Global PV system installations in 2011 will amount to 20.2 Gigawatts (GW), up 42.7% from 14.2GW in 2010. While this represents a significant slowdown from 97.9% growth in 2009, it remains an impressive performance in light of expected rollbacks in subsidy programs from various governments.
“Because of the cuts in Feed-in Tariffs (FiTS) in Germany and Italy next year, and the budget concerns in Greece, Italy and Spain, PV installations in 2011 will slow somewhat compared to the blistering pace of 2010,” said Stefan de Haan, senior analyst for iSuppli. “Furthermore, the weakening of the euro versus the Chinese yuan will artificially inflate prices for solar cells and other system components in Europe. But contrary to some observers’ fears, installations will continue to rise at a prodigious rate next year. Modestly falling pricing for solar cells and complete PV systems are expected to more than mitigate the negative impact of the falling FiTs and rising yuan.”
Price triumphs
Assuming the US dollar/euro exchange rate remains above US$1.20/€, iSuppli predicts crystalline silicon solar cell prices will not increase in 2010 and instead will decline by 5% compared to 2010.
Prices for installations in 2011 will fall slightly more, decreasing by approximately 10% on average in Europe. Installation prices will decline to compensate for reduced subsidies in the largest markets of Germany, Italy and France, the company said.
Because of this decline, the average Return On Investment (ROI) for PV installation projects is expected to remain attractive and to continue to stimulate substantial demand. Even with Italy’s FIT cut of 10% to 27% split over the year, the ROI for solar installations completed in the country during 2011 will average 10% for major market segments. In Germany, assuming a 13% FiT cut, the projected ROI will be in the range of 8% to 10%.
Solar upside
With the ROI still positive, leading solar countries will still experience robust growth in PV installations in 2011, although at a slower rate than in 2010.
The number 1 solar energy country - Germany - will install 9.5GW worth of PV systems in 2011. This will represent a 43.9% increase from 6.6GW in 2010, down from 73.4% in 2010. de Haan told renewable energy focus that Germany is a very good example of how a market can be created and developed in a "rather sustainable way". A well-adjusted FiT is a "terrific tool to support PV, probably the best scheme [of] all", he said. And he added that the USA and China "should introduce something similar to help their domestic industry".
In second place in terms of solar generation will be Italy, predicts iSuppli, which will install 2GW worth of PV systems in 2011, up 53.6% from the 1.3GW installed this year.
The United States will install the third largest total of PV systems in 2011, at 1.9GW, up 79.3% from the 1.1GW in 2010. This is down from 152.3% growth in 2010.
In fourth and fifth places, respectively, France and Japan will experience healthy expansion, with both countries crossing the 1GW threshold for new installations for the first time.
A notable drop-out during 2011 will be the Czech Republic as its installations plunge to 150MW-250MW for the year, down from 1GW in 2010. The country’s precipitous decline will be driven by new FiT legislation reducing the current tariffs. Foreign investors drove the market in 2009 and 2010, creating a solar boom comparable to that in Spain in 2008. iSuppli expects that the Czech Republic’s government will take measures to drastically reduce the amount of new solar installations.
Solar event in 2012
Global PV installation growth is set to undergo a major deceleration in 2012, with a rise of only 2.8% to 20.8GW for the year.
“iSuppli believes 2012 will be the year when the PV industry weans itself from the generosity of German subsidies,” de Haan said. “The German market will cool off and expand by only 4 to 5 GW per year for the next several years. We believe the government aims to keep an orderly progression in order to achieve an ultimate goal of around 80GW of installed PV capacity.”