The solar photovoltaic (PV) market saw another strong year, with total global operating capacity reaching the 100 GW milestone in 2012.
The market was fairly stable relative to 2011, with slightly less capacity brought on line but likely higher shipment levels, and the more than 29.4 GW added represented nearly one-third of total global capacity in operation at year’s end. The thin film market share fell from 15% in 2011 to 13% in 2012.
Eight countries added more than 1 GW of solar PV to their grids in 2012, and the distribution of new installations continued to broaden.The top markets—Germany, Italy, China, the United States, and Japan—were also the leaders for total capacity.
By year’s end, eight countries in Europe, three in Asia, the United States, and Australia had at least 1 GW of total capacity.The leaders for solar PV per inhabitant were Germany, Italy, Belgium, the Czech Republic, Greece, and Australia.
Europe again dominated the market, adding 16.9 GW and accounting for about 57% of newly installed capacity, to end 2012 with 70 GW in operation.But additions were down from 22 GW and more than 70% of the global market in 2011; the region’s first market decline since at least 2000 was due largely to reduced incentives (including FIT payments) and general policy uncertainty, with the most significant drop in Italy.
Regardless, for the second year running the EU installed more PV than any other electricity-generating technology: PV represented about 37% of all new capacity in 2012.10 As its share of generation increases, PV is starting to affect the structure and management of Europe’s electricity system, and is increasingly facing barriers that include direct competition with conventional electricity producers and saturation of local grids.
Italy and Germany both ended 2012 with more solar PV than wind capacity in operation, together accounting for almost half of the global total.
Germany added a record 7.6 GW, up just slightly over the previous two years, increasing its total to 32.4 GW.Solar PV generated 28 TWh of electricity in Germany during 2012, up 45% over 2011.14 Italy reached a total capacity of 16.4 GW; however, the 3.6 GW brought on line was far lower than additions in 2011.
Other top EU markets included France (1.1 GW), the United Kingdom (0.9 GW), Greece (0.9 GW), Bulgaria (0.8 MW), and Belgium (0.6 MW).All saw total operating capacity increase 30% or more, with Bulgaria’s capacity rising sixfold, although France’s market was down relative to 2011.
Beyond Europe, about 12.5 GW was added worldwide, up from 8 GW in 2011.18 The largest markets were China (3.5 GW), the United States (3.3 GW), Japan (1.7 GW), Australia (1 GW), and India (almost 1 GW).19 Asia (7 GW) and North America (3.6 GW) followed Europe for capacity added; by year’s end, Asia was rising rapidly and was second only to Europe for total operating capacity.
U.S. capacity was up nearly 85% in 2012 to 7.2 GW.California had a record year (>1 GW added) and was home to 35% of total U.S. capacity.But PV is spreading to more states, driven by falling prices and innovative financing and ownership models such as solar leasing, community solar investments and third-party financing.
On the negative side, battles are emerging around the future of net metering due to utility concerns about potential stranded costs of existing generating assets.Utility installations represented 54% of additions and accounted for 2.7 GW of U.S. capacity by year’s end, with more than 3 GW under construction.Utility procurement is slowing, however, as many utilities approach their Renewable Portfolio Standard (RPS) targets.
China doubled its capacity, ending 2012 with about 7 GW, but below expectations for the year.By the fourth quarter, China accounted for more than a third of global panel shipments, surging past Germany in response to government efforts to create a market for the glut of domestic solar panels.The market is dominated by large-scale ground-mounted systems, many of which are in western China, far from load centers.But national policies aim to encourage distributed, building-mounted projects as well.
Total capacity in Japan rose 35% to exceed 6.6 GW, driven by the new feed-in tariff (FIT); by the end of 2012, solar PV accounted for 90% of capacity certified in the FIT system.Japan’s rapid demand increase has led to significant investment in PV and a rush into projects that are pushing up land prices.
Australia ended the year with nearly 2.4 GW, up 70% over 2011.33 By early 2012, an estimated one in five homes in South Australia had rooftop PV.India also saw notable growth, with capacity increasing more than fivefold to 1.2 GW.
Just as some traditional EU markets are starting to slow, falling prices make it easier for PV to compete in new markets across the globe. Namibia and South Africa brought large solar parks on line 2012, and Chinese companies have begun building projects in at least 20 African countries to help spur demand for Chinese exports.
Israel is the only country in the Middle East with a significant market.But in Saudi Arabia and across the Middle East-North Africa (MENA) region, interest in solar power is being driven by rapid increases in energy demand, a desire to free up more crude oil for export, and high insolation rates.
The Southeast Asia region has been dominated by Thailand, but markets are starting to bloom elsewhere.And driven by favourable policies, demand in Latin America is shifting from small off-grid and niche applications to large-scale deployment in the commercial and industrial sectors—especially in Brazil, Chile, and Mexico.
Interest in off-grid systems is growing, particularly in developing countries.In 2012, one of the world’s largest off-grid systems was completed in the South Pacific territory of Tokelau, to provide 100% of electricity needs.Off-grid projects represent a significant portion of installed PV capacity in some developed countries, including Australia, Israel, Norway, Sweden, and the United States.
However, the vast majority of PV capacity today is grid-connected, with off-grid accounting for an estimated 1% of the market, down from more than 90% two decades ago.
The market for building-integrated PV (BIPV)—solar panels that double as shingles, walls, or other building materials—represents less than 1% of solar PV capacity being installed worldwide, amounting to an estimated 100 MW added in 2012.The economic downturn has slowed construction, dampening BIPV growth.Europe is the largest market with more than 50 companies active in the sector.
Also on the rise in some countries is interest in community-owned PV. Eight U.S. states have policies to encourage community solar projects; by late 2012, community projects accounted for an estimated 60 MW of U.S. capacity.In Australia, the Melbourne LIVE Community Power Programme enables community members who cannot install their own rooftop systems to invest in the project.
At the same time, the number and scale of large PV projects continues to increase. By early 2013, about 90 plants in operation were larger than 30 MW, and some 400 had at least 10 MW of capacity.The world’s 50 biggest plants reached cumulative capacity exceeding 4 GW by the end of 2012, and at least 12 countries across Europe, North America, and Asia had solar PV plants over 30 MW.
More than 20 of these facilities came on line in 2012, including the world’s two largest: a 250 MW thin-film plant in the U.S. state of Arizona and a 214 MW plant in Gujarat, India.Germany held on to its lead for total capacity of facilities larger than 30 MW, with a cumulative 1.55 GW in operation by year’s end, followed by the United States, France, India, Ukraine, China, and Italy.Several projects are planned around the world that range from 50 to 1,000 MW in scale.
The concentrating PV (CPV) market is still comparatively tiny, but interest is increasing due greatly to higher efficiency levels in locations with high insolation and low moisture.The world’s first multi-megawatt projects came on line in 2011, and, by mid-2012, more than 100 plants totalling as much as 100 MW were operating in at least 20 countries worldwide.The United States has the largest capacity thanks to a 30 MW Colorado plant that started operating in 2012, followed by Spain, China and Chinese Taipei/Taiwan, Italy, and Australia.CPV is also spreading to new markets in North Africa, the Middle East, and South America.
Solar PV is starting to play a substantial role in electricity generation in some countries, meeting an estimated 5.6% of national electricity demand in Italy and about 5% in Germany in 2012, with far higher shares in both countries during sunny months.By year’s end, PV capacity in the EU was enough to meet an estimated 2.6% of total consumption, and global capacity in operation was enough to produce at least 110 TWh of electricity per year.
As in 2011, 2012 was a good year for solar PV distributors, installers, and consumers, but cell and module manufacturers struggled to survive let alone make a profit. An aggressive capacity build-up in 2010 and 2011, especially in China, resulted in excess production capacity and supply that, alongside extreme competition, drove prices down further in 2012, yielding smaller margins for manufacturers and spurring continued industry consolidation.Low prices also have challenged many thin film companies and the concentrating solar industries, which are struggling to compete.
The average price of crystalline silicon solar modules fell by 30% or more in 2012, while thin film prices dropped about 20. Installed system costs are also falling, although not as quickly, and they vary greatly across locations. From the second quarter of 2008 to the same period in 2012, German residential system costs fell from USD 7.00/Watt (W) to USD 2.20/W; by contrast, average prices for U.S. residential systems had fallen to USD 5.50/W.
Approximately 31.9 GW of crystalline silicon cells and 35.5 GW of modules were produced in 2012, down slightly from 2011.Despite several plant closures, year-end module production capacity increased in 2012, with estimates ranging from below 60 GW to well over 70 GW.
China’s production capacity alone exceeded the global market.67 Thin-film production declined nearly 15% in 2012, to 4.1 GW, and its share of total global PV production continued to fall.
Over the past decade, leadership in module production has shifted from the United States, to Japan, to Europe, to Asia.
By 2012, Asia accounted for 86% of global production (up from 82% in 2011), with China producing almost two-thirds of the world total.70 Europe’s share continued to fall, from 14% in 2011 to 11% in 2012, and Japan’s share dropped from 6% to 5%.The U.S. share remained at 3%; thin film accounted for 29% of U.S. production, down from 41% in 2011.
Europe was still competitive for polysilicon production, however, and the United States was the leading producer.
The top 15 solar PV module manufacturers accounted for half of the 35.5 GW produced globally; 11 of these companies hailed from Asia.Yingli (China) jumped ahead of both Suntech (China) and First Solar (USA) to land in first position. First Solar held its number-two spot, and Suntech fell to fourth after Trina Solar (China). There was also much shifting in the ranks among the other top players.
Market consolidation continued in 2012. On the project development side, merger and acquisition activity was driven by large companies wanting to buy into project pipelines; among manufacturers, even global companies with solid financing suffered.The string of failures and bankruptcies that began in 2011 continued into 2013, due to overcapacity of module production.
More than 24 U.S. solar manufacturers have left the industry in recent years, and, by one estimate, about 10 European and 50 Chinese manufacturers went out of business during 2012.78 Even “tier 1” Chinese companies like Yingli and Trina idled plants and struggled to stay afloat.
By year’s end, China’s 10 largest manufacturers had borrowed almost USD 20 billion from state-owned banks, and Suntech Power’s main operating subsidiary declared bankruptcy in early 2013.
In India, 90% of domestic manufacturing had closed or filed for debt restructuring by early 2013.
Other Asian companies were busy buying up next-generation U.S. solar technology, and Hanwha Group (South Korea) bought the bankrupt Q-Cells (Germany), the top module manufacturer in 2008.82 First Solar (USA) and Panasonic (Japan) closed production lines and/or suspended plans for new factories; GE (USA) halted construction on its thin-film factory in Colorado and announced plans to return to R&D; Bosch Solar (Germany) announced that it would stop making cells and panels in 2014; and Siemens (Germany) announced its exit from the solar business.
Most companies that remained in established markets were investing in improving manufacturing processes, rather than R&D, to reduce their costs.
Even as some manufacturers idled production capacity or closed shop, others opened facilities and aggressively sought new markets—particularly in the developing world.New plants opened around the globe in 2012, from Europe to Turkey, Kazakhstan to Japan, and Malaysia to the United States.
Ethiopia’s first module-manufacturing facility (20 MW) began operating in early 2013 to supply the domestic market.
Innovation and product differentiation have become increasingly important, and successful manufacturers have diversified both up- and downstream, with many expanding into project development or building strategic partnerships.
First Solar moved away from the residential market to focus on development of utility-scale PV plants; First Solar and SunPower (USA) both announced deals that will provide entry into the Chinese market; Trina Solar is becoming a provider of total solar solutions; and Canadian Solar is shifting into project development and ownership.
The year 2012 was also mixed for CPV. Several companies, including Skyline Solar and GreenVolts (both USA), closed their doors, and SolFocus (USA) announced a decision to sell; but those companies that were still operating invested increasing amounts of time and money in building manufacturing facilities in emerging markets.
The industry is currently in the commercialisation phase, but several challenges remain, including obtaining financing required to scale up projects, and demonstrating continuous high yield outside the laboratory.