The global solar power market will continue growing rapidly, fueled by increased focus on curbing greenhouse gas emissions, favorable legislation, and the need to enhance energy self-sufficiency and security. That’s according to a new report by Frost & Sullivan, Global Solar Power Market.
The report finds that the global solar market earned revenues of $59.84 billion in 2013 and estimates this will double to $137.02 billion by 2020.
In 2014, global solar PV demand is dominated by the Asia-Pacific region, which will account for approximately 46% of annual installed solar PV capacity. China, Japan, India, and Australia will continue to be the top four countries driving regional demand. With panel prices coming down drastically, Asian manufacturers are now looking at value chain integration and technical efficiencies to differentiate their products from those of other suppliers.
Europe, where installed capacity has expanded rapidly, is still a huge solar power market. By 2020, Germany, France, Spain, Italy, and the United Kingdom together plan to install more than 75 GW of solar PV capacity. Compare that to the total global installed PV capacity in 2013, at 137 GW.
The United States has become a lucrative market, as the price of solar PV systems in the region has declined due to imports from China. Even with anti-dumping and illegal subsidy tariffs on imports, the U.S. market remains strong.
Policy remains a key factor in maintaining a strong market. “The global solar power market is benefitting from various incentive schemes in the form of tradable green energy certificates, FiTs, subsidies, and tax rebates for the use of renewable energy for power generation,” said Frost & Sullivan Energy & Environmental Industry Analyst Pritil Gunjan. “However, these incentive schemes continue to be very heterogeneous, making solar PV penetration rates vary widely based on local and regional policies.”
Policy decisions will drive the market during the forecast period. Environmental policies and upgrades/modifications of the electricity grid, in particular, will have a strong influence on electricity prices for consumers and determine the extent of solar power uptake.
The potential of the solar power market has been reined in by the high installation and maintenance costs of solar PV systems. Along with the intermittent supply of solar power and the sometimes low return on investment of solar PV systems, the availability of less expensive renewable energy technologies such as wind and bioenergy also challenge the market. As banks have been funding projects related to these proven technologies, solar power suppliers are facing increasing competitive pressures. In addition, the strong reliance on government support has impeded market development.
“Drafting strict clean energy regulations and offering adequate subsidies to the renewable energy sector will be essential,” noted Gunjan. “Equally important will be maintaining clarity in the incentive guidelines for solar power so that project developers, investors and customers are not misled and can make proper investment decisions.”