Worldwide, the level of newly installed PV grew by 20% last year and is expected to grow by another 20% in 2014; resulting in an estimated absolute growth from 37GW to as much as 50GW globally by the end of this year. In addition, by the end of 2016 the worldwide installed capacity of solar power is expected to double. In years past the growth took place primarily in Europe, but those days may be gone.
The European Photovoltaic Industry Association (EPIA) outlines in its latest Global Market Outlook report that "Europe’s role as the unquestioned leader in the PV market has come to an end". While Europe accounted for 74% of the world’s new PV installations in 2011, and even around 55% the year after, the region only represented 29 percent of the world’s new PV installations in 2013, the report says.
This general estimation is also shared by IHS: "Overall the European market will shrink this year to just over 10GW of new installations, this represents a maximum of 25% of the global total", expects Ash Sharma, Senior Director Solar Research & Analysis at IHS. However, the market analyst has a diverse breakdown of the different markets in Europe, noting that overall the European market is shrinking due to solar market conditions in Germany and Italy. "In addition, the Spanish market is practically dead at the moment." He pointed to the UK as a growth market along with smaller markets such as Austria, Switzerland and Turkey. "Bottom line, one needs to differentiate between the national markets before one can get a clear picture of Europe." Sharma also sees growth potential again from next year on as the overall European market seems to have bottomed out by now.
Installed gigawatts are one side of the medal, European manufacturing is the other. Hanwa Q Cells is a company with strong European roots that targets Europe to a great degree. Since the completion of the takeover of struggling Q-Cells SE and Q-Cells GmbH in 2012 the company has managed to improve internal efficiency and to profit from synergies within Hanwha Group and further more to expand its market share in Europe. These measures may have contributed to positive operating results in the first quarter of 2014; the company now sees itself as the largest European PV provider.
Europe is still an interesting market for the PV industry but the potential of each individual country has to be taken in account.
Sales networks were strengthened in several countries such as France, and in distribution the wholesalers are taken out to address installers directly in the residential business to strengthen the brand awareness. Says Philippe Pflieger, Head of Sales France at Hanwa Q Cells: "Europe is still an interesting market for the PV industry but the potential of each individual country has to be taken in account. What is lacking in the German market is partly compensated by other markets in Europe. The United Kingdom is a European boom market this year. As to France we consider the French market to remain stable. France is not on schedule with its long-term plan on renewables; there is a need to catch up." Indeed, the French legislature is currently discussing a reformed renewable energy law that could be enacted beginning 2015 with the will to target a 40% of renewables in the French energy mix by 2030. French-based tracker specialist Exosun currently profits from its home market as well, since large-scale tenders provide opportunities for their solutions.
For mounting specialist Schletter, Europe remains an attractive market, even in comparison with other, more booming continents. "The residential PV segment will further develop in all EU markets, this is an unstoppable development", says Schletter’s Deputy Director Hans Urban and points to the possibility of partial grid autonomy through self-consumption, which bears a number of advantages ranging from industrial self-supplying parks to remote hotels in southern European regions.
Other specialized players, however, don’t see Europe as a key market: Zev Rosenzweig, CEO of Israel-based CPV provider AORA states that despite having a research site in Spain, the Sun Belt region in Southern Europe proves to be a difficult market environment and their CPV solution are seeing application more in the MENA region or remote island regions to desalinate water.
Certainly the current market conditions in Europe do not attract masses of new market entrants. But IHS analyst Ash Sharma points out that there are always opportunities: "We still see more consolidation than new entrants into the market, but with that there might be opportunities for instance for Asian companies to buy existing players and get access to an established distribution system. Another motivation to locate manufacturing in Europe could be to avoid anti-dumping tariffs. More evident at the moment are new market players in the segment of development and EPC, e.g. in Turkey." A potential module shortage predicted to occur around 2017 to 2018 is also creating a stimulus for Europe to once again be a top region for cell and module manufacturing. There’s currently a cross boarder plan to build a multi-gigawatt factory. X-GWp is the concept name and the project consortium led by Fraunhofer ISE, the French National Solar Energy Institute (INES), and the Swiss Center for Electronics and Microtechnology CSEM together with several European manufacturing companies that are still keeping their names secret. At the moment only little information is available about the project status and key issues such as financing.
A large manufacturing facility such as this would also help Europe’s equipment manufacturers to reduce their dependence on exports. The approximately 100 German PV equipment manufacturers alone hold over 50% of the world market and export 70% of their products to Asia, according to the VDMA. Unlike PV manufacturers, they still do not fear Asian competitors at the moment who enter the market mostly with "good enough" machinery in the middle price segment. But many European and international equipment manufacturers struggled during the consolidation process of the industry during 2012 and 2013, a phase that was especially marked by the disruption of investments in new production equipment. Centrotherm was amongst them; the company had to move to insolvency protection in the summer of 2012 but managed to successfully restructure. Hans Autenrieth, Speaker of the Centrotherm Board now sees a new investment cycle in manufacturing equipment underway, but he is cautious about PV manufacturing in Europe: "There might be a chance for local module manufacturing lines due to imposed import duties or due to local content regulations by European countries. In the midterm we don’t see investments in new solar cell production lines, but there might be upgrades of existing lines."
Europe is a patchwork of different policies and complex, different market structures...
Overall, while Europe has lost its dominant role in PV, it remains a significant market for new photovoltaic installations. In addition, with a high number of existing solar parks aging, operation and maintenance and servicing is becoming more important. One thing, however, the current players and new entrants have to be aware that "Europe is a patchwork of different policies and complex, different market structures, not a solar entity", as Q Cells’ Philippe Pflieger put it.
Written by Andreas Breyer, Senior Editor, Germany, Solar Novus Today