London, UK — The global photovoltaic market in 2010 witnessed unprecedented growth with 15 GW of new capacity being added to the existing 25 GW already installed, taking the year’s total beyond the previous forecasts by the European Photovoltaic Industry Association and Greenpeace.
In publishing their sixth joint solar generation report, the two groups say that PV technology has all the potential to contribute a double digit percentage of electricity supply in the world’s major regions, topping 20% by 2050.
The headline figures are impressive: €20 billion of investments in PV 2010, installations overshooting expectations with almost 2 million PV installations up and running, and the combined installed global capacity capable of powering at least half of Greece, according to their latest joint study. Strong growth has been driven in particular by European countries, which now account for 70% of the global market. Also picking up the pace are the ‘promising’ key markets of North America, Japan, China and Australia, it says. The PV arena is widening too with major new development areas in the so-called Sunbelt region, alongside Africa, the Middle East and South America — still nascent players but potentially significant ones in the future.
A one-third reduction in unit costs from the figures of just five years ago is noteworthy and they continue to be driven down by technological progress, production efficiency and increasing implementation. Costs are expected to continue to fall, says the report, as previously in comparable industries producing semiconductors and TV screens. Building-integrated photovoltaic applications, more commonly known as BIPV, will have an increasingly important role to play and its potential is ‘simply enormous’, claims the joint study.
Policy, Policy, Policy
Clear measures are essential for the creation of a successful renewable energy policy that provides long-term stability and security of supply. Four main elements are required for a successful renewable energy support scheme, it says. They are a clear, guaranteed pricing system to lower the risk for investors and suppliers and to lower costs for the industry; clear, simple administrative and planning permission procedures; priority access to the grid with clear identification of who is responsible for the connection, and what the incentives are; and, finally, public acceptance and support.
There should be no surprise that the not-particularly-sunny Germany has developed a dynamic solar electricity market and PV industry, says the report. Its feed-in tariffs, which provide minimum prices for all renewable energy fed into the grid, means that wind power in Germany is currently 40% cheaper than in the UK, says the study.
More than 40 countries have now adopted an FiT system of some description, with most adjusting them according to their own specific need. FiT mechanisms, say Greenpeace and EPIA, provide the cornerstones to promoting the production of solar electricity in Europe. The key to a successful scheme rests on a number of factors, say the authors, and lies in its being viewed as a temporary measure until solar PV reaches grid-parity; that the costs are paid by utility companies and distributed to all consumers, thus ensuring non-dependence on government budgets; that FiTs actually drive cost reductions with an annual review for newly installed PV systems; that they encourage high-quality systems, rewarding those who actually generate solar electricity and not those who simply opt to install; and that they encourage PV financing — guaranteeing income over the life of the system, enabling people to access loans for PV installations.
Europe at the Forefront
Just as in other areas of the renewable energy sector, Europe is playing a leading role in the development and deployment of solar PV technology. German is the world leader in terms of installed PV capacity with approximately 15 GW installed by the end of 2010. Italy, says the report, is one of the most promising mid-term markets with an end-2010 installed target in excess of 1.5 GW.
The Czech Republic had shown good growth at the end of the last decade but owing to ‘unsustainable support schemes’ the market there is expected to shrink significantly in 2011. Favourable political will in Belgium has seen it make it into the installed top 10 chart, with 292 MW added in 2009. However a revision of the financial support scheme in early-2010 saw the pace of development slow down somewhat, says the report. France followed Belgium with 185 MW installed in 2009 and an additional 100 MW that was awaiting grid connection. France has huge potential but must solve grid issues in order for PV to penetrate decentralised power sources and to allow the market to develop, it adds.
The first six months of 2010 saw grid connections become easier to attain and resulted in an upturn in the market. Spain’s PV market has been in turmoil following a new market cap in 2008, the effects of the financial crisis and, according to the report, political instability. Meanwhile Greece, the UK, Slovakia and, to a certain extent, Portugal are showing a strong potential for growth, it adds.
Outside of Europe, Japan was the third largest market in 2009 with 484 MW installed with more growth expected on the backing of crucial favourable political will. Over the same period the US clocked up 475 MW of installed PV capacity and, as ever, the country certainly has the potential to become a leader in the field. China and India, booming already in so many other areas, are also expected to see significant growth figures over the coming five years, says the report, with some ‘impressive’ projects already in the pipeline. Canada and Australia were said to have shown significant development in 2009, while Brazil, Mexico, Morocco, Taiwan, Thailand and South Africa were rated by the report as ‘promising’.
By 2020, the report’s authors see a global installed capacity ranging between 1082 GW and 1845 GW of PV energy installed under two different modelling scenarios. After a decade, the initial rate of growth would slow down as first-installed equipment nears retirement age and repowering gets underway.
Europe will continue to lead the PV world until 2020 under two of the report’s scenarios. By this date North America will have developed enough manufacturing capacity and China should have about 29 GW, though the report claims the latter’s capacity could potentially be doubled. The real take-off for non-Western regions will happen between 2020 and 2030, says the report, with China and India experiencing massive growth during the period.
Key Feed-In Tariff Policies
The German Feed-in Law (EEG) has inspired many countries and been a strong driver for the German PV industry. In June 2007, the German parliament decided to amend the EEG and introduced annual tariff decreases. In 2010, the first FiT cut came in January, followed by adjustments in July and October. Further decreases will be implemented in January each year. The drop in FiT has led to a plunge in both tariffs and system prices, putting the PV industry under considerable pressure.
In Italy the FiT is paid by Gestore dei Servizi Elettrici (GSE). The tariffs change according to the plant size and the level of building integration. Naturally high levels of sunshine add appeal to Italy’s support scheme, which mixes net-metering with a well-segmented FiT. In January 2009, the Italian government extended the net-metering to PV systems up to 200 kW. This ensures the PV system owners receive the same price for the electricity they produce and the electricity they consume from the grid. If, over a time period, an excess of electricity is fed into the grid, the PV system owner receives a credit (unlimited in time) for the value of the electricity. This measure is quite attractive for the residential, public and commercial sectors. In addition to the value of the electricity they add to the grid, the PV system owners also receive a premium FiT on the total electricity produced by the PV system.
In 2009, Japan restarted its subsidy for residential PV systems and introduced a new programme to purchase surplus PV power. Almost 99% of the PV systems installed in Japan during 2009 were grid-connected, distributed applications, mainly residential PV systems. Its Ministry of Economy, Trade and Industry (METI) allocates budgets for market revitalisation, subsidies for the installation of residential PV systems, technology development for PV power generation, field testing of new technologies, grid testing with large-scale PV power generation systems, and the development of an electric energy storage system. In July 2009, METI enacted legislation that obliges electricity utilities to purchase surplus PV power. Incentives also take other types of clean power generation (such as fuel cells) into consideration. Prices are expected to be reviewed annually and all electricity customers will contribute towards the costs.
The US has been a sleeping PV giant until recently. The US economy has been in turmoil since 2008 and state legislatures faced severe budget crises in 2009. To compensate, federal and state leaders have adopted policies to develop cleaner and more diverse energy sources as tools for economic revitalisation. In 2009, the investment tax credit cap was removed and the 30% federal investment tax credit for commercial and residential PV systems was extended to 2016. This credit can now also be used by electricity utilities. The relative vigour of the PV market depends on individual states. California, New Jersey, Florida, Colorado and Arizona are the top five states for new installations. Between September 2008 and September 2009, about 40 new solar incentive programmes were created in 19 states. Incentive levels were reduced in 10 states.
World leader in 2008, the Spanish market has since been almost completely blocked by political decisions. Since 2009, Spain has had a market control cap that limits the PV installations to around 500 MW each year. Due to the introduction of severe legal and administrative barriers, the market has had difficulties in reaching the 100 MW level since 2009. Many installations were cancelled or delayed due to the uncertainty, at the end of 2010 a Royal Decree with a retroactive effect on existing plants was adopted, putting at stake the viability of many investments.The FiT has a classification of eligible PV plants which include: roof-top plants or plants developed for similar surfaces that are smaller or larger than 20 kW; any other type of plant – essentially ground-based PV plants. The maximum size of a plant (either rooftop or ground-based) is now10 MW. The Spanish government has decided to reduce the FiT for 2011 to favour small residential installations at the cost of large, ground-mounted systems.