Lux Research’s latest Solar Demand Forecaster claims Portugal’s installations cap to be the most alluring in Europe to investors. The country’s internal rates of returns (IRR) for the six major solar technologies remain high in 2011 along with Cyprus and Greece, though the financial crisis in Europe could significantly hinder that market.
“Uncertainty surrounding Europe’s financial situation and its countries’ ability to pay out incentives will prevent wild growth – keeping that market relatively constant,” said Matt Feinstein, the Lux Research Analyst who led the Demand Forecast. “However, a number of Asian markets have high returns going into 2012 – notably Malaysia at 24.1%, the Philippines at 22.6%, and Japan at 20.9%. They will push demand toward that region in 2012 and 2013.”
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IRR is the discount rate at which the net present value (NPV) of future cash flows from a capital investment equals zero. Capital expenditure is the primary factor in determining a market’s IRR, along with incentives and operating expenses.
In August 2011, the research firm noted that many markets have IRRs that are worthwhile for investments by project developers. Appealing residential markets include Australia with a 52% subsidized IRR, Greece at 32% and Ontario at 27%. On the commercial side, New Jersey and Portugal, at 42% and 37%, respectively, are followed closely by Hawaii at 34%.
| Top 5 Locations by IRR (1Q12) |
| 1. Portugal |
| 2. Cyprus |
| 3. Hawaii |
| 4. Greece |
| 5. Israel |
The Solar Demand Forecaster provides a customizable platform for tracking IRR and projecting future growth through 2016 for the six key photovoltaic technologies: monocrystalline silicon (c-Si), multicrystalline silicon (mc-Si), cadmium telluride (CdTe), copper indium gallium diselenide (CIGS), thin film silicon (TF-Si) and high concentrating photovoltaic modules (HCPV). It provides breakdowns for IRRs for residential, commercial and utility installations in 50 US states, 31 Chinese provinces and autonomous regions, and 75 countries/regions globally.