PV Installations Expected to Grow 15% in 2011 to 21 GW

More than 21 GW of new PV capacity is predicted to be installed this year - up from around 18 GW in 2010, according to IMS Research's latest report on PV demand.

The firm says it has raised its outlook for this year based on new information regarding supply chain pricing which will help stimulate demand in major markets. However, it also cut its long-term forecast slightly due to decreasing incentives in several markets.

IMS Research's latest analysis of global PV demand revealed that installations will grow just 15% this year and that prices are falling rapidly enough to create another surge in demand in markets such as Germany.

In addition, now that the decree in Italy on incentives has finally been implemented, life will return to the paralyzed market, which was simply waiting and watching in the first quarter of this year (Q1'11), IMS Research says. Installations were 37% down in the quarter, with approximately 3.5 GW of new capacity. This number is forecast to increase steadily each quarter throughout the year, culminating in a very large fourth quarter.

One significant outcome from the latest PV demand database is that European installations will fall this year and next year.

"Europe's share of the PV market will fall considerably in the next three to five years; in fact, we predict European installations will decline in both 2011 and 2012 and will not return to the 2010 level for quite some time," says Ash Sharma, PV research director.

"Despite many governments' indicating that renewable energy will become a larger part of their energy policies in the wake of the Fukushima crisis, it is less clear whether this talk will translate to real support for the PV industry," Sharma adds. "The governments associated with most major markets have either cut incentives recently, or indicated that they will do so soon.

"We predict demand from Germany and Italy alone to fall by 3 GW in 2012, and Europe's share of global demand to fall from 80 percent in 2010 to 56 percent in 2012," he adds.

IMS Research also predicts a single-digit decline for PV installations in 2012 due to both the falls forecast in Europe and uncertainty in the U.S. and Asia. Although both of these markets are growing well this year and are predicted to exceed 5 GW combined, it is not yet clear if growth can be sustained in 2012 and if government policy will fully support PV.

Although the Chinese government announced it was to double its target for PV capacity, IMS Research believes that market growth will be limited to government-controlled projects and that a feed-in tariff will not be introduced for several years, as system prices are considered too high.

"Yet again, the outcome of the PV industry's development in 2012 will be entirely dependent on reducing costs rapidly enough in order to keep prices in line with incentives in major markets," says Sharma. "Although margins are now being squeezed and prices are beginning to fall, further reductions are needed in 2012, and the key now lies in polysilicon and wafer supply to do this."

source:  IMS Research

PV Inverter Shipments Decline 39% As Product Inventory Builds

Global PV inverter shipments declined to 4 GW in the first quarter of this year (Q1'11) - 39% lower than the previous quarter, but 31% higher than in Q1'10, according to IMS Research's latest quarterly report on the market.

Rising channel inventory in markets such as Germany, Italy and France contributed to the disappointing first-quarter results. The report is based on actual sales and shipment data from 35 of the largest PV inverter suppliers, including the largest Chinese vendors. It revealed that although the first quarter of the year is traditionally weak for the PV inverter industry, the 39% sequential drop in Q1'11 shipments was much larger than the 17% drop seen a year earlier.

"Q1'11 was a difficult quarter for inverter suppliers," says Ash Sharma, PV research Director at IMS Research. "Inventory began to build in late 2010, and this continued with order cancellations common for suppliers during the quarter. Q1'11 is now the second quarter in succession where shipments have fallen."

Following a trend seen in late 2010, Germany continued to become less important to the PV inverter industry in Q1'11, according to IMS Research. Since the company began tracking quarterly shipments, Q1'11 was the first quarter when Italy had a larger market than Germany, with over 1.2 GW shipped.

Inventory may be a likely destination for the inverters, given that uncertainty caused by a review of the Italian feed-in tariff (FIT) in Q1'11 halted project financing and stalled the market.

"Even with uncertainty during the quarter, inverter demand stayed buoyant, with installations still being completed from the previous Conto Energia FIT scheme, which expired at the end of 2010," Sharma says.

Germany's falling share of the inverter market was also apparent in the results of its supplier base, with many German suppliers losing share of the global market, the report adds. Market leader SMA Solar Technology reported quarterly results that were down on the same period in 2010. U.S.-based suppliers, such as Satcon and Advanced Energy, continued to perform strongly, because they were less exposed to the stalling European markets.

IMS Research predicts only slow growth in demand for inverters in Q2'11, because several gigawatts of inventory is being held throughout the supply chain. Weak demand in Europe is not clearing the inventory quickly enough for strong growth to return, the company says.



Source:  Solar Industry

Record Module Inventory Awaiting Installation As Prices Continue To Fall

Global PV module inventory levels have reached over 10 GW in the second quarter of 2011, the highest amount recorded to date, according to the latestanalysis from IMS Research.

High inventory levels, as well as lower incentive levels in key European markets, have contributed to rapidly decreasing prices during the quarter, the company says.

A sudden slowdown in completed installations due to the halting of the Italian market, as well as a slower than expected start to the year in other key European markets, has led to a sharp increase in stock levels throughout the supply chain. Inventory levels at manufacturers, distributors, integrators and installers have all climbed during the first half of 2011.

Most of this record inventory has already been shipped by module manufacturers and is located in distribution and sales channels. IMS Research estimates that almost 8 GW of modules are currently shipped by suppliers, but have yet to be installed and connected to the grid.

"Throughout 2010, when all products were moving quickly through the supply chain, channel inventory typically stood at four to five GW; which is roughly equivalent to one quarter's production," says Sam Wilkinson, a PV research analyst at IMS Research. "Generally speaking, a module will take around three months to be shipped, transported and make its way through distribution channels before being installed, so this figure appears reasonable."

"Many in the industry consider today's inventory level to be shocking," Wilkinson adds. "However, it represents an increase of only around three to four GW over 'normal' levels."

In addition to the large channel inventory of modules, supplier inventory has also grown quickly in early 2011; most suppliers are reporting that year-to-date production has far exceeded shipments. The resulting increase in modules held in stock by suppliers has taken the total PV module inventory over the 10 GW mark, IMS Research explains.

The company predicts that further declines in average PV module prices will lead to a strong recovery in the PV market, in particular, led by growth in Germany and the U.S. High inventory levels are expected to begin to be corrected in the third quarter.

Source:  Solar Industry

PV Panel Shipments Decrease For First Time In Two Years

PV module shipments declined in the first quarter of this year (Q1'11) - compared to the numbers seen the previous quarter - for the first time since the beginning of 2009. Prices have also begun to decline rapidly since the abrupt halt to demand in the booming Italian market, in the lead up to last week's announcement of Italy's new feed-in tariff (FIT).

According to the latest analysis of the global PV industry by IMS Research, global PV module shipments for the quarter declined by nearly 10%. Average prices, which had remained strong throughout 2010, supported by high demand from major European markets, also fell sharply.

Shipments and prices are forecast to continue their decline in the second quarter, with the prices of crystalline modules from Chinese tier-two suppliers falling the quickest.

Great uncertainty in the Italian market has been a significant factor in slowing the booming PV market, IMS Research says. Demand from Italy came to a standstill overnight when it was announced that the current FIT would be suspended. This development has led to high inventory levels and crashing end-market prices.

"Suppliers that are dependent on the Italian market saw demand for their products quickly evaporate when the feed-in tariff was suspended," says Sam Wilkinson, PV market analyst at IMS Research. "Many manufacturers rapidly adjusted production in an attempt to prevent stock from building.

"However, distributors were already stocking large amounts of product, and the total worldwide PV module inventory has now reached a record amount of over 10 GW in Q2'11," Wilkinson continues. "Many companies have already begun dumping prices in order to clear it."

The Italian government's May 5 confirmation of the country’s new incentive scheme is expect to "restart" 2010's second-largest PV market and slow the rapid decrease of prices. However, IMS Research predicts that long-term damage to investor confidence and caps to the subsidy scheme will mean that the Italian market will not reach its 2010 size again this year.

Despite the outlook in Italy, IMS Research predicts positive growth for the global PV module market this year, and full-year shipments are forecast to grow by nearly 20%, driven by continued demand from new gigawatt-scale markets, such as the U.S., and continued demand from European countries.


Source:  Solar Industry

U.S. Photovoltaic Project Order Backlog Now Surpasses 12 GW

The solar photovoltaic project order backlog for the U.S. market has now soared past 12 GW, according to the latest edition of the Solarbuzz United States Deal Tracker report.

Although the PV industry is facing the effects of large cuts in feed-in tariffs across Europe, the order backlog in the U.S. confirms that the country will be one of the most promising growth markets over the next 24 months, Solarbuzz says. The U.S. market doubled in size in 2010 and is forecast to do so again this year.

The April edition of the report logs over 375 nonresidential projects in the U.S. project pipeline being planned or going through a request for proposal process. It also includes an additional 775 projects that total 0.7 GW of PV systems either installed or being installed since Jan. 1, 2010.

Nonresidential PV systems in the US market range from just 50 kW up to hundreds of megawatts. Even with the growing utility presence in the market, the corporate and government sub-segments still have 76% of the completed projects since Jan. 1, 2010, Solarbuzz says.

Utility-scale projects under development are found in 29 states, but four states account for 80% of this total (measured in MW). This segment is increasingly being serviced by specialist project developers, but also directly by major cell and module manufacturers acting in that role. The top 10 developers account for 57% of the utility pipeline in megawatt terms.

"The nonresidential segment has traditionally been driven by corporate and government customers," says Craig Stevens, president of Solarbuzz. "As renewable portfolio standards take effect, utilities have become a key driver of medium-term market growth.”

The top 10 states for non-residential PV projects are California, New Jersey, Massachusetts, Pennsylvania, Arizona, Texas, Colorado, North Carolina, Nevada and Florida, according to the report.

Over 260 different installation companies are servicing the identified 1,150 nonresidential projects that buy their modules either directly from manufacturers or through distributors. First Solar, Suntech Power, Sharp, Yingli Green Energy and SolarWorld are the most represented module manufacturers in this segment.

The installed system pricing data shows that the largest US projects are now being completed in the range of $3 to 4 per watt DC. The reduction in nonresidential PV system prices is key to stimulating US market growth.

SOURCE: Solarbuzz

Mid-Atlantic / Northeast - Fastest Growing Solar Market in USA

Strong project installation totals across the board, increasing market diversity and ever-expanding product manufacturing are propelling the U.S.' PV market to new heights, according to Rhone Resch, president and CEO of the Solar Energy Industries Association (SEIA).

Resch spoke at today's opening general session at PV America, welcoming attendees and providing a comprehensive overview of the industry's most important current trends, forecasts and priorities.

SEIA expects more than 3,000 industry professionals to descend on the Pennsylvania Convention Center during the course of the conference, which includes general sessions, topic-specific educational sessions and an exhibit hall featuring companies from across the supply chain.

Although the conference is marketed as a regional event, PV America is the only U.S. conference focused solely on solar phovoltaics, the organization points out.

Resch's speech this morning highlighted solar PV's growth last year and its potential for 2011. In total, 878 MW of PV capacity was installed in 2010, more than doubling 2009 installation totals. However, he acknowledged, much work remains to be done - particularly in continuing to ensure that PV projects of all sizes have access to funding, and in securing favorable policies at the federal level.

In 2010, the expansion of key new state markets was one of the key growth drivers, Resch said. The Mid-Atlantic/Northeast region - led by New Jersey - is now the largest market for PV in the U.S.

"One of the defining characteristics of the U.S. market is its diversity," Resch added. "That fact became even more apparent during 2010. And it's one of the reasons that the world is looking to America as the next great solar market.

"The U.S. market showed strong growth not only in one market segment in 2010, but across all three segments: residential, commercial and utility scale," he said. Specifically, the residential market grew by 68%, while the commercial market grew by 79%. The utility-scale PV market grew at the fastest rate of the three segments - 246% - a rate that Resch called "incredible."

Resch also highlighted the solar market's manufacturing potential in the U.S. Although some domestic solar manufacturing plant closures made the news last year, construction has begun on more than 50 new factories.

Last year, production of cells and wafers in the U.S. nearly doubled, according to SEIA's research. Module assembly posted 62% growth.

However, numerous challenges remain for solar, Resch said. Although the industry was victorious late last year in securing an extension of the U.S. Department of Treasury's Section 1603 cash-grant program, the biggest obstacle for projects is financing.

SEIA has responded to these conditions by developing a multi-part approach to meeting finance goals. "First, SEIA is advocating for a multi-year extension of the 1603 program - an initiative that already has the support of President Obama," Resch said.

Additionally, Resch called for a "clean energy bank" that would supply "long-term, low-cost financing by an institution that understands our technology and is willing to finance projects."

Master limited partnerships must also be able to use tax credits, he said. Such a change, which he says would bring more investors into the solar market, would require modifications to the federal tax code. Resch also called for the federal government to be given the ability to enter into long-term power purchase agreements.

"Finally, we need to develop a national clean energy standard that deploys solar. Providing policy certainty for our markets is critical to attract the tens of billions of dollars necessary for us to achieve our goals," he added.

Resch also noted that extensive paperwork and bureaucratic obstacles frequently pose a challenge to solar power development, and urged listeners to contact their elected representatives to show them how solar projects lead to job creation.

"In addition to promoting specific policies, we also need governments at every level to embrace solar," he said. "Public solar installations help instill confidence in these technologies that Americans want to understand, and provide great marketing for our industry."

To that end, he added, the White House's planned solar installation can serve as a prime example of a highly visible project that demonstrates solar power's viability to the public.



Source:   SEIA

China, Germany, Italy and India Big Winners in Raising Money in 2010

Global clean energy finance and investment grew significantly in 2010 to $243 billion, a 30% increase from the previous year. China, Germany, Italy and India were among the nations that most successfully attracted private investments, according to new research released by The Pew Charitable Trusts.

China's record $54.4 billion in investments in 2010 represents a 39% increase from 2009. Germany was second in the G-20, up from third last year, after experiencing a 100% increase in investment to $41.2 billion.

"The clean energy sector is emerging as one of the most dynamic and competitive in the world, witnessing 630 percent growth in finance and investments since 2004," says Phyllis Cuttino, director of Pew's Clean Energy Program. "Countries like China, Germany and India were attractive to financers because they have national policies that support renewable energy standards, carbon-reduction targets and/or incentives for investment and production, and that create long-term certainty for investors."

The U.S., which had maintained the top spot until 2008, fell another rung in 2010 to third with $34 billion. The U.K. experienced the largest decline among the G-20, falling from fifth to 13th. The report suggests that uncertainty regarding clean energy policies in these countries is causing investors to look elsewhere for opportunities.

Italy attracted $13.9 billion in clean energy financing last year, improving its global standing to fourth, from eighth in 2009. For the first time, India joined the top 10 ranking, attracting $4 billion, a 25% increase.

Wind power continued to be the favored technology for investors at $95 billion. However, the solar sector experienced significant growth in 2010, with investments growing 53% to a record $79 billion and more than 17 GW of new generating capacity globally.

SOURCE: The Pew Charitable Trusts

Europe's FIT Reductions Temper Growth Forecasts For Global PV Demand

Following very strong growth - 139% - last year, global solar photovoltaic (PV) demand is off to a weak start this year, according to the latest Solarbuzz quarterly report. Preliminary estimates of the first quarter of this year's (Q1'11) end-market demand in Germany show that levels are running at less than 50% of their Q1'10 levels.

The gradual price reductions seen so far this year have been insufficient in energizing the market, Solarbuzz says. However, in Q2'11, global demand is still projected to reach 7.4 GW, representing 77% year-over-year growth.

During Q1'11, module manufacturers have been expanding sales channels, taking on a broader range of smaller distributors and brokers in order to both place increased production volumes and obtain better factory gate prices. As a result, total downstream inventories in Europe - and, to a lesser extent, in the U.S.. - have built to unsustainable levels at the end of Q1'11.

By mid-year, the top five European markets will see feed-in-tariff (FIT) cuts - some as high as 45%. Consequently, Q2'11 demand will be stimulated by the rush to beat mid-year FIT declines, especially in Germany and Italy, Solarbuzz predicts. There will also be steady growth in other European markets, the U.S., Canada, China and India.

This year, module manufacturers are planning to raise shipments by 55%, while full-year demand is projected to increase by just 12%. After the demand peak in Q2'11, the industry will face an exceptionally challenging second half of 2011 (2H'11) as it addresses a supply/demand imbalance. A period of negative production growth will be necessary to avoid excessive inventory build.

Any major changes to government PV policies as a consequence of the nuclear disaster that has followed the earthquake and tsunami in Japan are not expected to impact demand until 2012. At the same time, the disaster's impact on the nine major plants engaged in polysilicon, wafer and cell production in Japan so far appear to be minimal.

"2011 will be a challenging year for the industry as it manages a slowdown in the market," says Craig Stevens, president of Solarbuzz. "Europe will not be the growth engine it has been in recent years, and manufacturers will need to access new markets or be exposed to the risk of rising inventories or production cuts during a period of falling prices."

By Q4'11, the market share of Chinese, Taiwanese and other rest-of-world producers is projected to increase to 74%, up from 66% in Q4'10. The leading thin film manufacturer, First Solar, and the lowest-cost Asian producers will be the least vulnerable to reductions in shipments during 2H'11, but all manufacturers can expect to face extreme price pressure by the year-end, according to the report.

Lower-cost Chinese and Taiwanese manufacturers are expected to continue to benefit from an increase in outsourcing of production from the major Japanese and Western solar manufacturers.

SOURCE: Solarbuzz

Chinese PV Cell Manufacturers Increased their Marketshare from 49% to 59% in 2010

Market research firm, Solarbuzz has reported its Top 10 rankings by cell capacity in 2010. Actually, there were 12 companies in the ranking due to several companies tying on capacity. Suntech Power and JA Solar tied for the first position, followed closely by First Solar.

On a geographical basis, there were four producers in the rankings that are headquartered in China, (Suntech (1), JA Solar (1), Trina Solar (9) and Canadian Solar (12)). Taiwan was also well represented with three firms in the rankings, (Motech (5), Gintech (6) and Neo Solar Power (11)).

Not surprising was the inclusion of two key producers headquartered in the U.S., First Solar and SunPower, ranked third and tenth, respectively.

Both Kyocera and Sharp were tied for seventh position and were the only two firms from Japan in the rankings.

Only one German manufacturer was included in the Solarbuzz rankings, Q-Cells at number 4. However, like SunPower the majority of cell production is in Asia.

According to Solarbuzz, worldwide solar cell production reached 20.5GW in 2010, up a massive amount from 2009 when production reached 9.86GW.

Thin film production accounted for 13.5% of total production, Solarbuzz said - down (as a percentage from 16.8% in 2009)

Producers in China and Taiwan continued to build market share, and accounted for 59% of global cell production in 2010, up from 49% in 2009.

Source:  PV Tech and Solar Buzz

Ontario's Solar PV Installations May Surpass California in 2011

If ClearSky Advisors' forecast is correct, Ontario, Canada may become the leading market for solar PV in North America in 2011.

The summary of the forecast, one of a series on the Ontario solar market by ClearSky Advisors, will turn heads in the solar PV world.

ClearSky Advisors forecasts that Ontario will install more than 400 MW of solar PV in 2011. This would be nearly double that installed by California in 2010, presently the largest North American market for solar PV.

California has more than three times the population of Ontario, Canada.

With contracts on the books, Ontario is expected to reach 2,650 MW of solar PV by 2015. For comparison, the USA has installed slightly more than 2,000 MW of solar PV during the past thirty years. California has installed half of that amount.

Of the more than 30 module manufacturers ClearSky has been tracking, 17 to 24 are expected to become compliant with Ontario's domestic content rules by the end of the year.

Source:   Renewable EnergyWorld.com

7.25 GW Solar Installed in Germany in 2010

New figures released by Germany's Federal Network Agency show that 1,073 MW of PV were installed in the country in December - the second-highest monthly capacity for the year. Although no end-of-year rally took place, 2010 was another record-breaking year for the German PV industry, says Bonn, Germany-based market research firm EuPD Research.

Installed capacity in 2010 totaled 7.25 GW in 242,893 systems, representing year-over-year growth of 91%. "These figures are not a surprise," says Markus A.W. Hoehner, CEO of EuPD Research. "Newly installed capacity is, for the most part, in line with our forecast."

Systems between 10 kW and 30 kW made up 26% of newly installed capacity, making them the greatest contributor to growth in 2010. The midsize to large-size market segment - systems between 100 kW and 500 kW - showed year-over-year growth of 174%.

Bavaria once again led Germany in 2010, with an installed capacity of 2,379 MW, EuPD Research adds. The state of Baden-Wuerttemberg came in second, and North Rhine-Westphalia came in third.

Although business was slow at the start of this year, the market is set to pull forward in the coming months, as soon as prices stabilize, EuPD Research predicts. The company also believes that development in the German market is likely to be somewhat dependent on the political decisions pending in Italy.

Overall, EuPD Research anticipates moderate growth in the German market this year.

SOURCE: EuPD Research

Polysilicon Shortage in China Affecting Market Prices

China imported 5,521 tons of polysilicon in January, representing a year-on-year rise of 74.8 percent, according to the latest statistics released by the General Administration of Customs. The figure is 40 percent above the 2010 average monthly import, which was approximately 3,958 tons, providing evidence that the material is in tight supply across the country.

The domestic supply shortages are attributable to a production halt as a result of routine year-end audits performed by major polysilicon makers in China before the Chinese Spring Festival break as well as the down time during the 9-day break itself, leading to significantly decreased production and stock on hand, according to an industry analyst. The country's polysilicon imports for February are expected to remain at the same high level.

Driven by rising oil prices worldwide, combined with tight supplies, polysilicon, which is used in the manufacture of solar PV modules, is experiencing rapid price hikes. The spot price for polysilicon has reached US$114 per kilogram earlier this month an increase of nearly 100 percent from the end of last year.

Furthermore, the Polysilicon Industry Access Standards jointly released by several Chinese regulators in January of this year significantly raise the bar for entry into the polysilicon sector. As a result, growth in polysilicon production capacity is likely to lag behind that of market demand for a long while as 80 percent of the industry’s players are expected to be squeezed out of the market due to non-compliance with the standards.

Demand in the sector is expected to grow at an annual rate of 30 percent, causing polysilicon prices to continue the upward trend, said Hou Wentao, a senior analyst at Hunan province, China-based Xiangcai Securities.

Some major polysilicon manufacturers are aggressively accelerating their efforts to expand capacity in order to take advantage of higher polysilicon prices and stronger market demand. Hong Kong-listed GCL-Poly Energy H

Chinese PV giants including Hanwha SolarOne have gotten off to a good start this year, and are reporting a substantial inflow of new orders, according to a source that attended the SNEC 5th (2011) International Photovoltaic Power held recently in Shanghai.

A report published by CIConsulting, a leading industry research firm in China, indicated that many European countries have put in place measures to cut subsidies to the PV industry since the second half of last year, leading to the speculation that the global PV market will see steep decline in 2011 given that Europe contributes significantly to worldwide sales of PV products.

However, the soaring prices for polysilicon reflect, at least to some degree, that global PV demand has not seen any dramatic drop for the time being.

U.S. Solar Doubled in 2010, May Add 2 Gigawatts to Double Again

The amount of new solar energy capacity in the U.S. doubled last year and may double again in 2011 because of government incentives, stronger demand and falling prices, a trade group said.

The total capacity of photovoltaic and solar thermal power systems that were installed last year reached 956 megawatts, compared with 441 megawatts added in 2009, according to a report released today by the Solar Energy Industries Association.

Installed capacity of residential, commercial and utility- scale plants may increase by as much as 2 gigawatts this year, according to GTM Research, which worked with Washington-based SEIA to produce the report.

“Another doubling of U.S. installations in 2011 is likely, even in the absence of a substantial mid-year price decline,” Shayle Kann, GTM Research’s managing director of solar research, said in an interview.

In total, 878 megawatts of photovoltaic systems and 78 megawatts of solar thermal power projects were installed in 2010, according to the report. The cost was $6 billion, up 67 percent from 2009.

The cumulative total of 2.6 gigawatts of installed capacity can power more than 500,000 households, the report said.

Largest Market

First Solar Inc. (FSLR), the world’s largest maker of thin-film solar modules, expects the U.S. to be its largest market this year, and has 2,400 megawatts of North American projects in its development pipeline, Alan Bernheimer, a spokesman for the Tempe, Arizona-based company, said in an e-mail.

A U.S. Treasury grant program, which reimburses 30 percent of the costs of installing solar systems, helped drive up the number of projects, the report said. The installed price of photovoltaic systems fell by 10 percent for commercial and 8 percent for residential installations last year.

Other countries are cutting their subsidies for solar systems this year, potentially leading to an oversupply of panels and further price cuts.

“There is a strange effect where the worse things get in Germany and Italy, the more suppliers are going to price more competitively in new markets, like the U.S., ultimately growing the market,” Kann said.

California had 259 megawatts of photovoltaic capacity installed in 2010, more than all other states. New Jersey followed with 137 megawatts, more than doubling from 57 megawatts in 2009 and the highest growth rate.

SEIA represents about 1,000 companies involved in the solar energy industry, including installers, manufacturers, developers, financial companies and others, SEIA’s assistant manager of communications Jared Blanton said in an e-mail.

Source:   Bloomberg

Is PV Supply Growing Faster than Demand?

On the back of last year's record demand, there are growing concerns that photovoltaic (PV) module supply is set to outstrip demand throughout 2011, leading to significant oversupply in the industry. But are these concerns founded? And if they are, what impact might the oversupply have on the global PV industry?

2011 Forecast

According to analysts at UK-based IMS Research, Photovoltaic (PV) module production capacity increased by nearly 70% over the course of 2010, reaching nearly 30 GW by the end of the year. Looking ahead, IMS anticipates that 35 GW of annual capacity will be reached within the first half of 2011, despite installations in the same period being predicted to reach no more than one fifth of that amount.

“Demand for PV grew quickly throughout the second half of 2009 and 2010, driving installations in 2010 to reach more than double the previous year. Most suppliers implemented aggressive capacity expansion plans throughout the year,” says Sam Wilkinson, Research Analyst at IMS.

“Following some reductions and amendments to incentive schemes in Europe, installations will not continue to grow at this rate and demand will not be sufficient to support all of this new capacity,” he adds.

Although in general agreement about the prospects of an oversupply in 2011, other analysts are more cautious about its likely extent. Adam Krop, Vice President of Equity Research at Ardour Capital Investments believes that the bankable supply of modules will be around 25 GW by the end of 2011 - compared to a conservative estimate of 17–18 GW of demand.

“While this appears to be a significant oversupply, these numbers are not a great ‘apples to apples’ comparison,” says Krop.

“The 25 GW of supply is based on statements of capacity build from individual companies, but keep in mind these are year end goals, so ramp timing plays a big role. While nameplate capacity for the industry could be 25 GW, we should discount that number for an adjusted annual run-rate as the lines ramp,” he adds.

Krop also expects some higher cost capacity to be decommissioned in Europe and says that some Chinese capacity plans could be postponed or scaled-back as well.

“[The] real question is how much a supply-demand imbalance will affect pricing and margin structures. We are incorporating 10-15% price declines for module manufacturers based on a more competitive pricing environment,” he says.

Strong Policy Impact

Although the chances of a global oversupply of PV modules occurring in 2011 will depend on a number of factors, one of the most important is likely to be the ongoing levels of government financial support for the sector in key markets. In particular, policy developments in Germany, Italy, France, Spain and other European countries have the potential to significantly affect overall global demand. Given recent trends in policy, it is a fair bet that, as the cost of solar continues to drop, we can expect some additional Feed-in-Tariff (FIT) reductions.

“If [there is] an oversupply situation in 2011, it will be due to lower demand [as a result of] subsidy cuts in Europe. The supply side is easier to control as it is a matter of cutting capital expenditure. Neither is good for stock prices,” says Krop.

“We also need to take into consideration the anticipated growth in China, the US and other markets,” adds Gil Forer, Global Cleantech Director at Ernst & Young.

“But, the retroactive limiting of the number of hours [for which] PV can receive incentives in Spain [and] the retroactive taxes in the Czech Republic, have damaged investor confidence in those countries and caused banks to become more cautious on the sector overall. This could potentially have long lasting negative effects on financing cost, which is a key input variable for the industry,” he adds.

Forer’s prediction is that, as more supply comes online, it is likely that prices for modules will moderate further, improving the economics in those countries with stable incentive schemes, low cost of capital and/or high insolation, thus increasing uptake.

“So, overall there is not one global answer, [instead it] will vary market by market,” he says.

For Forer, any growth market is likely to experience frequent, and often rapid, supply and demand adjustments. However, what makes PV unique is that it relies heavily on policy support, which can change according to political priorities and ability to absorb costs.

“As more and more segments and geographies enter grid parity, we would expect the market to become less volatile over time. That said, the increase in capacity, especially coming online in Asia is quite large,” he says.

Impact on Industry

So, what impact might the widely predicted oversupply have on the global PV industry? For Forer, whilst any oversupply is likely to be temporary, it will be enough to hurt high cost producers.

“Companies with strong brands and strong customer channels will be less affected. Most at risk are high cost producers that are not operating at scale and with weak brands,” he says.

“As we saw during the financial crisis, which was followed by oversupply, bankability was key and could again become a more differentiating factor,” he adds.

Further up the supply chain, tier 1 suppliers, typically favoured by the market, remained sold-out throughout much of 2010 – meaning that tier 2 suppliers were able to capitalise and grow shipments significantly. As a result, both Tier 1 and Tier 2 suppliers have quickly added new capacity going into 2011. The outlook continues to be good for Tier 1 suppliers, who continue to see high demand for their products in 2011.

“With a greater proportion of demand served by these Tier 1 suppliers in 2011, Tier 2 suppliers are likely to see less demand for their products, this is likely to result in some competitive pricing and lead to price declines across the industry,” says Wilkinson.

For some, it is quite possible that oversupply, and the ensuing drop in prices, will drive out some of the smaller, higher cost players.

“Low cost leaders such as Yingli, Trina and First Solar should be in the best position, but again, an oversupply situation would bring multiples and stock prices down across the board,” says Krop.

“Consolidation and mergers of capacity is not likely in my opinion. Capacity will continue to be built and shifted into China, Malaysia and Taiwan, while technology and branding will be focused in key regions [such as] Europe and the US,” he adds.

Source:  By Andrew Williams, Contributor - Renewable Energy World.com

Crystalline PV Margins And Prices Predicted To Fall Sharply This Year

Prices have begun falling dramatically throughout the PV crystalline supply chain in the first quarter of this year, according to the latest analysis from IMS Research. The company's latest quarterly report on the PV polysilicon and wafer market has revealed that polysilicon, wafer, cell and module prices will fall 7% on average in the first quarter and will continue to decline in the second quarter.

The declines are largely due to cuts to solar incentive schemes in a number of key markets, causing installation growth to slow considerably. Average polysilicon contract prices fell by just 2% in the fourth quarter of 2010. However, spot prices declined by nearly 10%, reversing the rapid increases that had occurred in the previous quarter, when tier-two and tier-three suppliers had been able to sell silicon at inflated prices on the spot market due to high demand and a shortage in supply.

Both contract and spot prices are forecast to continue their decline in the first quarter of this year, falling by 4% on average over the previous quarter. Similar price declines are predicted throughout the supply chain. Reduced incentive rates have placed increased pressure on module suppliers’ prices, and these manufacturers are naturally transferring this pressure to their upstream suppliers and forcing down cell, wafer and polysilicon prices as a result, IMS Research says.

As with polysilicon, it is likely to be the smaller module, cell and wafer companies that suffer the most severe price declines. High demand throughout 2010 meant that their larger competitors were largely sold out, and these suppliers were able to capitalize on the situation and increase their shipments and prices quickly.

In particular, a large number of Chinese tier-two suppliers were able to gain market share and in the third quarter of 2010, these suppliers' module prices were, on average, higher than Chinese tier-one prices. As demand weakened at the end of 2010, tier-one suppliers’ products have become more freely available, and IMS Research predicts that the smaller suppliers will be forced to price more competitively in an attempt to gain or even maintain market share this year.

As a result, average Chinese tier-two crystalline module prices are forecast to fall by nearly 10% in the first quarter of this year.

Although module prices are falling, suppliers' costs are not falling as quickly, the report adds. "Efficiency improvements and relatively high utilization rates are helping to continue the lowering of manufacturing costs throughout the supply chain," explains PV Market Research Analyst Sam Wilkinson. "However, costs are not being reduced as quickly as prices, and gross margins are beginning to tighten.

"IMS Research predicts that by mid-2011, some polysilicon and wafer suppliers will see their gross margins fall to half of what they peaked at in the third quarter of 2010," he adds.

Despite declining margins for most in 2011, the overall outlook for the industry remains positive, and IMS Research predicts that the polysilicon market for PV applications will grow by nearly 20% this year to reach nearly $8 billion.

SOURCE: IMS Research

With PV Prices Dropping - European PV Capacity Predicted to Reach 350 GW by 2020

Global investments in solar photovoltaic technology could double from 35 billion - 40 billion euros today to over 70 billion euros in 2015, according to a study published recently by the European Photovoltaic Industry Association (EPIA) and Greenpeace International. The estimated investments in the European Union (EU) alone would rise from today's 25 billion - 30 billion euros to over 35 billion euros in 2015.

The report, "Solar Generation 6," foresees that PV could account for 12% of Europe's power demand by 2020, and up to 9% of the global power demand by 2030.

PV prices have dropped some 40% since 2005, and by 2015, the cost of PV systems is expected to drop by an additional 40% compared to current levels. As a result, PV systems will be able to compete with electricity prices for households in many countries in the EU within the next five years.

The report estimates that current global solar PV capacity could grow from over 36 GW at the end of 2010 to close to 180 GW by 2015. European PV capacity is expected to increase from over 28 GW in 2010 to nearly 100 GW by 2015, and has the potential to reach up to 350 GW on a global basis by 2020, the report adds.

The report also highlights the enormous PV potential for Europe in light of the EU’s established target of 20% renewable energy and 20% energy efficiency. Based on this potential for photovoltaic growth, the EU could easily increase its emissions-reduction target from the current 20% by 2020 to a more aggressive 30% level, the study concludes.

The Solar Generation 6 report is available for download here.

SOURCES: European Photovoltaic Industry Association, Greenpeace

Tipping Point: So Cal Edison says Solar Now Cheaper than Natural Gas

We hear it every day: "Solar is too expensive." Well, not according to the California utility Southern California Edison.

In a recent filing to the state's Public Utilities Commission, SCE asked for approval of 20 solar PV projects worth 250 MW – all of which are expected to generate a total of 567 GWh of electricity for less than the price of natural gas.

Although the exact details of the 20-year contracts for the projects are kept confidential for a few years, the utility reports that all winning solar developers issued bids for contracts below the Market Price Referent, which is the estimated cost of electricity from a 500-MW combined-cycle natural gas plant.

What does that mean? It means that a large number of solar PV project developers believe they can deliver solar electricity at a very competitive price. And these aren't mega-projects either. All of the installations will be between 4.7 MW and 20 MW – a sweet spot for PV projects.

Although the price of natural gas has plummeted in recent years because of excessive production and lower demand for power, the cost of solar projects and the price of solar electricity has dropped in tandem. With stong solar requirements in states like California, demand for PV has stayed strong.

"Solar energy is a natural hedge against rising energy costs – a hedge that regulators and utilities are turning to lower electricity costs for their customers," said Rhone Resch, president and CEO of the Solar Energy Industries Association.

California regulators seem to agree that mid-sized solar PV installations, which capture economies of scale but suffer fewer regulatory and transmission constraints, are an important part of the market.

These latest projects were solicited through SCE's Renewables Standard Contracts program, a reverse auction mechanism implemented by the utility in 2010. The program is a precursor to California's Reverse Auction Mechanism (RAM) that was approved last December. That 1-GW program requires California's three largest utilities to hold auctions twice a year to solicit bids from developers of mid-sized (i.e. 1-20 MW) solar PV projects.

The 250 MW of contracts sent to the CPUC for approval is in addition to a 500-MW solar program initiated by SCE in 2009.

According to SCE's filing, the utility seems to be genuinely positive about the prospects for solar PV:

“Solar PV is a mature and proven renewable energy technology that has been supplying a substantial amount of renewable energy to SCE and other California load-serving entities (“LSEs”) for several years.”

While large-scale concentrating solar power projects have been gaining ground in California and other southwestern states, PV is looking like the better option in many cases. Due to the steady declines in the cost of production and price of modules, as well as improvements in Balance of Systems technologies (i.e. power electronics, racking and wiring) that make installations more efficient, solar PV is leading the way.

“The solar industry has done a great job in bringing down costs – long a promise, now a reality,” said Adam Browning, executive director of the Vote Solar Initiative, in a response to the recent SCE announcement. “These are price-points that can really scale, and will encourage policymakers to think big.”

In a recent report from GTM Research comparing similar-sized CSP and PV projects, the authors forecast that electricity from utility-scale PV plants will be considerably lower than some CSP technologies. In the next decade, the research firm projects CSP plants will be generating electricity in the $0.10 to $0.12 per kWh range and PV will be producing electricity in the $0.07 to $0.08 kWh range. (On the flip side, CSP technologies can offer storage capabilities and hybrid natural gas components, providing value that PV can't necessarily deliver.)

With high peak demand, lots of expensive “spinning reserve” power plants and ample sunlight, California is the likely place for PV to compete. But with project costs continuing to drop and utilities promoting the technology, the steady march toward grid parity will spread to other markets as well, said Vote Solar's Browning.

“Though California does have world-class sunlight, solar is modular and adaptable, and similar results can be had throughout the country.”

New Report: 100% Renewable Energy Worldwide Is Possible By 2050

A fully sustainable and renewable global energy system is possible by 2050, according to The Energy Report, which was published this week by Ecofys and the World Wildlife Fund (WWF).

"We can do this by using and improving the technologies that are already at hand," says Manon Janssen, CEO of Ecofys. "It is a business opportunity, as much as it is a technological challenge."

For several reasons, the world will need an adapted energy system to accommodate its growing population, the report says. Climate change, depletion of natural resources and a growing dependence on only a few energy suppliers are a threat to our current system. Renewable sources such as solar energy and other resources are necessary for a sustainable balance.

The Ecofys Energy Scenario, which is the basis for The Energy Report, asked the fundamental question: “Is a fully sustainable global energy system possible by 2050?” Ecofys investigated technical, social and economical developments in all energy carriers, all regions and all sectors of the global energy system.

First, the scenario forecasts a future level of energy-consuming activities based on a growing population and a tripling of the world’s economy. These services would be delivered with a minimum of energy and material use.

Second, the scenario ranks the sources to provide the energy for these activities based on sustainability. Energy from the sun, wind, water and heat from the earth’s crust are prioritized and will contribute to a further electrification of our society, the report explains. Only once these options are exhausted is bio-energy deployed.

With the utilization of existing technologies alone and the application of stringent sustainability criteria, 95% of all energy can be renewable by 2050, according to Ecofys and the WWF. Only certain manufacturing processes (e.g., steel, cement) will need specific properties of fossil fuels that cannot yet be substituted by renewable fuels yet.

An important condition in the scenario is the development of a sustainable standard of living around the world, based on increasing equity between different regions. Up-front financing will be required, but in the long term, benefits will outweigh costs, the report concludes.

SOURCE: Ecofys