22 June 2011
European government policy adjustments are causing major shifts in the sizes, growth rates and customer segment mix of photovoltaic (PV) markets in 2011, according to the conclusions of three new Regional Downstream PV Market reports issued by Solarbuzz today.
European markets, led by Germany and Italy, have absorbed Feed-in Tariff (FiT) rate cuts of up to one-third between 1 January 2010 and 1 July 2011. These reductions have caused first quarter 2011 demand in Germany to collapse to less than half of its first quarter 2010 size. In addition, overall European full-year demand is expected to flatten in 2011 after increasing more than 170% from 2009 to 2010. These policy adjustments have hit large ground-mount systems on agricultural land particularly hard.
Europe is now projected to represent 65% of world PV demand in 2011, down from 82% in 2010, while the US will grow from 5% to 9%. The top five Asia Pacific markets, led by Japan and China, accounted for 11% of global demand in 2010, a share that will grow to 16% in 2011. The market share of these Asia-Pacific countries is projected to increase steadily to reach at least 26% by 2015, while the US share rises to 14% by then. In contrast to the European challenges, PV project pipelines in the US, China and India collectively now stand at a huge 25 gigawatts (GW).
European distribution margins held up better than expected during 2010 and early 2011, as project margins collapsed, causing a refocusing of business models and channels to market. Europe benefited from sharply lower prices during the first half of 2011, which particularly helped maintain Italian demand impetus. The absence of mid-year FiT reductions in Germany will now aid demand recovery in the second half of 2011. Chinese module supplier prices in Europe were as much as 25% below their European and Japanese counterparts in the first quarter of 2010. This discount steadily reduced to a low of only 10% in February 2011. However, it spiked again toward the end of the second quarter of 2011.
In China, domestic demand more than doubled in 2010, with Ningxia and Jiangsu once again the two largest provincial markets, while the utility segment accounted for 49% of the national market. In 2010, China was the second largest market in the Asia-Pacific region, second only to a rejuvenated Japan whose 111% year-to-year growth was driven by residential demand, accounting for 82% of the market. Strong solar policy support in place before the Fukushima nuclear disaster indicates that the Japanese market will grow between 1.3GW and 1.5GW in 2011.
In the US, soaring utility demand is redefining end-market, product mix and channels to market. Chinese module manufacturer market share increased to 37% in 2010 and is building again during the first quarter of 2011. In 2010, the Chinese distribution channel shipment share saw a small drop to 23%, while project developer and direct utility procurement shares emerged as formidable new channels. In 2011, the US market is projected to reach around 2GW and to grow to as high as 6.4GW by 2015.
