Solar, Utility Scale

Key Asian Pacific Markets Primed for PV Growth

The global photovoltaic market has been fueled in large part from the growing manufacturing base in the Asian Pacific region – namely China.

Now the region is expecting a major boom in PV demand as well. In 2010, the region, which includes China, Japan, India, Australia and South Korea, accounted for 11 percent of global demand. In 2015, that number is expected to spike to 25 percent, according to a new report released Wednesday by Solarbuzz.

China

There are signs that China is moving well beyond the role of manufacturer. The nation’s manufacturing base currently accounts for 50 percent of global production. Those manufacturers are expecting to tap into a growing domestic market as well with nearly 10 GW in the project pipeline. On-grid installations in China are projected to double in 2011 as incentive policies increase the pace of large and utility-scale PV installations.

In 2010, 85 percent of demand in China was from projects larger than 1 MW and the latest temporary on-grid tariff announcement in Qinghai province will further boost shares of ground-mount utility projects in 2011. Programs such as the Golden Sun and Solar Rooftop programs maintain prominence going forward as developers continue to advance projects toward completion. Provincial FIT policies in Jiangsu and Shandong also made significant contributions to overall demand.

Japan

Japan continues to debate its energy future following the Fukushima nuclear disaster. There is a growing call for incentives that will spark a renewed growth of renewable alternatives.

With the implementation of a nationwide net feed-in tariff, the Japanese solar PV market is expected to install at least 1.29 GW of new PV capacity in 2011 — a 35 rise since 2010. These figures are in sharp contrast to established European markets, such as Germany, which are experiencing a dramatic slowdown in growth.

Non-residential installations, while not representing the majority of total capacity, are growing at more than twice the rate of residential system installations. Japan was the fourth largest PV market in the world in 2010, doubling for a second year in a row and installing 960 MW behind the re-launch of the nationwide residential incentive program and the net feed-in tariff. The share of imported modules has grown more than 138 percent year over year, accounting for 13 percent of module shipments in Japan last year.

India

The on-grid ground-mount segment is expected to lead the way in building India’s installed capacity, with installations expected to at least double in 2011.

The National Solar Mission, as well as state level policies in Gujarat, Rajasthan, and Maharashtra are leading to strong growth, with these three states accounting for as much as 70 percent of the total Indian market in 2011. Armed with the goal of installing 22 GW of new solar capacity by 2022, the National Solar Mission has sanctioned 300 MW of on-grid PV capacity to be installed through 2011 and 2012, with an additional 300 MW to be allocated in the second half of 2011.

Though the first round of projects has experienced setbacks due to high capital costs, low returns, and regulatory hurdles, a potential restructuring of project guidelines is likely to stimulate higher success rates of future projects. As of June, the on-grid pipeline of projects targeted for completion by 2013 stood at 1.5 GW.

South Korea

Although projected to contract in 2011 due to the phase-out of the country’s FIT program, longer-term growth potential in South Korea remains stable as new Renewable Portfolio Standards are implemented.

The new RPS is expected to install 1.2 GW of new PV capacity over the next five years, although at a much slower pace than in past years. Decreased incentives under the FIT and RPS significantly slowed large ground-mount installations in 2010, paving the way for strong growth in the building-mount segments. This trend is expected to continue over the next few years as the Korean government seeks to incentivize small and building-mount applications.

Australia

The Australian government’s latest energy policy takes the form of a carbon tax, which will transition to a cap-and-trade system in 2015. The introduction of this policy comes on the heels of several dramatic policy changes, including an increase in the rate of decline for Australia’s main PV incentive program, Solar Credits, and the implosion of several state-based feed-in tariff programs.

The 431 percent market growth in 2010 came despite an attempt by the government to reign in demand for PV installations. The economics of PV systems have been enhanced by decreasing installed system costs, due to falling global module prices, an increasing number of accredited installers, and expectations of increasing retail electricity prices.

New South Wales accounted for 44 percent of the national market, but now faces market disruption following cessation of the Solar Bonus Scheme in April. Fragmented and stop-start solar policies remain the largest stumbling block to long-term sustainable growth for the PV industry in Australia.