David Appleyard, Chief Editor, Renewable Energy World
February 23, 2012 | 5 Comments
For its first Big Question feature of 2012, REW asked its readers to share their hopes and fears, opinions and predictions for the year ahead given the outcomes (or lack thereof) of the climate negotiations in Durban, ongoing shakeouts in major renewable energy sectors and the challenging global economic climate.
Georgina Benedetti, Energy & Power Systems Senior Analyst, Frost & Sullivan
Due to 2011’s lower demand, oversupply of some components and products, limited credit availability, increased manufacturing capacity and higher silicon supply, solar module prices have experienced a sharp decline. The emergence of Chinese PV cell manufacturers producing solar cells at a lower cost than US companies further dropped prices. In response, some US manufacturers were forced to reduce prices, decrease margins, close some manufacturing facilities, or even declare bankruptcy. Nevertheless, these challenges have not affected overall investment in solar energy.
Also, lower module prices have helped reduce the price of solar energy, making solar more competitive with other forms of electricity generation. Module prices are expected to further decline at a lower rate during the next five years, making solar more affordable in the absence of subsidies.
The PV market in North America is projected to grow at a CAGR of 42% from 2011 to 2015. Wind and geothermal are projected to grow at 17% and 7%, respectively.
US wind installations decreased by almost 50% in 2010 due to the economic crisis and lower fuel and energy prices. However, the market began to show signs of recovery in 2011. More than 7 GW of wind capacity is expected to be installed in the US in 2012, a 25% increase on 2011. This is fueled by the proximate expiration of the Loan Guarantee programme, the production tax credit (PTC) and the investment tax credit (ITC), the main drivers for the wind market.
As developers rush to complete projects before the expiration deadline, the market will experience an acceleration of installations, especially during Q1 and Q2 of 2012. If the tax credit is not extended, a major halt throughout the entire industry can be anticipated in the second half of 2012. Contracts and investments will be indefinitely put on hold. However, a long-term extension of the PTC would allow developers to plan more accurately for growth and allow manufacturers sufficient lead time to provide an ample amount of turbines to accommodate high demand.
Charlie Gay, President, Applied Solar
2012 will be an inflection point for the PV industry. The market prediction is forecast to be 25 GW of new capacity. This estimate could be significantly higher if the market elasticity to price creates the response long expected for solar power, or lower if the feed-in tariffs (FiTs) in Germany and Italy drop dramatically or are capped and the inertia needed to access competitive markets is too much to overcome.
(Source: Applied Materials)
Based on improvements in cell efficiencies and production economies of scale, today’s manufacturing cost per watt can range from as low as US$0.82 to $1.05. With a continuous progression of cost reduction inherent in production, supply chain and module technologies, the reality of mainstream global grid parity is close. In fact, continuing cost declines in PV power production are enabling unsubsidised markets to grow in emerging economies and in meeting the peak power demands being amplified with the decommissioning of old, polluting power stations. In the US we see homeowners seizing the initiative, one rooftop at a time, to break free of the wired world.
One exemplary emerging market is South Africa where PV is competing with coal-generated electricity. As PV expands across the globe, varying economic and infrastructure conditions give rise to a growing number of different business models. In some countries, especially developing nations, distributed local generation has been the norm and can permanently sidestep the need for a wired infrastructure. Power is consumed close to where it is generated. As cost reduction accelerates, local infrastructure and local self-reliance will motivate and inspire policies and business strategies that leverage these advancements by creating local jobs and prosperity proportionate to the creative energy of individuals.
However 2012 takes shape, the future for renewables remains exciting. Regardless of the economic environment, what some may overlook is the speed of change, as PV adoption continues to grow. In the future, we’ll see a convergence of smart communication technologies with energy production and distribution. The potential of creating a wireless world of energy and information with local jobs is yet to be tapped.
Shaminder Singh Ragi, Alternative Energy, Globaldata
The Chinese solar industry will achieve unprecedented growth in 2012, adding more than 2.8 GW thanks to two developments: the 12th Five Year Plan for Renewable Energy Development 2011-15 and the feed-in tariff (FiT) scheme.
China only had 893 MW of solar installed capacity at the end of 2010 and is expected to have gained an additional 1.7 GW in 2011. The country is expected to surpass the US in 2012 to become the third largest PV market in the world, based on annual installed capacity. According to the 12th Five Year Plan, targets for installed capacity are expected to be set at 10 GW by 2015 and 50 GW by 2020. This 2015 target implies an annual growth of over 1000%. Under the plan, China is promoting the development of smaller-scale distributed solar projects in populated areas. This will attract private small and medium enterprises to the installation market, as large players will focus on bigger projects.
China also announced mid-2011 FiTs that mandated minimum prices grid operators must pay at 15 cents/kWh. This is expected to be paired with clean energy quotas for grid operators and is aimed at guaranteeing market demand for the solar power produced.
Installation growth may also be positive for domestic companies facing weakened demand in Europe and over-capacity buildup. Stock prices of Chinese solar companies, like those of their peers, have plummeted in the last four to five months. However, strong growth in domestic installations may bring something to cheer about for the Chinese solar companies.
Greg Sutch, CEO, Intralink
For the past decade Western countries have led the way in the cleantech sector, pioneering new ideas and setting standards by working to minimise the carbon footprints of entire nations. But the future is no longer looking as rosy, or more accurately, not as green. Business is slowing down and the financial support of governments is no longer guaranteed. As a result Asian countries have appeared both as a new source of revenue for those in the West as well as competitors with cutting-edge technologies of their own.
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