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Global PV Markets: Asia Rising, Europe Sinking

Global PV installations soared 40 percent in 2011 to 27.4 gigawatts (GW) as sluggishness in the first half of the year swung to a scramble to complete projects before incentive programs expired or get rewritten, according to NPD Solarbuzz. (That's pretty close to what European Photovoltaic Industry Association (EPIA) had earlier calculated 27.7 GW in global grid-connected PV in 2011, with six regions topping 1 GW of capacity: Italy, Germany, China, USA, France, and Japan.)

Among high points in Solarbuzz's new calculations:

  • China's rising, Europe's sinking. The top five markets among 100 tracked by the analyst firm — Germany, Italy, China, the US, and France — made up nearly three-quarters (74 percent) of global demand. Note the surge in China, which swelled more than fivefold during the year. Also note that two-thirds (68 percent) of end demand game from Europe, amounting to 18.7 GW (down from 82 percent of demand in 2010), with the vast majority coming from Germany, Italy, and France.
  • Demand is rising, but still trails supplies. Global solar cell production topped 29.5 GW, up from 23 GW in 2010. Thin-film production made up 11 percent of that. China and Taiwan continue to dominate solar manufacturing, increasing their share to 74 percent vs. 63 percent in just 12 months. Meanwhile, the top 10 polysilicon makers ramped their capacity to 204,000 metric tons/year, while the top 10 wafer makers accounted for more than 20 percent of global capacity.
  • Excess does not equal success. The excesses of the early part of 2011 translated into plunging prices. Market-weighted average prices (factory gate) for crystalline silicon (c-Si) sunk 28 percent in 2011, double their decline in 2010 — in 4Q11 they were down 46 percent from the same period a year ago. The industry generated 12 percent more global revenues in 2011 (to $93 billion) in global revenues, and raised more than $8 billion in corporate equity and debt.

Major PV markets by country, in gigawatts (GW).
(Source: NPD Solarbuzz 2012 Marketbuzz)

The outlook for 2012 calls for "rest of world" markets to make up a third (32 percent) of global demand, up from just 20 percent of demand in 2010. Europe's marketshare will continue to slip, to 53 percent in 2012. "Aggressive cuts in incentives in Germany and other European countries have set up the potential for a global market decline in 2012," pointes out NPD Solarbuzz president Craig Stevens. So now "the rush to install is on, especially in Germany" where cuts to incentive schemes "will force companies to embrace self-sustaining marketing models earlier than they expected." China, meanwhile, needs to decide whether it will strengthen its own incentives to stimulate its domestic PV market and support its PV manufacturing base, he added.

On the manufacturing side, look for suppliers to preserve what little margins remain by reining in manufacturing even more all across the supply chain, from polysilicon to wafers to cells. Stevens points out that polysilicon, which historically has been the most constrained and enjoyed the most profits, now finds itself with the most capacity anywhere in the PV supply chain, a recipe for lower margins.

Over the next five years, look for Europe's market to keep shrinking, on its way to just 42 percent by 2016 — by which time China alone could take up 17 percent of the world's demand. Also expect factory-gate module prices to keep sinking fast. Solarbuzz calculates another 29 percent drop in pricing for 2012, and overall a 43-53 percent decline from 2011 to 2016.

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