The Market for Solar PV Will Soon Outgrow the Wind Energy Market

In 2010, global market volume for wind energy was 41 gigawatts, a modest 7% higher than the volume in the record year 2009. In 2010, the solar PV market was 14,5 gigawatts, a growth of over 90% compared to 2009.
The wind energy market achieved this market size in 2006, which would suggest that solar PV is only 4 years behind in its development. In 2009 the ‘gap’ was still 7 years: the PV market volume of slightly more than 7 gigawatts of newly-installed power was already achieved by the wind energy market back in 2002.

Wind and Solar Energy: Similar Growth Paths
Looking at the growth curves of both technologies, we see much similarity (see graph below). Both have gone through the phases of attractive subsidies, individual markets exploding, and markets facing subsidy cuts. But, overall and globally, the wind energy market, and now the solar PV market, have shown nothing but growth.
Now, it seems that PV is catching up with the wind growth path. Looking ahead, the wind energy market is expected to grow 9-15% in the coming years, reaching a volume of around 60 gigawatts in 2014. Solar PV, for its part, may well reach a market volume of 36 gigawatts by that time.

No Market Decline
Particularly encouraging is the fact that the wind energy market has shown no decline since 1996. So there is no reason to suggest that the PV market will ever decline. Renewable Energy is a sector set for growth. Does anyone believe that RE will lose importance in the years to come? Or that oil prices will plummet because oil demands will easily be met by increasing production capacity? Or that growing energy demands can easily be met by new coal and nuclear power plants? Or that the earth’s ever-increasing population will be supplied easily with fossil fuels? And then there is this little CO2 issue driving the need for clean energy.

The Sun is More Reliable
If Renewable Energy in general, and wind energy in particular, are setting the trend for the global PV market, then the solar energy market is expected to grow to a yearly volume of over 50 gigawatts within the space of only 5 years. It would not surprise me if solar PV becomes a bigger market than wind energy some day - my guess being within less than 10 years. PV is more versatile in that it can be applied in many more ways. Apart from the large-scale projects which are driving the wind energy market, PV also has a bright future for decentralized (small) power applications, and in small applications, on- and off-grid, as well as in a vast array of products. And, at the end of the day, the sun is even more reliable and predictable than wind. Wind is sometimes hard to predict. One can be pretty sure that the sun will shine every day...

The Global Market in 2011: Will the Optimist and Pessimist Meet in the Middle?

The Optimist’s Prediction for the Global PV Market in 2011
According to the optimists in the PV business, the world’s leading and dominant market, Germany, will continue to grow in 2011. Maybe not another 90% like in 2010, but at least a safe 20%. This after an amazing, record-breaking year 2010 with the installation of over 7 gigawatts of PV power. The optimists believe that the industry will be able to decrease its prices, and as such compensate for the German feed-in tariff reductions in January and July. At the same time, these lower (module) prices will lead to explosive growth in other markets with even better feed-in tariff levels, such as those we see in Italy, the UK or Ontario.

This will stimulate the utility scale PV project market in the USA and project development in other robustly-growing markets such as those of Japan, Korea and Belgium. The optimists foresee China and India emerging as voluminous markets driven by new incentives, lower prices and their acute need for more (clean) electricity. And there is more. New markets are popping up simultaneously, starting with new feed-in tariff and incentive schemes such as those in the Philippines or Thailand, or the huge project initiatives in Morocco.
Add up all these forecasted growth markets and the global market could well grow an additional 20-25% as compared to the record breaking year 2010, resulting in a market size of over 18 gigawatts for 2011. And this is without even taking into account the possible positive effects of continuously increasing oil prices.

The Pessimist’s Prediction for the Global PV Market in 2011
The pessimist, on the other hand, foresees the German market shrinking, because the feed-in tariff reductions are too great for the industry, which will not be able to follow with the necessary cost and price reductions needed to keep the system prices attractive for investors. The pessimist foresees too much of a mess in the Italian market. As nobody knows what has actually been installed in 2010, the Government may well interfere in the current incentive scheme. Furthermore, feed-in tariff reductions have been accounted in Italy as well as in other markets. But, how much can we trust this announcement - or indeed, a new Government - in these difficult economic times faced by Italy? The pessimist may also see a Spanish horror scenario looming. Can retroactive measures be excluded? The pessimist also sees the Czech market collapsing in 2011; the Spanish market returning to zero as investors have completely lost faith in the Spanish Government; and the Belgian market facing a difficult second half of the year when strongly reduced module prices will be needed in order to keep investors interested in large-scale projects.

The pessimist foresees that the French market will remain on hold and doesn’t expect to see the introduction of any new incentives to attract investors in large-scale power plants. The pessimist also believes that India and China will not become huge markets in the near future. To develop projects in bureaucratic India will take much more time than expected. Besides, the companies that won the tenders under the National Solar Mission might not be able to build and finance their projects at the accepted low feed-in tariffs. China will focus predominantly on exporting their products rather than on building domestic plants. The UK and Ontario may reconsider their incentive schemes this year, as investors are tending to exhaust the budgets with applications for large-scale ground-based projects, which was not the original intention of the program. The pessimists also see new markets that look promising, but they believe that it will take a few years to develop these into sizeable markets of a few hundred megawatt volume.
If we add up these developments and forecasts, this could mean a global market in 2011 of around 12.5 gigawatts, i.e. 10-15% less than the 2010 figures.

Who Will be Right - the Optimist or the Pessimist? 
No-one could have predicted that a volcano would erupt in Iceland in 2010, any more than they could have predicted the oil well issue faced by BP, or the political changes in Egypt. So, who can predict what will happen in 2011 and how this will impact the PV market? Always expect the unexpected. Will the euro survive? Will the dollar fall? Will the Italian Prime Minister survive? Will oil prices continue to rise? Will inflation and interest rates rise rapidly? Will we see oversupply and solar module prices crashing?
There are simply too many factors influencing the future - so maybe the best approach is to believe neither the optimist nor the pessimist, but rather to opt for a more middle-of-the-road outlook. The scenario we arrive at if we take the mid-point of a 15% global market shrinkage (pessimist view) versus a 25% global market growth (optimist view) is a scenario which presents a 5% increase, or a market of around 16 gigawatts of new installed PV power. Not bad in today’s uncertain global economic climate. But, for sure, the wrong prediction.

PV in India: A visit to cold Europe might be helpful for this ‘hot’ market

India is hot! You can walk around in a t-shirt in streaming sunshine in January, a period that we in Northern Europe call “winter” and during which we may be ice skating or skiing! The Indian food is hot and spicy as well. And the economy in India is “hot” - all excellent conditions which forecast a sunny future for their PV market.

Potentially one of the richest countries
During the Conference “The Solar Future: India” last week in New Delhi it became clear that India is on its way to becoming a solar super power. The question is not if, but rather when. The majority of the experts and participants present at the Conference believe India will be ranked among the major solar PV markets within 5 years.
There is of course good reason to believe this. There is abundant sunshine for at least 300 days per year. The country has much more sun than Spain. The permanent power shortage leads to power cuts, mainly during peak hours at midday, when the sun shines brightest. The economy, population and energy demand are increasing year by year. And India has no energy sources other than the sun. In a way, it is therefore one of the potentially richer countries in the world in terms of potential energy supply. What is needed to kick-start the development of India’s solar market?

Never seen a PV panel
This fundamentally comes down to one thing: education and information. There is no lack of solar entrepreneurial spirit among the Indian people and companies. Many Indian businessmen have been educated in Europe or the US and have close ties to experienced foreign companies, suppliers, EPCs eager to enter India. Indeed, this is not the most difficult part of India’s market development.
More challenging is the financial banking sector. And financing is key in the development of any PV market. Unfortunately, it is not easy to import financing from foreign (experienced) institutions. The Indian financial sector will need to be educated right from the bottom. Indian bankers who have probably never seen PV panels before are now being asked to finance grid-connected project developments costing over 10 million dollars. No wonder they have many questions and take time to evaluate their risks. The country is not familiar with project financing for renewable energy systems, and definitely not used to loans spanning more than 10 years. Basic information needs to be spread. What is solar PV? How reliable is this energy technology? What are the risks involved? Does it make sense to invest money in this energy source?

It takes 4 years to develop a market
As they say, “Seeing is believing.” More real-time monitoring of data, developers with track records, and real panels on the ground are necessary. No doubt this will happen. In a few years these Indian bankers and investors will see that solar projects probably are the most steady cash flow generators possible. It is just a matter of time before the financial sector will embrace solar PV.
As stated in a previous blog, it takes time to educate and develop a market. For most markets it takes some 3 to 4 years to develop into a market of several hundred megawatts in annual installations. Let us recall Spain; in the first year, with the world’s most generous feed-in tariff, Spain did installed “only” 13 MW of new grid-connected installations. Four years later (2008), Spain had the world’s largest market, with 2600 MW. In 2008, the PV market in the whole of India, which is larger in size than Europe with at least four times Europe’s  population, installed less than 15 MW. It is expected that this figure could rise to around 500 MW in 2011. Based on the many State programs and initiatives, this figure will surge to more than 2000 MW by 2013.

Take the Indians on a European PV tour
The Indian market will be kick-started by the National Solar Mission and the Gujarat PV Program. These two initiatives alone could lead to more than 500 MW of new installed PV power in 2011. And many more Indian States will follow suit. With a global solar industry looking for larger markets besides Germany, it might be an idea to help the Indian bankers and investors - taking them on a tour of Germany, Spain or the USA; showing them the hundreds of large-scale projects already implemented; teaching them about real-time data monitoring; informing them about financing possibilities and the risks involved - in essence, showing them that solar PV is a mature technology and not rocket science, and hence building their trust. The sooner these Indian financial stakeholders are convinced, the faster the Indian PV market will grow.

Take the Indian bankers to cold Europe
There is no longer a lack of modules or investors in the global market, and there is no shortage of EPCs willing to implement projects in India jointly with local people. The main obstacle is lack of information and trust among financial stakeholders. This does not have to be the most difficult task. Let’s arrange a European large-scale PV project tour for the Indian financial executives. The costs for this will be worth the money as it will help to develop the huge new booming PV market.
Indeed, the biggest problem may well be that of rendering the tour attractive to these Indian visitors - taking them from their hot climate to one which is cold not only in terms of the below zero degrees climate but in terms of frozen economies - and to top it all, non-spicy takeaway food!

Solarplaza is ready to organize this European PV tour for Indian PV financial executives. Which of our stakeholders are willing to contribute?