Changes Afoot in Global Solar Market

Currently in No. 3 position, the United States is tipped to become the world's biggest solar market, in the next four years, as adoption and installation rates overtake current leader Germany, thanks to a continuing reduction in component and panel prices.

In a report, IHS iSuppli noted Germany will continue to lead the market over the next several years, but its share of the sector will continue to decline due to steps being taken by the government to reduce installation incentives. The same trend is happening in several other early adopter countries in Europe, including the Czech Republic, France, Italy, and Spain. Budgetary constraints in these countries have resulted in severe cutbacks in government incentives that will crimp installation, the research firm said.

“Italy had been expected to be the star performer of the European market in 2011,” said Henning Wicht, senior director and principal analyst for PV systems at IHS, in a statement. “However, on March 3, the Italian government changed its solar policies, implementing changes in its tariffs that make the PV market in the country less attractive to investors starting in June. While the Italian government is expected to fundamentally continue to support PV, installations in the country will decelerate in 2011 compared to earlier expectations — although they won't stall.”

Europe had been leading the adoption of solar technology worldwide, and its share will remain strong for a while, although it will continue to decline as a percentage of the total market due to severe cutbacks in incentives in the top five markets on the continent, according to {complink 11491|NPD Group Inc.}'s DisplaySearch unit. Some of the cuts will take effect in the second quarter, and this could result in a rush to install the devices — a development that will provide a temporary boost to European sales of solar panels, DisplaySearch said.

“2011 will be a challenging year for the industry as it manages a slowdown in the market,” said Craig Stevens, president of Solarbuzz. “Europe will not be the growth engine it has been in recent years, and manufacturers will need to access new markets or be exposed to the risk of rising inventories or production cuts during a period of falling prices.”

European governments have been cutting back on incentives offered by manufacturers of solar devices due to budgetary pressures. The reduction in incentives will hurt sales growth in Europe this year, according to iSuppli, which estimates photovoltaic installations will decline in Germany this year and grow at a slower clip in Belgium, France, Italy, and Spain. Installations are forecast to decline sharply in the Czech Republic — down to 350 megawatts in 2011 from 1331 megawatts in 2010 — but will expand in several other European countries, with demand more than doubling this year in Bulgaria, Greece, and the United Kingdom.

Installations of solar panels are roaring ahead in the United States, according to iSuppli, which estimates 2,073 megawatts will be produced in the country this year, up from 937 megawatts in 2010. Total worldwide solar market installations in 2011 is forecast to reach 20,897 megawatts, up from 17,196 megawatts in the prior year.

DisplaySearch estimates pricing pressures will continue in the solar market, where Chinese and Taiwanese manufacturers are projected to increase their share strongly in 2011. “The leading thin-film manufacturer, FirstSolar, and the lowest-cost Asian producers will be the least vulnerable to reductions in shipments during second half of 2011, but all manufacturers can expect to face extreme price pressure by the year-end,” DisplaySearch said. “The lower-cost Chinese and Taiwanese manufacturers will continue to benefit from an increase in outsourcing of production from the major Japanese and Western solar manufacturers.”

22 comments on “Changes Afoot in Global Solar Market

  1. Jay_Bond
    March 28, 2011

    Solar energy use in the U.S. is continuing on a steady growth. On a more local note, we have a minor league baseball stadium that is powered by solar panels. These solar panels were donated by one of the largest semiconductor and solar manufacturers, Hemlock Semiconductor. Hemlock Semiconductor and its parent company Dow Corning are working very hard to make solar energy more affordable for everybody. As the cost continues to go down, and the area needed to install panels shrink, the market is headed for large gains in the U.S. 


  2. eemom
    March 28, 2011

    I see solar pop up more and more.  Our school is looking to install solar panels which would reduce its energy cost plus help fund other repairs.  The energy savings are making it more attractive for schools, companies and even malls to utilize the technology.  The technology has become cost effective enough which is a great thing.

  3. mfbertozzi
    March 29, 2011

    Well, despite what has been reported by analyst, incentives on migration to solar energy are not ramping. This is the true picture in Southern Europe. Resources devoted to that in the beginning, are following other destinations (for example towards helps to people from Northen Africa) then solar energy maybe has to wait more before a massive deployment.

  4. DataCrunch
    March 29, 2011

    At one time, I heard Saudi Arabia and other Gulf states were investing heavily in solar energy production.  It made sense when I read it, since that region seems to have a monopoly on sunshine. Although that region is still the leader in oil production and exports, the countries were looking to continue their reigns as the kings of energy exports via solar energy.  I haven’t heard much recently about that, nor is it mentioned in Bolaji’s report.

    North Africa seems like a good location as well to set up shop for solar energy production.

  5. Mydesign
    March 29, 2011

         As we know that the solar business is very down through out for the last few years because of many reasons. Let’s think about, how we can motivate the solar business. First the marketing peoples have to make a general awareness about the solar energy and how its ecco friendly by different marketing methods. The government can also play an important role to promote the solar business, primarily by providing subsidy to the customers, for solar based equipment purchase. Secondly by giving a discount in the traditional electricity or gas bill, based on the energy saved through solar products. More over local governing bodies can insist the builders to contribute atleast by 25 percentage of the total energy consumption by solar energy.

  6. prabhakar_deosthali
    March 29, 2011

    The prefect example of how a new technology becomes popular if it serves the basic needs, has come to fore by a recent news article here in India. This article says that in the list of dowry items ( the kind of gift given by the bride's family to the Groom) that the grooms from the Northern India are demanding , the solar systems top the list. Becasue of shortage of grid power in this region , electricity is available only for 10 to 12 hours of the day. And because of the DTH, TV reception is now available in all the remote corners of these rural areas. These people have found the power alternative in Solar energy. Similar to what Mobile phones have done to communications , the solar energy is set to make these remote villages power independent. Since 80% of India's population lives in the villages , the solar energy usage is going to get an automatic boost in the coming years. Apart from entertainment, it is also  used to pump water dor irrigating their farms

  7. mfbertozzi
    March 29, 2011

    Good point Dave. In fact vaste areas are ideal location as possible deployment of sites to provide power by solar energy. North Africa could play a key role as well as rurual India as mention on post below.

    Going further, other locations are become first candidate as solar energy provider.
    On top of all Chile is achieving the leadership. Large mountain chains previously devoted to mining activities are to high respect to sea level to grow something but  are very good location for solar energy PoPs then Chile is climbing worldwide rank to 1st position for solar energy production.

  8. tioluwa
    March 29, 2011

    What exactly is going on with Solar? Dave mentions that he no further news seems to be coming out about Saudi Arabi's Solar investment, and i am quite surprised at the reduced investment in solar from Europe, especially after the news late last year about the investment in North Africa towards a solar power plan.

    What has happened to that project?

  9. Backorder
    March 29, 2011

    It appears that the growth opportunities will slow down in European markets which were leading the industry till now. Even now have the greatest share of the pie. However, with initiatives like the Jawaharlal Nehru National Solar Mission from India, targeting 20,000 MW of solar power by 2020, I can see a lot of opportunity for the solar power industry in the developing world.

  10. Clairvoyant
    March 29, 2011

    This is great to hear. There is so much potential for solar energy. With the continuous improvement on panel manufacturing costs, it allows us to continue to use more of this potential.

  11. J-TX
    March 29, 2011

    I have followed developments in solar energy only casually, as it has long been my desire to get off the grid.  The problem is cost.  As an economist, I don't think it is responsible to ask the Federal Government to issue broad incentives / rebates to homeowners to install solar systems.  I believe the market should dictate.  Now, as more industrial installations become common, that will drive down the cost.

    My example: 6 years ago, in Oregon, I looked at doing a system that would take my 2000 sq ft house off the grid.  The system was $25K, but would only be 45% efficient, because of perennial cloud cover / proximity to the sun.  Not fianncially viable, as the hydro power in the NW is so cheap, it would take ~40 years to make back the investment.  Now in Dallas, TX, with lots of sun, and most electricity on the grid generated from petroleum, a system to take my 3100 sq ft home off the grid is $60K.  While electricity prices are roughly 70% higher here, again it would take about 27 years to recoup the investment.  Add to that the fact that there are no Texas government or power company incentives to help with the cost, because the power (oil) companies still pay the politicians via “campaign contributions”, and there is no help for the individual wanting to get greener,

    If someone were to deliver a more efficient, smaller footprint and cheaper system, I would buy it tomorrow. So as technology advances, we will all get solar panels on our roof.  I mean, how many of us had cell phones 20 years ago?

  12. SunitaT
    March 29, 2011


        Surprising to know that European governments are cutting back on incentives offered by manufacturers of solar devices due to budgetary pressures.But after the decision by countries like Germany,which relies on reactors for 23 percent of its power, to halt nuclear reactors accounting for 25 percent of its atomic energy capacity as part of a safety review, it becomes even more imporant for the European governments to continue with this incentive.


  13. bolaji ojo
    March 29, 2011

    Correct. Once the price of these devices and the installation costs decline many more families and businesses will opt for solar power. Government incentives may drive initial adoption but to be sustainable users would need to be convinced the product is cost-effective for them. Semiconductor companies are helping to push the industry in this direction by coming up with components that help to better store power and more effectively distribute and use this.

  14. Ms. Daisy
    March 29, 2011

    This is good news for homeowners who want to invest in their homes and save on the heating cost especially in the cold months. But how wouldd the shortage in electronic supplies and semiconductors impact this growth especially in the US?

  15. bolaji ojo
    March 29, 2011

    It's unlikeky the market will feel any direct impact from any shortages that might come up unless a major blow up occurs. I believe the industry is able to handle the current market demand without any hiccup. That may change if things worsen – we hope they don't.

  16. Backorder
    March 30, 2011

    Is there any study identifying the best places, geographically, to invest in solar power? I am sure that matters and would like to have pointers if any.

  17. bolaji ojo
    March 30, 2011

    Until the recent decision by the European governments to cut back on incentives for solar installation, Europe had the edge on growth and adoption. As a result it represented one of the best locations for investors. However, I don't think geography is the main factor to use for deciding where to invest (Contact your financial advisor) but other growth regions are quickly catching up. In fact, China is likely going to be the fastest growing market in the near future. And North Africa may prove to be highly popular.

    For investors, the best way to look at the market would be to see which companies are supplying products, parts and installation services for the solar industry. These guys play in all markets, fast-growing and maturing. I would not rule out Europe even now. With the nuclear disaster in Japan some European countries may reconsider their decision to cancel incentives for solar products.

  18. maou_villaflores
    March 31, 2011

    I think there is but the big question is there enough funds for the projects?

  19. SP
    March 31, 2011

    But what was th ekey differentiator to bring US ahead of Germany in soalr market?

  20. Backorder
    March 31, 2011

    Another point I was pondering. How much would the solar industry benefit, if at all, from the near disaster at the nuclear installations in Japan? I would assume the shift would be more in the direction of conventional thermal power plants.

  21. stochastic excursion
    March 31, 2011

    The increase in solar energy from solar farms may also contribute to the lower standing in Germany's solar power market.  Regions outside of north and central Europe that have large desert areas can support large-scale centralized solar energy production.  Europeans might be able to make use of solar collectors on ocean and even ice platforms, but I haven't seen much of this.  In any case, southern latitudes can collect more energy with stationary horizontal panels.

  22. SME_Business_services
    April 9, 2011

    .The global solar PV market is poised to have a banner year. according to the recently published market outlook from GTM Research:. 2010 Global PV Demand Analysis and Forecast , . but some trade suppliers will encounter difficulty navigating the forthcoming ebb and flow of subsidy programs and increasing module overcapacity.

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