The Global Community for Sustainable Energy Professionals
The year 2011 was a record year for the solar photovoltaic industry, with more than 29 GW new capacity installed worldwide, corresponding to a 70% increase compared to 2010. Global PV capacity exceeded 69 GW in 2011, with 70% installed in European countries.
In 2011, nearly one-third of the new PV capacities were installed in Italy (9.3 GW) and more than one-fourth in Germany (7.5 GW), in a rush to benefit from advantageous feed-in-tariffs that were to be lowered during the year.
The United States accounted for 6% of capacity additions (nearly 1.9 GW) and 6% of installed capacity (4.5 GW). Utilities and non-residential PV installations are growing steadily and in 2011 they accounted for more than half of the new PV capacity installed. Capacity additions remain concentrated in California (29% in 2011), New Jersey (17%) and in five other States (Arizona, New Mexico, Colorado, Pennsylvania and New York, 34%). The country aims to raise new capacity installed every year to 2.8 GW in 2012, to more than 5 GW in 2014 and to 8 GW in 2016, reaching 15% of the global PV new installations.
In Japan over 1.4 GW were installed in 2011 which corresponds to a 45% growth. Nearly 90% of new installations were in the residential sector, highlighting a Japanese specificity (start of the Residential PV System Dissemination Program in 1994).
The 2011 boom is continuing the strong development which occurred over the last ten years. This expansion has two main drivers, namely falling PV module prices and strong support policies.
Solar PV capacity additions and total installed capacities in 2011
Source: Enerdata, from EPIA, Observer, SEIA
PV module systems prices have halved since 2000
PV modules prices have fallen dramatically since 1995. This drop is the result of two main factors: the learning factor, which tends to reduce the average cost by about 20% for each doubling of cumulative installed capacity and the emergence of new low-cost Chinese manufacturers that have dragged prices downwards.
Impact of learning factor on PV module price
Source: Enerdata, from SolarWirtschaft, IEAPV, EPIA, Observer, SEIA
The market entry of China in 2005 has completely changed the geographical breakdown of PV cell production. The three largest producing areas – namely Japan, Europe and the United States – have lost ground to Chinese manufacturers whose share has skyrocketed since 2005.
Both in 2010 and 2011, China accounted for more than half of PV cell production and five Chinese companies were among the world top ten manufacturers.
Market share of global PV cell production by country
Source: Enerdata, from EPIA, SEIA
Average PV module prices have thus halved, from about US$3.5/W in 2000 to US$1.7/W in 2011. PV manufacturers aim to reduce these prices further in order to reach the “grid parity”, i.e. the threshold, which would make solar competitive with the wholesale price of electricity without additional subsidies (US$1/W in the United States, and US$1.25/W in Europe). It could be reached by 2015 in Germany and Italy, where electricity prices are higher than the European average and before 2020 in other European countries.
Solar support schemes
The explosion of the PV industry would not have been possible without the existence of PV promotion policies such as premiums, green certificates, feed-in-tariffs (FiT) or tax credits.
Main solar incentives in selected countries
Source: Report on renewable energies support schemes, Enerdata
Large subsidies steered the development of solar capacities in Europe. Governments have however recently been reconsidering solar subsidies to adapt to the drop of PV modules prices and to the economic crisis. In the short term these reductions in subsidies induce a rush of new projects seeking network connection before the deadline. After this rush, cuts to subsidies induce a dwindling demand.
In the United Kingdom, attractive feed-in tariffs were implemented in April 2010, raising the installed PV capacity by more than 40 MW. The fall of feed-in tariffs for PV systems over 50 kW as of January 2011 and the announced cut in tariffs for smaller PV systems led to a rush of new projects seeking network connection before the deadline: more than 900 MW were connected in 2011. 125 MW were installed during the week preceding the expected date of FiT reduction (December 12th, 2011). Tariffs were maintained until March 3rd, 2012: nearly 100 MW were connected the week before (only 3 MW between March 4th and March 11th).
In Germany installations also accelerated just before tariff cuts and the announced 15% reduction in feed-in tariffs as of January 2012 led to a 350% increase in PV installations in December 2011 in comparison to the previous month.
Impact of the feed-in tariff reductions on monthly capacity additions in Germany
Source: Enerdata, from German Ministry for Environment, SolarWirtschaft
This trend is similar in many other European countries. In Italy, systems installed before the end of 2010 but connected by mid-2011 were allowed to benefit from the advantageous 2010 feed-in tariffs leading to a boom in installed capacities before the announced reduction of feed-in-tariffs in 2011. In the Czech Republic, 2 GW were installed in 2010 before tariff cut and the implementation of retroactive VAT whereas only 12 MW were installed in 2011.
The development of feed-in tariffs at provincial level in China (Zhejiang, Jiangsu) contributed to the strong growth of PV installation in China in 2011 (+2 GW, leading to a cumulated capacity of 2.9 GW). The country launched the “Golden Sun Program” in 2009 which provided subsidies for qualified PV projects from 2009 to 2011 (50% of installation cost). In 2011, a national feed-in tariff rate was adopted in an effort to reach 10 GW of installed PV capacity by 2015 (recently raised to 21 GW).
In Japan, after a three-year discontinuation, incentives resumed in 2009 (new feed-in tariff boosting residential installations) and existing non-residential subsidies (30% to 50% of the system costs) were replaced by attractive feed-in tariffs. A new incentive scheme was established for large-scale renewable technologies in 2011 to further develop the Japanese PV market.
Around 300 MW were installed in 2011 in India. India’s National Solar Mission (2010) aims to install 20 GW of solar capacity by 2020, 100 GW by 2030 and 200 GW by 2050. Grid parity should be reached by 2020, while parity with coal-fired generation is expected by 2030. A number of Indian States, such as Gujarat, Rajasthan or Punjab have introduced their own solar policy and feed-in tariffs.
What is the trend for 2012 and beyond?
Preliminary data for 2012 announce a strong development of capacities in new markets with sustained incentive policies. The US announced an increase of solar PV installations by 85% for Q1 2012 compared to Q1 2011 and plans for PV installations to exceed 3,200 MW in 2012; i.e. 75% greater than last year’s total. China for its part expects capacity additions of about 4-5 GW in 2012. The market will be softer in Europe due to additional cuts in solar subsidies. Italy is expecting a further 1500 MW-2500 MW in 2012 alone compared to 9 GW in 2009.
Looking at a longer-term perspective, the European Photovoltaic Industry Association (EPIA) expects the global installed PV capacity to reach 150 GW by 2015 (up to 200 GW in the policy-driven scenario). According to EPIA, the growth in world installed capacity will still be triggered by the European market (50 to 85 GW by 2015) but its share in the global capacity will decrease from around 75% to less than 60%; the share of North America is expected to rise from 7% to 17% between 2011 and 2015 and that of China from 4% to 8-10%. The effective capacity could be further developed if the 2010-2011 trends continue.
Solar capacity forecasts by 2015
