NPD Solarbuzz: Risk of over-dependence on Japan and China for 2013 boom

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Global PV demand is set to reach a record high of 35.1GW in 2013, according to the latest NPD Solarbuzz quarterly report.

However, the market research firm is warning that the scale of PV project pipelines cited for both China and Japan dominate growth expectations in the second half of the year to such a degree that there is a high risk that neither country will meet industry expectations as they struggle to absorb new capacity.

NPD Solarbuzz highlights that while the PV industry continues its globalisation the reality is that China and Japan are forecast to account for more than 45% of global PV demand in 2013, creating a scenario of over dependence on just a few key markets that are yet to demonstrate a history of being able to absorb large amounts of PV on a annual basis, unlike Europe and notably Germany.

“The solar PV industry continues to transition from a European-dominated environment to a global market, with a wide range of countries contributing to growth in the overall PV market,” said Michael Barker, senior analyst at NPD Solarbuzz. “Until this transition phase is completed, however, the PV industry remains highly dependent on a small group of countries currently at the multi-gigawatt level.”

According to NPD Solarbuzz, global PV demand during the first half of 2013 reached 15GW, a 9% increase over the same period a year ago.

However, only four countries were responsible for 60% of that demand growth: Germany, China, Japan, and the US. Once again, large-scale utility and commercial ground-mount applications were said to provide 45% of first-half PV demand, while the residential market accounted for approximately 20% of demand.

“Just three years ago, solar PV installations in China and Japan were contributing less than 10% of the second-half global market-share,” added Barker. “In 2013, the number of large-scale PV projects completed in these two countries alone will determine the level of annual growth from the industry, and by how much global demand can exceed the 35GW mark.”

Greater dependence on utility-scale markets is said to create greater risk that expected demand does not materialise due to the complex nature of utility-scale project build, completion and acceptance.

Such an emphasis on China and Japan as the European market continues to decline adds to risks that market expectations are not realised. According to Solarbuzz, Europe accounted for almost half of global PV demand during the first half of 2012, but that market is expected to decline to less than 30% during the second half of 2013.

Whether or not Japan exceeds China as the number one destination for PV installations in 2013 is seen as a moot point as dependence on only two regional markets for significant growth, something not seen before, was said to disguise the risks that forecasted growth rates could fail to be reached, causing another period of overcapacity.

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