Despite the fact that many industry specialists are concerned about the effect the expected reductions in government incentives will have on the growth of solar installation figures in 2011, iSuppli has predicted that the solar photovoltaics market will continue to expand well into next year as falling prices make solar energy more attractive.
The research analyst projects that 2011 global PV system installations will total 20.2GW, up 42.7% from the figure of 14.2GW in 2010. While this represents a significant slowdown from the 97.9% growth recorded in 2009, it remains an impressive performance when considering the feed-in tariff cuts apparent on a global basis.
“Because of the cuts in feed-in-tariffs (FiT) 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,” continued Haan.
iSuppli predicts additionally that assuming the U.S. dollar/euro exchange rate remains above US$1.20/€, crystalline silicon solar cell prices will not increase in 2010 and instead will decline by 5% compared to 2010. Furthermore, prices for installations in 2011 will also fall slightly, decreasing by approximately 10% on average in Europe. Installation prices will thus decline to compensate for reduced subsidies in the largest markets of Germany, Italy and France, says iSuppli.
Due to this expected decline, the average ROI for PV installation projects is expected to remain attractive and will continue to stimulate substantial demand. Even with Italy’s FIT cut of 10-27% divided out 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 8-10%.
The analysts forecast further that with a positive ROI, leading solar countries will still experience healthy growth in 2011, even if it is at a slower rate in comparison to 2010. The solar leader, Germany, is expected to install 9.5GW worth of PV systems in 2011, representing a 43.9% increase from 6.6GW in 2010, down from 73.4% in 2010. Italy, running behind Germany, will install 2GW worth of PV systems in 2011, up 53.6% from 1.3GW in 2010. The U.S will install the third largest total of PV systems in 2011, at 1.9GW, up 79.3% from 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.
The only poor performance iSuppli has predicted during 2011 is from the Czech Republic, as its installations plummet to 150MW – 250MW for the year, down from 1GW in 2010. The country’s steep 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.
Global PV installation growth is set to undergo a major deceleration in 2012, with a rise of only 2.8% – 20.8GW for the year. “iSuppli believes 2012 will be the year when the PV industry weans itself from the generosity of German subsidies,” said de Haan. “The German market will cool off and expand by only 4 to 5GW 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.”