A new report from Boston-based Lux Research anticipates that, within the next five years, the solar market for grid-connected systems will grow mainly in terms of megawatts installed. The outlook for near-term revenues appears downright dreary – with price declines outpacing volume growth, at least through 2012.
Based on analysis of levelized cost of electricity (LCOE) and internal rate of return (IRR) across 156 countries, states, and regions, “The global solar market for grid-connected systems will grow from 15.8 gigawatts (GW) in 2010 to 37.5 GW in 2016, a compound annual growth rate of 15.5 percent,” said Lux Research Analyst Matt Feinstein.
“However,” he stated, “price declines will outpace volume increases, at least at first: The industry will actually shrink on a revenue basis from $64.4 billion in 2010 to $56.9 billion in 2012, before recovering to $65.4 billion in 2016.”
Meanwhile, Asia will eclipse Europe as the hottest market for solar installation revenues – with Japan, China, and India driving considerable volumes. The United States also will emerge as a significant player, given the federal government’s support of tax equity through 2016 and a myriad of state-level programs.
To date, Germany has been the strongest solar market, however as manufacturers approach near-term limits on cost reductions, demand in that nation will begin to dwindle.
Among the report’s other key findings:
- Leading IRR markets, such as Australia, Greece – and, yes, New Jersey – will attract notice in 2011. With subsidies, a surprising number of markets have rates of return worthy of investment by project developers today.
- The most attractive markets for residential installations are Australia (52 percent subsidized IRR), Greece (32 percent), and Ontario (27 percent);
- The best commercial markets are New Jersey (42 percent), Portugal (37 percent), and Hawaii (34 percent);
- On the utility ground-mount side, Portugal (81 percent) tops the list, followed distantly by New Jersey (58 percent) and Cyprus (44 percent); and
- By 2016, viable investment targets will increase dramatically, to encompass 45 residential markets, a whopping 88 commercial markets, and 85 utility markets.
Subsidies and grid parity aren’t necessary to generate positive demand. An anticipated future increase in the cost of retail and wholesale power is all that is necessary to generate positive demand – even in countries without subsidies. Brazil, for example, is projected to reach a 12 percent unlevered, unsubsidized IRR for commercial multicrystalline silicon (mc-Si) systems at the end of 2016 – even though solar will not yet have reached grid parity. Indeed, of 55 geographies demonstrating unsubsidized IRRs above 10 percent at the end of 2016, only 10 will have reached grid parity.
Market Size Update 2011: Putting the Rest of World on the Map of Global Solar Demand provides a detailed map of the new solar landscape, offering “grid parity,” levelized cost of electricity (LCOE), and internal rate of return (IRR) analyses for all 50 U.S. states, 31 of China’s provinces and semi-autonomous regions, plus a further 75 countries and regions globally. It does so across six key PV technologies – monocrystalline silicon (c-Si), multicrystalline silicon (mc-Si), cadmium telluride (CdTe), copper indium gallium diselenide (CIGS), thin-film silicon (TF-Si), and high-concentrating photovoltaic (HCPV) – and three key applications: residential rooftop systems, commercial roof-top systems, and utility ground-mount systems.
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Cheryl Kaften is an accomplished communicator who has written for consumer and corporate audiences. She has worked extensively for MasterCard (News - Alert) Worldwide, Philip Morris USA (Altria), and KPMG, and has consulted for Estee Lauder and the Philadelphia Inquirer Newspapers. To read more of her articles, please visit her columnist page.Edited by Jennifer Russell