Major regional shift in PV demand - SolarStar

Global PV installations  hit 32GW in 2012, up from 28GW in 2011, according to the latest figures from market research firm, IHS. Growth is also expected in 2013 but restricted to only a 3GW rise to 35GW.

However, falling Average Selling Price""s (ASP""s) over the last two-years are set to continue in 2013. ASP decline has had a significant impact on industry revenue. According to IHS, industry revenue—measured as the system price multiplied by total gigawatts installed is expected will decline to an estimated US$75 billion in 2013, down from US$77 billion in 2012. PV industry  revenue was said to have peaked in 2011 at US$94 billion.

Yet IHS said that industry revenue would expand in the double digit range from 2014 to 2016, reaching as much as US$115 billion by 2016.

Ash Sharma, director of syndicated solar research for IHS said, “The conflicting trend of growing PV installation volumes accompanied on the other hand by falling revenues will challenge solar companies to continue to reduce their cost structures. While solar installations have grown every single year without fail since we started analyzing the industry in 2006—and will continue to do so until at least 2017—the picture is much more sobering when one looks at industry revenue, especially as PV component prices continue downward. And installation growth, although positive, is also slowing, further affecting the industry’s overall top line.”

Regional shifts

IHS noted that a major regional shift in PV demand was occurring and that the industry was becoming truly global. Europe was said to have accounted for more than 80 percent of solar demand in 2010, declining to 53% in 2012, and forecast to slide further this year to only 39% of the global market. Not surprisingly, Asia and in particular China is on track to replace Europe as the world’s largest source of solar installations in the coming years.

“Historically, solar companies could rely on Germany and a few other European countries to support their business,” added Sharma. “But these same companies need to now quickly accelerate their entrance into emerging markets around the world.”

IHS expects Germany to fall to third place in 2013, behind China and the United States. Japan and Italy follow in fourth and fifth, respectively.

Geographic fragmentation is also expected to escalate this year. The market research firm noted that the top 5 countries by installations accounted for nearly 75% of total solar demand in 2012, but is expected to decline to 65% in 2013.