vrijdag 26 augustus 2011

A Solar PV Market Forecast for 2014: Which Markets will be in the Top 10?

Solarplaza recently published the Top 10 of the world’s biggest PV markets for 2010 and previous years. But what will this Top 10 look like in 2014?
If we look back 3 years, we can see how unpredictable market dynamics are. After all, who would have believed that Italy would have turned out to be the world’s largest PV market in 2011? Who would have believed that Spain would have fallen out of the Top 10 in 2011, after being the world’s biggest market in 2008? And what about the global economic situation and other international developments impacting the solar industry and market developments...? It is in fact anyone’s guess when it comes to looking three years ahead... But it’s fun to try - so here is my best guess:

Market Size in 2014 [MW/Year]
1. Germany - 6500 MW
2. Italy - 5500 MW
3. USA - 4500 MW
4. Japan - 3300 MW
5. India - 3000 MW
6. China - 2000 MW
7. Australia - 1400 MW
8. France - 1100 MW
9. Spain - 800 MW
10. Greece - 750 MW

1. Germany
When Germans build cars, they make the best. Why would that be different with PV? Germany is the most developed and experienced market in PV, and the country has the world’s best PV business infrastructure, with thousands of PV companies. Germans have a great ability for technological and business innovations, have a green drive and clear renewable energy goals. All of which are the right ingredients for staying at the top, even after the FiT era. The expected dip in sales in 2011 is probably just a temporary phase, during which Germans are preparing for grid parity in 2012/2013. Being one of the world’s most stable economies, I expect solid market growth, which will be fuelled by the German attitude, “My green neighbor has PV, so I want/must have it too.” Market saturation is still far away, so there is plenty of room for further market growth. International companies believe in the future of German customers too: they are lining up to sponsor German football teams. Like in football, Germans always play in the top league. Losing the number one position to Italy this year might very well be a one-off mistake...

2. Italy
Italy is Italy and things are done differently in Italy. Five years ago a tiny market of 11 MW, the Italian market will be 500 times bigger than in 2006 and become the world’s largest market in 2011. Italians are creative, impatient and like speed. Plus, the Italian market is attractive – and you can’t teach  the Italians anything about attractiveness... Maybe the market will face a little fallback after the record year 2011, but I expect them to bounce back, reaching the goal of 20 GW cumulative installed PV power even before 2014. High irradiance figures combined with high energy prices are helping to bring Italy closer to grid parity this year – or at least next year – in the residential market. Some additional taxes or levies on the energy price to finance the feed-in tariff will do the rest. Italy will definitely remain a Top 3 market by 2014. My guess is that, even without a FiT, they will reach 20 GW. Italy is an ideal market and base for new business and financing models based on grid parity circumstances. The business infrastructure is already in place. All major PV players have established Italian branches – and not because of the nice cars! Italy is a market for the future, with electric cars powered by solar energy. Not because they hate the noise of fast cars, but because these accelerate faster than the current Ferrari.

3. USA
The USA will become the world’s biggest PV market. The only question is when... My guess: not yet – but in 2014. The US market might grow at least 50% per year and the potential is enormous with 50 States. But, as per Europe, every State has its own policy(makers) and federal policy is not as sustainable as PV systems themselves. At the present time, most States still have a small market size; easily 10 times less than that of Belgium in Europe. By 2014, several Sunny Desert States will be contributing, with some very large-scale projects (e.g. California, Arizona, Texas, Nevada, New Mexico), and several other States will have well-developed residential and commercial market segments (e.g. New Jersey). But, if the economy is up, the dollar strong, Democrats still in charge, paperwork for PV reduced and the federal tax credit still available, the USA may well become the world’s number one market even sooner. Is that feasible?

4. Japan
The shift from nuclear to renewable energy will help to make the Land of the Rising Sun an increasing PV market. After almost following in the steps of the Samurai by killing its own leading market position a few years ago, Japan is now on the way back to the top. The high energy prices and rapidly decreasing solar module prices help a lot. Also helpful are the mature domestic PV industry, the very well-developed PV business infrastructure – and let’s not forget public awareness. Japanese customers are already familiar with solar PV systems, with PV ads in all media channels. Ambitions and the potential are huge. A modest 30% growth rate per year will put Japan in the number 4 position with a size of around 3300 MW.

5. India
Probably one of the best places on earth for solar energy. The highest irradiance, high economic growth, permanent power shortage and no domestic natural energy sources – apart from abundant sunshine... All major markets have taken at least 3 years to build up their PV business infrastructures – and that is what is happening now in India. In the coming years, cheap solar energy will become unavoidable for all energy utilities in India. BOS cost (labor, engineering, etc.) will be low in India, and with module costs coming down rapidly, there is no better alternative. The Indian PV market potential is infinite. In the long term, India is ready to become the world’s biggest PV market. It will just take a little more time, because it is too hot to work too fast in this sunny country. My guess is at least a 100% growth, putting them into position 5 for 2014.

6. China
Will the Chinese domestic PV market be smaller than the Indian market?
The race might be close. But China might be more focused on industrial development and making money through export first, before developing its domestic market. Irradiance in the relevant populated areas in India is better than in China. And in a situation of no subsidies the market will follow the sun. Besides, there are more power shortages to solve in sunnier India than there are in China. On the other hand, the financial power of China is better, and if the Government would provide the same loans for PV installations that they have for manufacturers, and in the same amounts (billions of dollars) growth could be much higher. Being more manufacturing-driven, my guess is that China will focus more on export and sales and India more on domestic energy supply.

7. Australia
In an overview of countries with huge solar energy potential, Australia cannot be excluded. Although still addicted to coal, Australia might see the (sun)light soon, as they increasingly discover the potential of this clean, reliable, predictable and cheap energy source. And on the map it looks like there is also plenty of space for ground-based solar PV power plants... A natural choice for rapid market development. The Australian market is emerging and a solid 40% market growth per year will bring them into the Top 10 at place number 7 for 2014.

8. France
The time is over for nuclear power. Building new nuclear power plants is too high a (financial) risk. Financing a 20-year solar PPA contract is easier than financing a new nuclear site. Who wants to invest for another 40 years in such power plants, knowing solar and wind energy are favored by customers and voters alike? And will also be cheaper within 10 years? Solar energy will be a natural choice for France. The French love their innovative products and business concepts. And the French like their independence. New players will find their way into solar. And customers love to be independent with their own energy source. Only a 30% year-on-year growth is sufficient to put France into the 8th position.

9. Spain
Yes, why should Spain not regain its place as top-of-the-market? After the burst of the PV bubble in 2009, Spain is crawling back up, and very soon it may no longer need subsidies to make solar PV affordable. Energy prices are rising, and the companies that have survived are stronger and more experienced. Even more important, the Spanish banking sector has sufficient experience. Grid parity is close and Spain is Europe’s most logical and best-suited country for large-scale ground-based PV power plants. At a 30% market growth per year, Spain could end up 9th in the 2014 Top 10. Provided there is no economic meltdown in Europe, Spain could be the reviving surprise.

10. Greece
There needs to be at least one surprise in the Top 10. Greece is the silently but steadily growing market. Shadowed by its economic problems, the Greek market is doing great with over 200% growth per year since 2007. If it experienced just 40% growth in the coming years, it could suddenly enter the Top 10 in 2014. No domestic energy resources other than abundant sunlight and rising energy prices will help to develop Greece into an attractive grid parity market. Just replacing fossil fuels by solar power from all the islands will not only cut costs but will provide a sustainable future again for Greece.

There is always room for more surprises. Who in 2007 would have expected the Czech Republic as the number 3 market in 2010? It only takes 3 years to develop a market and business infrastructure. So if countries like Brazil, Chili, South Africa, Israel and Morocco start next year, they could easily end up in the 2014 Top 10.

The above Top 10 is just a best guess. An interesting experiment to look back on in 2014, to see whether predicting the future is still impossible – but nevertheless fun to do. I can’t wait to look back in 2014 and find out what surprising and foreseeable facts were overlooked...

This forecast is open for discussion and therefore I hope to meet you in Hamburg at our Global Demand Forum, where keynote experts will be sharing their vision on where modules are heading in the coming years!

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