Having quadrupled its solar capacity target to 50 GW by 2020 and begun an accelerated domestic installations program to tackle the oversupply of solar panels, China signaled its intentions not only to stand firm, but to increase its advantage, while it pushes ahead with transmission infrastructure plans and smart meter tenders.
The next-generation grid figures largely in Chinas evolving strategies. The State Grid Corporation of China (State Grid) has announced ambitious plans to install 300 million smart meters by 2015. Indeed, China intends to reach or even exceed a target of 50 million total smart meters this year alone. In its first round of smart meter tenders for 2012, State Grid procured 15.3 million single-phase and 1.2 million 3-phase meters its second-largest order ever.
Whats more, the nation has taken a new direction in its recently released 12th Five-Year Plan for smart grid technology: Predicated upon the success of a number of pilot tests, demonstration parks and model cities, renewable energy and electric vehicles will be tied to the grid, as well as large-scale energy storage.
The U.S. has also been focusing on the development of a smart grid. In Q2, the country dropped 1.5 points in the index to place 2, due to uncertainties about which energy policies a victorious presidential candidate might pursue, come January.
Despite this, Ernst & Young highlighted that on the back of US$4.5 billion (3.4 billion) in government stimulus grants allocated in 2009, the U.S. smart grid has enjoyed tremendous growth during the past 3 years. More than 100 projects have been directly financed, boosting the total smart grid spend in North America to about $5 billion, for the first time.
The majority of that money was spent on smart meters. By the end of 2012, Ernst & Young and Bloomberg New Energy Finance predict that there will be around 59 million smart meters installed in North America. As a result, smart meter deployments will be more gradual during the next several years, with investment focus shifting to areas such as distributed automation, smart grid analytics software, and asset management.
Germany, meanwhile, gained a point to create a second-place tie with the U.S., attributable to the governments proactive approach to addressing barriers to offshore wind development and creating stability in the solar sector. Both it and France are 2 of the most closely watched markets in Europe this year with about 45 million and 35 million smart meters to deploy, respectively, representing a combined opportunity of around 10 billion ($12.8 billion).
Under cost-benefit analyses for smart meters just completed by each nation in the European Union, France has a policy recommendation in place for full deployment and Germany does not. Both remain "in a state of stasis," according to the report, through mid-year 2012. French distribution utility ERDF, which had been due to launch smart meter tenders at the beginning of the year, has been delayed by negotiations with regional authorities and by questions around financing; German utilities await progress on technical standards from the German information security agency, BSI (Bundesamt für Sicherheit in der Informationstechnik).
Completing the top 5 are India, which after its recent widespread blackouts, has been demoted by 1 point, to fourth place, amidst speculation that the nation has attracted insufficient private investment to modernize its power infrastructure; and the U.K., which despite dropping half a point, has claimed fifth place, owing to a dip in Italys ranking a response to worsening economic conditions.
While the solar market continues to expand rapidly worldwide, including in the developing BRIC nations, there has been turbulence in some of the major markets. A roundup appears below.
- China is battling World Trade Organization disputes on several fronts (including the U.S. and Europe), based on allegations of dumping and subsidizing its solar goods. A final decision on the U.S. case is expected in October, along with the possibility of high duties that would make it more difficult for Chinas manufacturers to profit in the American market. In a long-expected pushback, on July 19, Chinas Ministry of Commerce announced its own investigation into imports of polysilicon from the United States. In other solar news, while the Chinese government has, for the second time this year, cut the FIT awarded to projects under its Golden Sun program, this has, to an extent been offset by the Q2 announcement of increased domestic capacity targets for solar. The country aims to have 21 GW of solar capacity online by 2015, and 50 GW by 2020 an increase from the previous targets of 15 GW and 20 GW, respectively.
- The United States solar sector also is currently at the center of a debate about its Department of Energys loan guarantee program. Instigated by the Republican-dominated House of Representatives and specifically by the House Energy and Commerce Committee a "No More Solyndras Act" has gained enough traction to pass through to the Senate. Should the bill be successful, it could bar the DOE from granting loan guarantees to any company that filed its application after 31 December 2011. The recently announced bankruptcy of Abound Solar, a U.S. manufacturer awarded a $400 million (322 million) loan guarantee has done little to slow the bills progress. However, more positive solar news came during Q2 when the U.S. Interior Department identified 17 solar deployment zones across 6 states, which will be regarded as "priority areas" in which permitting procedures will be expedited. During Q2, the Aqua Caliente project in Arizona also reached the 100 MW milestone, on the way to a 290 MW completion, which will make it the largest PV power plant worldwide.
- Germany is finally enjoying some certainty in its solar sector. In 2Q, the nation confirmed FIT cuts and spending caps, including a new mid-size category 10 kW to 40 kW receiving 0.185/kWh, which is higher than would otherwise be received for such projects. In addition, in the "good news" category, the federal regulator revealed that 2.3 GW of capacity were installed in Q1 more than the 812 MW during the same period last year.
- Japan took action on its commitment to renewable energy, in the wake of the tragedy of Fukushima. On July 1, an attractive FIT scheme became effective, drawing investors worldwide. Japans FIT is around 3 times the rate currently payable in Germany. Bloomberg estimates that it may spur from 3.2 GW to 4.7 GW of new capacity, generating an investment of at least $9.6 billion (7.7 billion). Electrical giant Toshiba already has revealed plans to build a series of solar plants on Japans tsunami-devastated northeastern coast, totaling 100 MW and costing around YEN 30 billion (0.3 billion or $383 million). This would represent the nations biggest solar program to date, and construction is expected to begin at the end of the year.
- In the United Kingdom, Q2 saw some clarification of support for small-scale solar projects, ending months of confusion. The new rate of £0.16 (0.20) per kWh took effect on August 1 and will be available for a 20-year period instead of a 25-year period. A degression mechanism will reduce support, depending on the capacity installed in previous periods. At the same time, the Department of Energy and Climate Change (DECC) almost halved its forecast for the industry, to deliver 22 GW by 2020 and now expects to reach 11.9 GW by 2020.
- Italy confirmed FIT cuts averaging 39 to 43% in its fifth Conto Energia in July, with an effective date at the end of August. Overall outlay of installations also will be limited by a budget to be set every 6 months ergo, 140 million ($179 million) for the first half of the year, reduced to 120 million ($153 million) and then to 80 million ($102 million).
Finally, another major world power has joined the EU, Finland, California, South Korea, and New Zealand in setting a price on carbon. The renewable energy sector in Australia "came of age" on July 1, after years of debate and controversy, when the nations carbon price mechanism took effect. The carbon pricing policy is designed to facilitate a 5% reduction in Australias greenhouse gas emissions (based on year 2000 levels), by 2020. This is a core obligation of Australia under the Kyoto Protocol and is a target that has bipartisan support nationwide.
Edited by Becky Beetz.