Solar power - a snapshot of the industry in 20121 November 2013
An International Energy Agency (IEA) report provides a snapshot of the global PV industry in 2012.
The IEA PVPS (International Energy Agency Photovoltaic Power System Programme) published its 18th 'Trends in Photovoltaic Applications' report in October 2013. Preliminary market data reported to IEA showed a roughly stable PV market in 2012 when compared to 2011.
At least 28.4 GW of PV systems was installed in the world in 2012. While these data still have to be confirmed, some important trends can already be extracted:
- The global PV market stabilised in 2012 at levels similar to 2011.
- The market in Europe has decreased significantly from 22 to 16.9 GW, but still remains number one by some distance with 59% of the global PV market.
- Germany and Italy have now enough PV capacity to produce respectively 5.6 % and 5.75 % of their annual electricity demand with PV.
- The Asian markets had the highest growth (+66%) and China entered the top three in second place for installed PV capacity in 2012. In the top ten list there are five European countries, four Asia-Pacific countries and one country in the Americas region.
- Parity with retail electricity prices was reached in several more countries in 2012 owing to PV system price decreases and electricity prices increases.
- Thirteen countries had at least 1 GW of cumulative PV systems capacity at the end of 2012 and nine countries installed close to 1 GW in 2012.
IEA global trends report
This unique report provides official and accurate data about the photovoltaic market, the industry, support policies, research activities and the integration of PV into the power sector in the 23 countries reporting to the IEA PVPS Programme, plus a reliable estimate of the other most important PV markets.
With close to 100 GW installed globally, PV has reached a point where it can start to develop without special financial support. However, the main market driver remains the feed-in tariff (FiT), which supported 61% of the global market in 2012.
After several years of rapid growth, growth, 2012 was a year of market and industry consolidation. In total, about 29.3 GW of PV capacity was installed in the IEA PVPS reporting countries and the other major markets during 2012 (2011: 29.1 GW; 2010: 16.6 GW). This raised the total installed capacity in IEA PVPS countries to close to 89.3 GW with further estimates placing the total installed capacity in the world close to, but below, 100 GW.
As stated, feed-in tariffs remain the dominant driver for PV market development with 61% of PV installations in 2012 having been underpinned by FiTs. However, for the first time, purely competitive PV installations (including self-consumption) are progressing, and now represent 12% of the market judging by 2012 figures. Other support schemes represented 27% of the market.
In Europe, for the second year in a row, PV was the primary source of electricity installed (in terms of power capacity), ahead of wind and gas, and also ahead of all other sources of electricity generation, from coal to nuclear. In several countries, the annual PV contribution to electricity demand has passed the 1% mark, with Italy at the top with at least 7 % and the overall European PV contribution amounting to around 2.6% of Europe's electricity demand. Australia has also passed the 1% mark but larger consumers of electricity such as Japan, China or the USA will require more PV capacity to reach this threshold. Across the world, PV represents 0.6% of the electricity demand based on installations at the end of 2012.
The PV industry produced 36 GW of modules in 2012, for the second year in a row, with a market slightly below 30 GW and production capacities at 58 GW. This explains the huge price decrease PV experienced in 2011 and 2012 as well as the subsequent trade conflicts that emerged in 2012. In addition, the global turnover of the PV sector dropped in 2012 from USD110 billion to 75 billion, due to market stabilisation and price reductions.
Finally, PV has with great rapidity become a significant source of electricity in several countries worldwide. The speed of this development results from its unique ability to cover most market segments, from the very small individual systems for rural electrification to utility-scale power plants (today there are examples above 200 MW in size). From the built environment, to large ground-mounted installations, PV is seen as an energy source of choice as a consequence of the various characteristics that make it suitable for most environments.
A world view
At first sight the development of PV in the world stagnated in 2012. However, looking at the details reveals a different picture: The large deployment of PV in Europe in 2011 was mainly driven by the huge installation levels in Italy (9.3 GW) and Germany (Figure 1). The deployment of PV slowed down in 2012 in Europe to around 17 GW, compared to around 23 GW the year before. But in parallel with this change, development in countries outside Europe grew fast in 2012, with China, the USA, Japan and Australia ensuring an overall market development. This trend should be confirmed in 2013, with Europe declining and PV developing in many locations around the world. All other continents should see PV development with Chile and South Africa at least, and possibly others, becoming new market hot spots from 2013 or 2014.
Asia seems to have become the new focus, with several markets progressing in 2012. Next to China and Japan, Thailand, Korea, Taiwan and of course India are starting or continuing to develop. However, the Americas are following closely behind, even though the number of countries where PV is developing was reduced in 2012.
The price reductions experienced in 2011 and 2012 have brought several countries and market segments close to a certain level of competitiveness. This is true in Germany and Italy where the retail price of electricity to many consumers is now higher than the production cost of PV electricity. This is true in several other countries for utility-scale PV or hybrid systems. These declining prices are opening new business models for PV deployment.
PV is more and more seen as a way to produce electricity locally rather than buying it from the grid. Self-consumption opens the door for the large deployment of PV on rooftops, and the transformation of the electricity system to a more decentralised model. But in parallel with this change, large scale PV continued to progress, with a 250 MW plant opening in 2012 in Arizona, USA, and a 214 MW plant due to open in India. Each year, larger plants are connected to the grid and plans for even bigger plants are disclosed. However, PV is not only on the rise in developed countries - it offers products that can bring electricity to places where grids are not yet well developed. The decline in costs of off-grid systems offers new opportunities for electrifying the homes of millions of people around the world who have never benefited from it before.
There are still numerous challenges to overcome before PV can become a major source of electricity in the world. The way distribution grids cope with high proportions of PV electricity on the system, the quality of generation available, demand balancing problems in systems with a high share of variable renewables and the cost of transforming existing grids will be critical factors for PV deployment in the coming years. Moreover, the ability to successfully transform electricity markets to integrate PV electricity in a fair and sustainable way will have to be closely scrutinised.
But the ability of the PV industry to lower its costs in the coming years and to present innovative products leaves little room for doubt. The price of PV electricity will continue to decline and accordingly, its competitiveness will increase. The improvement in PV installation quality will continue and will consequently improve PV system reliability and thereby lower the perceived risk of owning and maintaining PV power plants.
The road to PV competitiveness is open, but it remains a complex route, and is strongly linked to political decisions. Nevertheless, the advantages of PV are numerous and, as indicated by this report, the appetite for PV electricity is growing everywhere in the world. It will be a long time before PV represents a major source of electricity in most countries, but as some European countries have shown in the last few years, it has the potential for continued rapid progression.
Article based on the IEA's Photovoltaic Power System Programme's 18th 'Trends in Photovoltaic Applications' report