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As Europe's Dominance Wanes, Others Pick Up Solar PV

Europe's role as the main driver for the global solar photovoltaics (PV) market is coming to an end, concludes the European Photovoltaic Industry Association (EPIA) in its latest report.

"The results show clearly" that Europe's dominance is declining, said the trade body in its Global Market Outlook for Photovoltaics 2013-2017. Europe accounted for more than 70 percent of the world's new PV installations in 2011, while in 2012 this number was around 55 percent, the report found. In 2013, said EPIA, it "is almost certain" that the majority of new global PV capacity will be installed outside Europe, and that this trend will continue.

2012's Numbers

Australia expanded rapidly in 2012 with around 1 GW of new installations. India installed 980 MW, finally realising a part of its huge potential. In Korea, 252 MW were installed, a sign that the market has restarted but it remains at a low level, constrained by a quota system. Taiwan reached the 100 MW mark for the first time with 104 MW while Thailand, with a huge pipeline of projects, commissioned 210 MW. Malaysia, where several manufacturers are producing, installed 22 MW. In the Americas, Canada has expanded more slowly than some have expected with 268 MW, and Mexico and Peru installed several megawatts each. Brazil and Chile, with their huge potential, haven't commissioned many systems yet. In the Middle East region, Israel remained the only country with a significant market, while Saudi Arabia showed some interest in PV development. The Turkish market remains quite low despite its potential.

Europe on the Wane

The report found that an estimated 31 GW of new PV capacity was commissioned worldwide in 2012, roughly the same amount reported in 2011's results. But there is a key difference this time around. In 2011, 22.4 GW of new capacity was installed in Europe, while in 2012 that number fell to 17.2 GW while vigorous growth in other markets took up the slack. Last year's decline was due largely to the end of 2011's record-setting Italian PV boom, EPIA found, while the rest of the market stabilised.

The report termed the future of the European market "uncertain". Drastic cuts to some support programmes will push their markets down in 2013, EPIA said, even though emerging markets in Europe could offset any major decline. Given these new conditions, EPIA said the short-term prospects for European markets are stable (in the best case) or declining. Without support for PV from policymakers, the trade body fears the transition could be quite painful over the next two or three years – but with policy support, it said, the market could stabilise in 2013 and grow again from 2014.

Global Growth

Going forward, the forces driving the global PV market will be in countries such as China, the US, Japan and India, EPIA said, noting that "the PV market is becoming truly global." Outside Europe, it noted, the market is well-balanced in terms of total installed capacity: three countries with huge potential lead the pace, followed by an emerging secondary market. Except for the 2011-2012 Australian boom, EPIA said the market in most countries remains under control.

The report found that new non- European installations accounted for 13.9 GW in 2012, compared to 8 GW in 2011. China took first place with a probable 5 GW, followed by the US with 3.3 GW and Japan with around 2 GW. All are expected to continue growing in 2013, although EPIA expects China to be "one of the two top markets" this year, rather than necessarily number one. EPIA expects the fastest PV growth to 2017 to continue in China and India, followed by Southeast Asia, Latin America and the MENA countries. But in the report's business-as-usual scenario, growth expected outside Europe is unlikely to compensate fast enough for the European market's slowdown. Even in this scenario, though, EPIA says the global market could reach 48 GW in 2017, while under a policy-driven scenario that number could be as high as 84 GW.

The Issues

Factors such as the approaching competitiveness of PV compared to other electricity sources, the changing nature of electricity markets, trade conflicts and the turmoil facing the PV industry due to consolidation are already affecting the market outlook for the near future, EPIA cautioned.

In 2012, the report found, the precipitous drop in PV system prices in all markets triggered new installations that compensated for Italy's decline. But given the manufacturing sector's current uncertainty, module price stability is an ongoing issue – with implications for drops in system prices and the opening of new markets. Crucially, EPIA said, "The link between price decrease and the unlocking of new markets is the key to market development." But prices were pushed even lower in 2012 due to overcapacity and existing markets' inability to absorb more PV.

According to EPIA, market evolution to 2017 will depend largely on European developments and policymakers' ability to maintain market conditions at acceptable levels. With policy support, EPIA said the European market could stabilise at around 16 GW-17 GW in 2013 before growing slowly to around 25 GW-28 GW in 2017. The new markets could help ensure both significant growth even as soon as this year, and robust market development in the following years. EPIA expects the Asia-Pacific region (minus China) to represent between 10 GW and 20 GW each year until 2017. China alone could add 10 GW annually, as announced by Chinese authorities.

The Next Five Years

EPIA reminds us that 2012's more than 100 GW in cumulative global PV capacity represents a major achievement. Depending on the conditions of the report's business-as-usual scenario, the 200 GW mark could be reached between 2014 and 2016, while in the policy driven scenario EPIA believes that more than 420 GW of PV could be connected to the grid over the next five years.

Lead image: Macedonian solar PV plant on Shutterstock

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