PV markets: Searching for the next Germany

As Germany prepares to wind down its red-hot solar subsidies, a new study by Lux Research looks at several regions that could step in to fill the void, and who shows the most promise — from “top targets” to “fast burners.”

January 7, 2011 – As Germany prepares to wind down its red-hot solar subsidies, a new study by Lux Research looks at several regions that could step in to fill the void, and who shows the most promise — from “top targets” to “fast burners.”

Germany has long been held up as the gold standard for its governmental support of solar energy, and it represents roughly half the global market for solar components. But the country is dialing back its subsidy programs and entering a period of slower growth, so everyone in the PV system chain — component suppliers, project developers, and investors — are scanning the horizon (and globe) for new markets, notes Lux Research analyst Jason Eckstein. “Component manufacturers looking to maintain margins in the face of rapidly falling prices will find short-term relief from markets offering attractive subsidies in 2011,” he writes, but they also need to factor in things like sizes of countries’ electricity markets, quality of their grids, and other energy generation sources they can tap.

In a report (“Global Subsidy Roundup: Solar Beyond Germany”), the firm identifies several types of market classes, ranging from “fast burners” to “top targets” to “slow movers” and “weak prospects:”


  • India stands out, offering a heavily-funded subsidy scheme, a grid that desperately needs distributed generation, and huge projected electricity consumption.
  • South Africa has an attractive subsidy scheme, but is limited to utility-scale applications, and the regulatory environment is uncertain.
  • The UK’s solar resources aren’t great (neither is Germany though), but it’s a potential >20GW market, with a broad set of feed-in tariff (FiT) incentives. And it needs an energy option to offset tight natural gas supplies.
  • Cyprus, Israel, and Malaysia offer some of the most valuable subsidies, but all face fundamental limits on solar markets growth. Cyprus can’t support more than a few hundred MW of solar installations, while Israel and Malaysia are capped at ~3GW.
  • Russia, Brazil, and Mexico all offer huge electricity markets (>10GW of solar development potential) but investment schemes are lacking. Brazil cancelled a FiT policy in the early 2000s, but its market is among the closest to grid parity, with massive potential demand. Mexico, with its national net metering policy, could me a future solar champion as a distributed resource. Russia’s addressable solar market is huge (>80GW), but so far it has few demand drivers in 2011.


Bottom line: There is no “next Germany” per-se, but there are some pockets of short-term demand, as well as long-term plays in both on- and off-grid development. 

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Emerging PV solar markets: Some familiar names, many new ones. (Source: Lux Research)

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