Abstract

FiT Rate Reductions Spurring Global Market Growth in 2010

Three leading solar PV countries Germany, Italy and the Czech Republic separately reduce their FiT rates in mid-2010 and at the beginning of 2011. As a result, in order to benefit from higher FiT rates before further cuts, a flurry of demand for PV installations surfaced in the first and second half of 2010. Global PV installations, therefore, are expected to witness considerable growth and totaled 15.6GW in 2010, growing nearly 109% compared to that in 2009. The global solar PV market, which suffered from sluggish market demand in the fourth quarter of 2008 and onward, enjoyed a strong uptake beginning in the second half of 2009, and the market's growth momentum thus is expected to continue throughout 2010.

With relatively sufficient production capacity capable of meeting market demand, the global solar PV market is expected to advance 35.2% in the second half of 2010 in comparison to the first half. Compared to relatively few PV systems installed in the first half of 2009, the market growth in the second half of 2010 (303%) is expected to enjoy higher growth than PV installations in the first half of 2010 (109%).

Global Market to Grow at Modest Pace in 2011

Looking ahead to the future development in three major solar VP markets of Germany, Italy, and Czech, governments in these three countries have separately set to slash their FiT rates. Nevertheless, the rates of return on PV investment still manage to keep above 6%. That is, the reduction in FiT rates will be felt by the European solar PV market but will not cause the market demand to shrink considerably in 2011. Nonetheless, the global solar PV market, which enjoyed buoyant growth in 2010, is expected to grow continuously but at a modest pace in 2011 due to several factors. Factors such as the restricted FiT rates for farmlands in Germany, Italy, and France, rising electricity bills, and stability concerns about integrated grids, government of these three countries may mull to limit the amount of PV systems being installed, affecting PV installations in the future. 

As regards the development in North America, California's 2010 20% RPS is due to end and the 33% RPS target by 2020 is yet to be approved. At present, current California governor used an executive order to enact the same 33% target set by 2010 RPS, coupled with favorable subsidies launched by other states, it is anticipated that PV installations in the United States will continue to witness strong growth in 2011.

As for the solar PV market in the Asian market, the Japanese government announced a cut for FiT rate in 2011, playing a crucial factor affecting the future market development in Japan. Taking the advantages of the generous FiT rate and incentives for PV installations in regions, it is predicated that PV installations in the Japanese market will grow at the constant pace. In China, the government has difficulties to launch a nationwide FiT program in the short-run. However, with incentives such as "Solar Rooftops" program, the release of special permits required for solar utility purchase tenders and subsidies for the installation of rooftop PV systems, the future development of Chinese solar PV market should also merit attention.

Overall, the global solar PV market is expected to enjoy a slight growth of 4% in 2011 with 16.3GW of PV systems expected to be installed in 2011, following the substantial market growth achieved in 2010.

Market Competition to Intensify in 2011

In 2010, due to rush applications for PV installations, the supply of PV systems has been tight and production capacity has reached its maximum. In the Asian region, in particular, Chinese and Taiwanese leading solar PV manufacturers have been expanding their production capacity in 2010 in anticipation of burgeoning demand for PV systems in this region. Second-tier manufacturers, however, have been subject to relatively slow production expansion strategies and relatively weak negotiation power and some of them have to wait until the end of 2010 or the beginning of 2011 to obtain components. Increasing production capacity and the slowdown of demand for PV systems are expected to cause the market competition to intensify, likely affecting the shipment prices of PV systems and making some changes in the solar PV companies' market rankings.

Appendix

Glossary of Terms

List of Companies