prices, the IEA believes that easier installation will drive strong growth particularly in the residential, commercial and utility sectors, where there are "good resources".

However, it underlines that competitiveness ultimately depends on the conditions present in the different markets, in addition to cost structures, resources and the prices of alternative energy sources. "Yet," it states, "renewable sources are clearly becoming more economically attractive in an increasing number of countries and circumstances."

It adds that supply of both modules and other components is expected to remain "ample". While this will help to further drive down prices in the medium term, the photovoltaic manufacturing sector can expect to suffer from "several years of consolidation in the face of weak profit margins".

CSP development

The concentrating solar power (CSP) market is also expected to grow, although not at the levels previously expected. From an installed capacity of two GW in 2011, it is forecast to reach just 11 GW by 2017. The technology, says the IEA, faces a number of challenges, including price competition from photovoltaics and "complex" environmental permitting issues. Still, the storage and hybridisation (i.e. merging with a fossil fuel plant) capabilities of CSP provide value that is enhancing project attractiveness," remarks the agency.

In this industry sector, the U.S. is expected to lead the way in terms of growth, with an additional four GW of installed capacity by 2017, followed by Spain and China, with one GW, respectively. Smaller developments are further anticipated in the Middle East, North Africa and South Africa.

RE generation

Regarding the global renewable energy market, the IEA predicts that a total of 710 GW will be installed by 2017. As with photovoltaics, China is expected to account for the biggest increase, adding 270 GW of new capacity, followed by the U.S. with 56 GW, India, with 39 GW, and Germany and Brazil, with 32 GW, respectively.

It explains, "Ambitious policy targets, fast-growing electricity demand and ample financing underpin China’s expansion. In the United States, state-level renewable mandates combined with improving economics will drive growth, even amid uncertainty about federal incentives and persistently low natural gas prices. India’s favorable policy environment and rural electrification needs should encourage strong deployment of on- and off-grid renewable electricity capacity."

Meanwhile, renewable electricity generation should expand by 1,840 TWh between 2011 and 2017, thus reflecting an almost 60 percent increase over the period from 2005 to 2011. Overall, it says, global renewable energy power generation reached 4,540 TWh in 2011, which is a 5.8 percent increase form 2010. By 2017, it is expected to reach almost 6,400 TWh.

In terms of global renewable energy financial landscape, the IEA says levels of new investment reached US$250 billion in 2011, up from $210 billion in 2010. "The quarterly pattern showed a fall-off in global new investment during the first quarter of 2012, though part of this drop could relate to cost reductions and the exclusion of small distributed capacity from the data," it says.

In the future, it says that uncertain policy support could lead to tighter constraints from European bank project financing and utility balance sheet investments. However, due to the expectation that economic conditions will improve and that new funding options will arise, renewable energy financing should be sustained. It again points out though that both policy support and technology risks will play a part in the level of financing available.

It adds, "In those countries with more uncertain policy supports, the cost of capital tends to remain relatively high, undermining project economics. Moreover, investors still perceive some renewable technologies as risky, particularly offshore wind and CSP."